Liquid financial markets, downgrades in the auto and airline sectors, a spate of takeovers and global competition have contributed to the credit quality erosion, the rating agency said in two reports.
"An aggressive financial posture is necessary for survival in a stiff globally competitive environment," S&P said. "The same dynamics are unfolding in Europe, albeit at a slower pace."
As of September, junk, or speculative-rated issuers, defined as those rated "BB-plus" or below, stood at a record high of 49 percent, up from 48 percent at the end of 2005 and a low of 28 percent in 1992, S&P said.
Downgrades and mergers have taken an even higher toll on U.S. nonfinancial, or industrial companies, with 61 percent carrying junk ratings.
In Europe, where investors are less receptive to high-yield issuers, just 17 percent of all borrowers are rated junk.
While U.S. junk ratings have climbed, the number of top "AAA" ratings has dropped to 18 from a peak of 24 in 1998, S&P said.
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