Iraqi Bonds Rally for the Surge?

I wonder how Michael Greenstone's model would handle this new data on Iraqi bond prices, which are now rallying. Many people pointed out that his working paper may have bias because of the timing of the credit crunch with the surge itself. He does tries to deal with that by comparing outcomes on other risky securities, to his credit. But this new data suggests some updating downward of expectations about future Iraqi state default, no? Assuming this is causal (which I have no evidence for either way), I do wonder why the effect would be delayed.