> The cost of insuring Oracle Corp.’s debt against default over the next five years rose to 1.25 percentage point a year on Tuesday
This implies a 10% chance Oracle defaults in the next 5 years [1]. (2% would imply 15%. 5-year CDSs approach 50% default probability around an 8.5% spread.)
[1] 1 - e ^[(-1.25% x 5 years) / (1 - 40% recovery)]
> The cost of insuring Oracle Corp.’s debt against default over the next five years rose to 1.25 percentage point a year on Tuesday
This implies a 10% chance Oracle defaults in the next 5 years [1]. (2% would imply 15%. 5-year CDSs approach 50% default probability around an 8.5% spread.)
[1] 1 - e ^[(-1.25% x 5 years) / (1 - 40% recovery)]
whod want to buy Oracle?...the profitable bits, that is.