Merrill Lynch Announces Changes to Global Bond Index Rules

Country of risk will replace country of legal domicile as the soledeterminant of constituent qualification relating to all geographicfilters. This rule change results in 14 bonds moving from the highyield to the emerging markets index series. In addition, 10 bonds dropout of the high grade corporate indices, though they do not re-appearin the emerging markets index as it excludes investment grade rateddebt. No bonds would move from emerging markets indices into eitherthe high grade or high yield indices. This change also affects theselection of securities for various regional indices such as theEuropean Issuers High Yield Index and the Canadian Issuers High YieldIndex.
CMBS will be added to the U.S. and Global Broad Market Indices

USD-denominated commercial mortgage backed securities (CMBS) willbe added to the U.S. Broad Market and Global Broad Market Indices andtheir respective parent and sub-indices. Based on current information,3,102 newly qualifying CMBS, having a total market value of $374billion, will give the sector a 4.2% share of the U.S. Broad MarketIndex and a 1.7% of the Global Broad Market Index.

In order to qualify for inclusion, CMBS must have an original dealsize of at least $250 million, and the current amount outstanding fora collateral group must be at least 10% of the original deal size. Inaddition, individual senior tranches must have a current amountoutstanding of at least $50 million, and individual mezzanine andsubordinated tranches must have a current amount outstanding of atleast $25 million. Each qualifying tranche must have a compositerating (based on an average of Moody's, S&P and Fitch) of at leastBBB3. Agency deals and re-securitized deals are excluded from theindex in their entirety, along with IO, floater and inverse floatertranches of all deals. 144a securities are included.

For all large cap indices, the minimum deal size requirements forCMBS will be $500 million. In addition, minimum large cap tranche sizerequirements will be $100 million for all senior tranches and $25million for all mezzanine and subordinated tranches.
144a securities will be added to the U.S. Asset Backed Securities
Indices

144a securities will qualify for inclusion in the U.S. Fixed andFloating Rate Asset Backed Securities Indices and their respectiveparent and sub-indices. The inclusion of 144a securities will bring anadditional 75 tranches, having a total market value of $6.6 billion,into the Fixed Rate Asset Backed Securities Index (R0A0). Likewise, itwill add 191 tranches, having a total market value of $28.8 billion,to the Floating Rate Asset Backed Securities Index (R0F0). Theinclusion of these securities will not significantly alter the riskcharacteristics of either Index.
New Selection Criteria for U.S. Large Cap Asset Backed Securities
Indices

The minimum deal size requirements for USD asset backed securities(ABS) in all Large Cap Indices will be increased from $250 million to$500 million. In addition, minimum ABS large cap tranche sizerequirements for all mezzanine and subordinated tranches will belowered from $100 million to $25 million. Minimum tranche sizerequirements for large cap ABS senior tranches will remain unchangedat $100 million. The new size filters will result in the removal of 47senior and 3 mezzanine/subordinated tranches having total marketvalues of $8.3 billion and $1.1 billion, respectively. Conversely, thedecrease in the mezzanine/subordinated tranche size filters willresult in the addition of 196 tranches having a total market value of$8.2 billion.
The Sterling Corporate Index will be renamed the Sterling
Corporate & Collateralized Securities Index

The Sterling Corporate Index (ticker UC00) will be renamed theSterling Corporate & Collateralized Securities Index. The newly namedindex will continue to be referenced under the ticker UC00. Thepurpose of this name change is to reflect the fact that collateralizedsecurities have always qualified for, and been included in, the index.Concurrent with the name change, we will introduce two new sub-indicesof UC00: the Sterling Corporate Index (ticker UR00); and the SterlingCollateralized Securities Index (ticker UL00).

The full spectrum of Merrill Lynch's entire compliment of over3,000 global bond indices is available on a wide variety ofdistribution platforms, including the Merrill Lynch Global IndexSystem which can be accessed on Bloomberg (IND) or the MerrillLynch Index website at www.mlindex.ml.com (public website) orww.mlx.ml.com (institutional client website).

Merrill Lynch's Global Fixed Income Research team is part of thefirm's Global Securities Research and Economics Department, which hasmore than 700 analysts, economists and strategists.

Merrill Lynch is one of the world's leading financial managementand advisory companies, with offices in 36 countries and territoriesand total client assets of approximately $1.6 trillion. As aninvestment bank, it is a leading global underwriter of debt and equitysecurities and strategic advisor to corporations, governments,institutions, and individuals worldwide. Through Merrill LynchInvestment Managers, the company is one of the world's largestmanagers of financial assets. Firmwide, assets under management total$478 billion. For more information on Merrill Lynch, please visitwww.ml.com.