Sixty-one U.S. companies defaulted on their debt in the first three quarters of 2008, nearly quadruple the number last year. More than half were since late May, according to a report by Standard & Poor's.

Nine U.S. companies defaulted in September, including Lehman Brothers Holdings Inc. and Washington Mutual Inc. Through the first five months of 2008, the year-to-date total was 28, which was already more than the 16 seen all of last year and the 22 from 2006.

The U.S. speculative-grade default rate climbed to 2.68% in September from 2.5% in August and a 25-year low of 0.97% at the end of 2007. The latest estimate is for the rate to climb to 4.9%, but a surge to 8.5% isn't out of the question if economic conditions are worse than expected, said S&P.

The credit rater noted spreads continue to widen and remain at elevated levels, with the investment-grade spread at 3.05 percentage points, compared with 1.69 points a year ago. The speculative-grade spread has surged to 9.19 points from 4.15 points.

The distress ratio, or percentage of high-yield bonds that trade with risk premiums of more than 10 percentage points, was 34% in September, well above the prior year's 3.2% and the highest level since November 2002, when it hit 37%.

Meanwhile, the number of corporate bonds receiving upgrades this year stands at 152, down from 179 a year ago, while downgrades have surged to 426 from 269.

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