(Read more on the debt and equitymarkets.)

NEW YORK CITY-Through the end of June, Ernst & Youngcollected information from a group of more than 285 private equityfund sponsors. Asked what keeps them up at night, the majority ofrespondents cited the ability to find and deploy capital in assetsthat will meet their return expectations. Then the credit crunchcame knocking.

A follow-up straw poll to a number of respondents this summerproduced slightly different results. The ability to find and deploycapital was still a concern, but what mostly keeps fund sponsors upat night now is the fear of an economic recession and the impact offundamentals. “Why?” Mike Syers, partner in Ernst & Young's NewYork City office, asked at the firm's release of its Real EstatePrivate Equity Funds: Market Outlook. “We've had weak job reports,although the latest one was not as bad as expected, and housevalues are falling.”