Regarding the corporate credit markets, in 2005 problems in the US automobile and airline sectors – both of which are sensitive to the level of oil prices – have created periods of short-lived turbulence in credit markets, including the markets for more complex structured credit instruments.
Looking ahead, a key question in credit markets is the likely timing of the turn of the current very benign credit cycle. The chart on the right in slide 5 shows that the decline in global corporate default rates stabilised at a low level in the first three quarters of 2005 after a very marked decline in 2002-2004.