Standard & Poor’s says the global corporate default rate for speculative-grade and investment-grade rated entities fell to 0.57% at the end of the first quarter 2005 from 0.69% for full-year 2004.

“The global speculative-grade default rate (1.47% for the 12 months ended March 31, 2005) has remained below the long-term (1981-2004) average of 4.91% for 16 consecutive months, but is still above the record low of 1.3% posted in the second quarter of 1997,” Diane Vazza, head of Standard & Poor’s Global Fixed Income research Group, said in a report released Wednesday.

“The total number of defaults in the first quarter (five) was the lowest in any quarter since the fourth quarter of 1997, but the global default rate is expected to edge up slowly from its trough in the remainder of 2005,” she added.

S&P’s default forecast model indicates that U.S. speculative-grade default rates will decline slightly from their first-quarter low (1.9%) but then turn around in the latter part of 2005. Although it notes that concerns remain for a more material increase in defaults in 2006 and beyond.

Expectations for economic strength, financing conditions, and corporate profitability in 2005 are still favorable, S&P adds, albeit lower than the growth rates posted in 2004.