Figure on default rate on outstanding corporate bonds, 1992-2006. Data are plotted as a curve. The default rate is about 1 percent in the beginning of 1992, falls to near zero in the middle of that year, and then fluctuates at low levels well below 1 percent through 1998. The default rate generally begins to rise in 1999, reaching a peak of nearly 4 percent in 2002, and then generally falls back to near zero by 2004. It then rises and falls several times in 2005, peaking at just over 1 percent in late 2005, and falls to near zero by the middle of 2006. It remained near zero for the remainder of 2006.

Note: The data are monthly and extend through December 2006. The rate for a given month is the face value of the bonds that defaulted in the six months ending in that month, multiplied by two to annualize the defaults, and then divided by the face value of all bonds outstanding at the end of the calendar quarter immediately preceding the six-month period. Source: Moody's Investors Service.