RBSGC expects that triple-A cards and autos will widen modestly as the war comes to a conclusion and until regulatory matters clear up. Expects HELs will fare better, in spite of OASs. RBSGC also believes that credit sectors and tier-two and three issuers will be in more demand. However, until the economy stops shedding jobs, recommends diligence in these sectors. Says extension risk is becoming a more prominent issue, and prefers credit-impaired collateral that demonstrates less negative convexity. RBSGC likes 5- and 7-yr student loans, and Australian Mortgages and urges investors to look at non-bank Australian lenders for diversification.

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