Chart 7. The title is "The Default Rate on Speculative Bonds Rose Sharply during the First Nine Months of the Year." The combined bar and line chart shows the speculative-grade bond default rate and the ratio of bond rating downgrades to upgrades from 1998 to September 2001.

The speculative-grade bond default rate was 1.7 in 1998, 2.4 in 1989, 4.4 in 1990, 2.9 in 1991, 1.6 in 1992, 0.94 in 1993, 0.87 in 1994, 1 in 1995, 0.65 in 1996, 0.76 in 1997, 1.3 in 1998, 1.8 in 1999, 1.9 in 2000, and 3 in September 2001. The ratio of bond rating downgrades to upgrades was 3 percent in 1988, 6 percent in 1989, 10.5 percent in 1990, 4.8 percent in 1992, 3.5 percent in 1993, 1.9 percent in 1994, 3.3 percent in 1995, 1.6 percent in 1996, 2 percent in 1997, 3.4 percent in 1998, 5.6 percent in 1999, 5.7 percent in 2000, and 9 percent in September 2001. Forecasts are 10 percent for December 2001 and 11 percent for the first half of 2002.