Companies that do not have an investment-grade rating are defaulting on their bonds at the lowest rate in almost a quarter of a century.

Standard & Poor's, the rating agency, is predicting that the annual default rate among firms rated non-investment grade will fall to 1.6% globally this year, its lowest level since 1981. That year, the rate of defaults was 0.63%. S&P based its 2004 estimate on the 0.8% default rate during the first half of the year.