Ending May 2002, the rolling 12-month US speculative-grade default rate fell to 9.57 per cent from 10.26 per cent the previous month. Over the same period, the European Union speculative-grade default rate fell to 10.95 per cent from 11.68 per cent. In contrast, the US and European Union investment-grade default rates remained constant at 0.1 per cent and 0.0 per cent respectively.

These weakest-rated issuers have S&Ps credit rating designations of triple-C or lower and are either on CreditWatch with negative implications or have a negative outlook. While the current list of 47 weakest-rated global issuers is long, it remains below the 59 and 49 identified this past January and April, respectively.

"The decrease in the number of weakest links supports the declining default rates and serves as an indicator that a moderate deceleration in defaults will continue throughout the rest of 2002," says Diane Vazza, head, S&P, Global Fixed Income Research.

A concentration of issuer weakness exists in the media and entertainment and telecommunications sectors, together representing 40 per cent of the weakest issuer list. These top two areas of weakness maintained their relative position on the list while automotive and high technology tied for third place, each representing an additional 9 per cent of the list. The country distribution is predominantly in the US, accounting for 74 per cent of issuers.

Since S&P last commented on Weakest Links on 10 April 2002, 19 issuers have fallen off these lists and 17 issuers have been added.Of the 19 that were removed from the list, 13 were due to issuers defaulting, four had rating improvements either in issuer credit rating, outlook, or CreditWatch implication, one had its ratings withdrawn, and one was acquired, loosing its parent issuer status. The 17 new members were the result of downgrades in issuer credit rating, outlook, or CreditWatch implication during this period.