Kamakura Reports Corporate Credit Quality Improves Slightly in August

HONOLULU, September 1, 2005: Kamakura Corporation reported today that its monthly index of troubled companies in the United States dipped slightly to 13.3% of the public company universe in August, the third monthly decline in a row. The index, which was down from 13.4% in July, had been at 16.0% of the public company universe in both April and May. The Kamakura troubled company index reached its recent low point of 11.1% in April 2004. The index exceeded 30% at the height of the last recession. Kamakura classifies any company with a default probability of more than one percent as troubled.

"The Kamakura troubled company index continues to move in a narrow band that is consistent with good but not great credit quality for publicly listed companies," said Warren Sherman, Kamakura President and Chief Operating Officer. "We expect this to continue in the months ahead, although there will clearly be some firms adversely affected by the persistent rise in oil prices. In August, the number of companies with default probabilities between 1% and 5% increased slightly to 8.0% of the universe in August from 7.9% in July. Companies with default probabilities between 5 and 10% also increased slightly to 2.0% of the universe from 1.9% a month earlier. Companies with default probabilities between 10% and 20% showed the sharpest improvement, dropping to 1.3% of the universe from 1.6% in July. The riskiest firms in the universe, those with default probabilities over 20%, improved 0.1% to 2.0% of the universe in July."

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