Not one single Asian company rated by Standard & Poor's has defaulted on its debt in the past couple of years according to a new study, which underscores the improvement in the credit sector since the Asian financial crisis. The study, the first by the ratings agency for Asia ex-Japan, shows a marked improvement in default rates from 7.2 per cent in 1998 and notes that the portion of investment grade companies - those considered to be least risky - increased to 51.5 per cent last year from 31.7 per cent in 1999. However, the past 12 months saw a lot more high-yield companies seeking first-time ratings and issuing debt, which suggested the curve might start to head higher again a few years down the road, Standard & Poor's Ratings Services said yesterday. New issuers include China-based Panva Gas, Chaoda Modern Agriculture and Asia Aluminum, which have all sold inaugural bond issues in the international market in the past eight months. 'There is a distinct correlation between the ratio of non-investment grade [issuers] to total ratings and the default ratio,' said John Bailey, managing director of S&P's corporate and government ratings group. 'The still sizeable amount of non-investment grade companies among the new ratings is an indication that we will start to see the default rate move up - not in 2005 because there is a time lag, but maybe in three to four years.' Investment grade issuer ratings made up 67.6 per cent of Asia's total credit ratings in 1996, suggesting the region has some way to go to return to the credit quality seen prior to the financial crisis. However, the small sample size of 439 issuers means these numbers fluctuate much more than they do globally. A default rate of zero per cent was not sustainable long term and is probably an indication that the market is not yet mature. Globally, the default ratio has fluctuated between 0.69 and 3.5 per cent.