I have a P0420 code on my 2006 Scion tC. Could it be possible the catalytic converter would be bad?

But not affect performance? When I took it for an inspection several months ago, everything ped except it said they could get get a reading either way on the rear O2 sensor, but, in the balance of things, I ped the inspection. I guess common sense tells me its the O2 sensor that is throwing that code and making the check engine light come on, but I was just preparing for the worst, so to speak. Any chance it could be the catalytic converter? Thats an arm and a leg to replace, I'm sure. This car is a 2006 with 135000 miles and has been a champ, great reliability. Still runs great!