We do not believe event risk will lead to significant underperformance by credit in 2006. For that to happen, either a domino effect would need to occur, with a greater portion of the market hit by such events; or a contagion effect, whereby investors become risk averse. In our view, neither of these scenarios is likely for 2006.
Event risk has risen, but we do not expect investors to demand much higher spreads as compensation. Aft