When - not if - the cycle turns

Credit quality is resilient at the moment, but recent shocks, such as the US subprime debacle, highlight the need for prudence

Clearly, and in spite of the turmoil caused by events such as the downgrades of bellwether credits in the auto sector and the more recent worries about the US mortgage market, conditions in recent years have been very benign for the CDO market, allowing for the development and promotion of increasingly aggressive structures. But many more cautious investors are already looking ahead to the likely deterioration in credit quality that will be an inevitable by-product of the end of the current