Banks and Transportation Head the List of Potential Bond Rating Upgrades

May 4, 2006

NEW YORK May 4, 2006­Standard & Poor's Ratings Services today published its "Potential Bond Rating Upgrades" report, which cites that fewer entities (336) were poised to benefit from potential upgrades in April 2006 than in March (339). The April number is lower than the recent peak of 349 set in January but higher than the 321 in February 2005.

Financial institutions were well placed for potential upgrades, with banks displaying a high percentage of issuers listed with a positive bias, as were sovereigns. Within nonfinancials, metals/mining/steel and­to a lesser extent, high technology­appeared well placed for upgrades. The aerospace and defense sector was also prominent but only accounted for a handful of issuers.

In all of these sectors, the proportion of issuers listed with a positive bias (i.e., a positive outlook or ratings on CreditWatch with positive implications) are currently at more elevated levels than has historically been recorded, highlighting the potential improvement in credit quality.

The sector showing the biggest net increase since the previous report in the absolute number of potential upgrades was transportation.