WASHINGTON - The amount of tax-exempt debt that went into default in 2008 spiked to record levels equaling about 2% of the year's total dollar amount of new issuance, and 2009 is on track for another high level of defaults, according to market participants who track them.

Though the bulk of the debt was issued on behalf of corporations that sell debt in the municipal market through conduit issuers or special taxing districts, the trend has not escaped the notice of Securities and Exchange Commission chairman Mary Schapiro, who highlighted it in a speech last week in which she said improvements to the muni market are a high priority for the SEC.

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