Financial institutions have enjoyed the benefits of low margins on bonds, asset-backed securities and other debt issues this year, but they should recognise that the global credit market is fragile and vulnerable to new shocks.Citi's global head of credit products strategy, Matt King, told delegates at the group's investment conference in Sydney yesterday that risk margins could go up again.King said: "We don't yet have a recipe for long-term stability. Things have picked up, but we are in a stimulus-induced environment. It is fragile."King was most concerned about the situation in Europe, where bad debts continue to rise in countries like Italy and Spain. He likened the situation to Japan in the 1990s, where because banks were reluctant to write off their bad debts and start again stagnation took hold."If you don't write it off you don't get recovery. We think Europe is in that situation," he said.Another factor contributing to ongoing instability was the high level of leverage in Europe and the United States. "All the de-leveraging we have done in the private sector has been offset by growth in leverage in the public sector. And it is taking more and more credit growth to generate less and less GDP growth."Things look stable, but if you give it a nudge it looks more risky.