Standard & Poor's released its 2008 Australia and New Zealand corporate default and ratings transition study last week. S&P noted that the Australia and New Zealand rated corporate pool suffered its highest downgrade to upgrade ratio for five years, at 2.57 times. To put that in context though, the ratio hit 4.60 times in 2002 after rising to 2.11 times in 2001, this being the time of our last economic 'slowdown', as S&P put it. The ratio hit a peak of more than 12 times in the previous economic slowdown of 1997/99.Given that we are now in an economic recession, this suggests that the downgrade to upgrade ratio will be a lot worse in 2009 and possibly 2010.  S&P also noted that there was only one default recorded last year, this being by Babcock & Brown International. There was also one default recorded in 2007 and 2006, these being by New Zealand companies Geneva Finance, and Linsa Insurance, respectively.The relatively benign performance of the Australian and New Zealand rating pool needs to be viewed in the context that it is composed of a relatively small number of corporates that hold credit ratings and the ratings are almost exclusively investment grade.Given this, it may be useful to look at the credit quality (or ratings performance) of a broader pool of borrowers of interest to the domestic corporate bond market. Reviewing the negative rating actions (in this case defined as rating downgrades as well as reviews for possible downgrade and negative outlook revisions) that we have covered here, the chart below shows that the actions have largely marked the low points in the financial markets. The exception is December 2008 when there was a rush of actions from the rating agencies. Rating actions for corporate groups were counted only once while rating actions by more than one rating agency were counted separately. Positive rating actions were few and far between.The marked decline in rating actions in April suggests that global financial crisis driven rating actions may have largely passed, if one takes the view that we have seen the worst of the GFC. However, it will be the global recession that will drive rating actions from here.