www.moodys.com Credit Policy Moody’s Global Special Comment Table of Contents: Summary 1 Introduction 3 2008 – Financial Crisis Leads to Record Default Volumes 3 Default and Recovery Outlook for 2009 11 Default Rate Forecasts 11 Recovery Outlook 14 Rating Accuracy Metrics 15 Data Tables and Charts 17 Guide to Data Tables and Charts 50 Methodology and Data Sources 51 Methodology Changes in this Year’s Report 51 Moody’s Definition of Default 51 Rating Migration Calculations 51 Default Rate Calculations 52 Recovery Rate Calculations 53 Credit Loss Rate Calculations 54 CAP Curve and Accuracy Ratio 54 Data Sources 54 Analyst Contacts: New York 1.212.553.1653 Kenneth Emery Senior Vice President Sharon Ou Assistant Vice President - Analyst Jennifer Tennant Analyst Adriana Matos Senior Associate Richard Cantor Managing Director February 2009 Corporate Default and Recovery Rates, 1920-2008 Summary This report comprises Moody's twenty-second annual default study in which we update statistics on the default, loss, and rating transition experience of corporate bond and loan issuers for 2008, as well as for the historical period since 1920. Briefly, we find that:  101 Moody’s-rated corporate issuers defaulted on a total of $238.6 billion of bonds and $42.6 billion of loans in 2008. Including issuers who were not rated as of January 1, 2008, 104 corporate issuers defaulted on $239.8 billion of bonds and $42.8 billion of loans.  The financial industry was the most troubled sector in 2008 as measured by default volume. In that sector, the bankruptcy of Lehman Brothers Holdings, Inc. in September was the largest default in history ($120.2 billion debt).  Across regions, 84 of the 101 defaulters in 2008 were North American issuers (74 in the U.S and 10 in Canada) with defaulted debt volumes totaling $226.2 billion. In Europe, 12 Moody’s-rated corporate issuers defaulted on $53.4 billion of debt. The remaining defaulters were Latin- American and Asian issuers.  Moody’s global speculative-grade default rate ended 2008 at 4.1%, more than quadrupling 2007’s year-end level of 0.9%. The default rate for all Moody’s-rated corporate issuers rose to 1.9% at the end of 2008 from 0.3% at year-end 2007.  Measured on a dollar volume basis, Moody’s global speculative-grade bond default rate ended 2008 at 5.8%, up from 2007’s year-end level of 0.6%. Among all Moody’s-rated issuers, the volume-weighted default rate increased from 0.1% in 2007 to 2.2% in 2008.  Moody’s global speculative-grade default rate forecasting model predicts that the speculative-grade default rate will jump sharply to 16.4% in the fourth quarter of 2009, a level that, if it materializes, would exceed the peaks reached in 1991 and 2001.