Oracle's Credit Default Swaps Surge Past 160 Basis Points
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 23 hours ago
0mins
Should l Buy ORCL?
Source: Benzinga
- Rising Credit Risk: Oracle's five-year credit default swaps (CDS) have surged past 160 basis points this year, marking the highest level since the 2008 financial crisis, which raises concerns about its over $100 billion debt and could impact its financing capabilities and investor confidence.
- Liquidity Issues: Investor Steve Eisman highlighted that the CDS market is “extremely illiquid,” where a single hedge fund's trades can cause significant spread fluctuations, complicating the market's assessment of Oracle's credit risk.
- Transparency Concerns: Eisman noted that Oracle's reinsurance transactions through its offshore subsidiaries are “very opaque,” which may dramatically increase the company's leverage, further intensifying market worries about its financial health.
- Industry Impact: Over 70% of Blue Owl's loan book is concentrated in the software sector, and while fears of AI disruption have affected public SaaS stocks, CEO Craig Packer stated that the recent sale of $1.4 billion in loans at 99.7 cents on the dollar suggests that the underlying credit quality may not be as poor as the market perceives.
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Analyst Views on ORCL
Wall Street analysts forecast ORCL stock price to rise
34 Analyst Rating
25 Buy
9 Hold
0 Sell
Moderate Buy
Current: 151.560
Low
180.00
Averages
309.59
High
400.00
Current: 151.560
Low
180.00
Averages
309.59
High
400.00
About ORCL
Oracle Corporation offers integrated suites of applications plus secure, autonomous infrastructure in the Oracle Cloud. The Company operates through three businesses: cloud and license, hardware and service. Its cloud and license business is engaged in the sale, marketing and delivery of its enterprise applications and infrastructure technologies through cloud and on-premise deployment models including its cloud services and license support offerings, and its cloud license and on-premise license offerings. Its hardware business provides infrastructure technologies including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware-related software to support diverse IT environments. Its services business provides services to customers and partners to help maximize the performance of their investments in Oracle applications and infrastructure technologies.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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