A short war in Iraq could push ABS spreads wider, but as was the case in 1991, it would likely have little impact on the market in the long term, says Merrill Lynch managing director Dan Castro.

The 1991 Persian Gulf War was the last time the U.S. was involved in a major war while the ABS market was in full bloom. While the U.S. was engaged in a war in Afghanistan beginning late in October of last year, it did not have the same impact on the market as a major war in the Middle East would. Recently, the Pentagon announced plans for a large military buildup around Iraq, including the dispatch of two, and possibly three, aircraft carriers.

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