Bangkok--12 Sep--Standard & Poor's The sharp rise in defaults in 2008 comes as no surprise given the current lackluster economic activity and financial conditions, elevated energy prices that have sapped consumer confidence, and a markedly higher cost of capital, said an article published today by Standard & Poor's. In the first eight months of 2008, 55 entities defaulted globally, compared with just 22 in all of 2007 and 30 in 2006, according to the report, titled "Default Autopsy Finds Traces Of Private Equity DNA (Premium)." The global speculative-grade default rate has increased to 1.9%, more than double the year-end 2007 level of 0.86%. In the U.S., which accounts for 53 of the 55 defaults, the default rate increased for eight consecutive months to 2.5% in August, from a 25-year low of 0.97% at the end of 2007. "We expect the default rate to continue this ascent and reach 4.9% in the next 12 months," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. Ownership of the 55 defaults on which we could gather information reveals that generally, large shareholders of these defaulted entities are asset management firms, alternative investment funds, endowment and pension systems, and individual stakeholders. However, the complex relationships of the players within the capital markets serve to dilute the exposure of any given group. "Of the 55 defaults, nearly 70% were involved in transactions involving private equity at one point or another, which may or may not have facilitated the default," said Ms. Vazza. While we expect to see more sponsors' fingerprints on the majority of the corporate defaults over the next 12 to 18 months, strategies and financing adopted by private equity sponsors are not always to the detriment of ailing companies and some may have already deferred or even averted defaults. This article is part of our premium Global Fixed Income Research content, which is available to premium subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Members of the media may request a copy of this report by contacting the media representative provided. Media Contact: Mimi Barker, New York (1) 212-438-5054, [email protected] Analyst Contacts: Diane Vazza, New York (1) 212-438-2760 Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data. With approximately 8,500 employees, including wholly owned affiliates, located in 23 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http:// www.standardandpoors.com Key Contacts: Americas Media Relations: (1) 212-438-6667 media_ [email protected] Americas Customer Service: (1) 212-438-7280 [email protected]