In This Issue: A World Of Change For Financial Markets: In the 25 years since Standard & Poor's published its first issue of CreditWeek, the U.S. financial markets-and the bond market, in particular-have changed dramatically. The economy and financial markets have been largely deregulated. Financial instruments have multiplied, with far more alternatives now available for both issuers and buyers. Even the buyers of securities have changed.Innovation And Transparency Propel International Credit Markets: Over the past 25 years, the expansion of credit markets outside the U.S. has made a significant contribution to the overall growth of capital markets worldwide, offering issuers more choice in raising capital and investors greater visibility of the risks involved. Such expansion could not have occurred without more open economies and the conditions that create them. Progress And Obstacles On The Road To A Single European Market: Standard & Poor's believes the gradual expansion of the EU and the introduction of the euro have been most significant in shaping the current European economic landscape. These two events lie at the heart of what is now one of the largest single global markets. While Europe has made significant progress, it has not been a smooth or a complete transition. The Decline Of Ratings-A Three-Act Play: When the curtain opened 25 years ago, a Standard & Poor's 'AAA' rating was the gold standard that big companies aspired to. Company-specific issues and macroeconomic factors played a role in this shift, but it is impossible to comprehend this fall in credit quality without considering the shareholder-friendly financial policies of the past 25 years. The Structured Finance Market's Accumulated Wisdom: As structured finance has developed over the past quarter century or so, a seeming paradox has emerged: Despite ever-more complex debt structures and risk transfers that can flummox even the savviest investors, structured finance has become entrenched in the capital markets. With trillions of dollars invested worldwide, it has also crossed over to the mainstream. Today's Golden Age In Banking Belies A Tarnished Past: Over the past quarter century, the world's banking industry has changed radically. Capital markets worldwide have expanded relentlessly in size and complexity. But at the same time, one fundamental remains unchanged the world over: Banks gather interest-paying deposits from customers and lend to borrowers at higher rates. Amid Storms And Scandals, A Global Insurance Industry Emerges: The capital markets have played an important role in allowing public insurers to expand their franchises by marketing their debt and hybrid securities. Increasing use of insurance-linked capital market solutions has further improved the insurance sectors' ability to meet market needs. In hindsight, this evolution may actually have been a revolution. Public Finance Grows And Demonstrates Resilience: The most notable feature of the public finance market in the past quarter century has been the sheer growth of new issuance volume. The total annual par amount of issuance increased 786.9% between 1981 and 2006. On a per capita basis, the obligations issued annually grew to $1,638 in 2005 from $204 in 1981, an increase of more than 700%. Mapping The Future Of Sovereign Credit Ratings: Standard & Poor's continued to expand its coverage of the sovereign universe in 2006, and although credit market conditions are likely to become less buoyant later in 2007, we expect more sovereigns to seek ratings. In all, 113 sovereigns now have ratings. A Standard & Poor's Roundtable On The Evolution Of Corporate Governance: Technology and globalization have transformed the world. Markets and corporations have, in many ways, represented the vanguard of change during this period, with financial transactions taking place at warp speed on a 24/7 basis across borders. The Future Of Credit Markets: The Market's View: We are in perhaps the most unique credit period in a long time. The default rate on corporate bonds in the high-yield sector, dollar-denominated, is approximately 0.76%. That's the lowest in 25 years. The Future Of Credit Markets: A Standard & Poor's Panel Discussion: Twenty-five years ago, financial assets were about $12 trillion, just over 103% of global GDP. Today, the debt markets are approximately 300% of global GDP. About half of that is the structured finance market. If you throw in the derivatives market, the total rises to 800% of global GDP. Clearly, the growth of financial assets has outpaced the growth of the global economy. | 
