Default Study: Australia & New Zealand 2005 Annual Default & Rating Transitions Sep 06

Standard & Poors, September 2006

Abstract
Following a prolonged period of economic prosperity and benign credit conditions, 2005 saw some weakening of credit metrics, as reflected in rating downgrades exceeding upgrades by 1.7x. Contributing to the downward rating adjustments was a trend toward higher balance-sheet leverage, driven by M&A activity and share buybacks. In addition, one default was recorded in 2005 for a previously confidentially rated issuer. There were no defaults recorded in 2004. Overall, the credit quality of the Australia and New Zealand rating pool remains high, with an average issuer credit rating of 'A-' despite the number of speculative-grade credit ratings increasing in 2005. While the ratio of downgrades to upgrades has moved above the global average, rating volatility is consistent with that of...

Companies mentioned in this report are: Australia (Commonwealth of) (Unsolicited Ratings),New Zealand

Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.

Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.

Australia (Commonwealth of) (Unsolicited Ratings),New Zealand

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