http://www.bloomberg.com/news/articles/2015-02-19/sears-turnaround-seen-failing-by-traders-in-credit-swaps-market
Here is a snippet from that piece:
Billionaire Eddie Lampert’s quest to revive Sears Holdings Corp. is looking dubious to credit-swaps traders.
It now costs more to insure against a Sears default for a year than for five years, a dynamic that indicates traders anticipate a credit event such as a default in the near term. The relationship was reversed as recently as last month, according to prices compiled by CMA in the privately negotiated market for credit swaps.
The 129-year-old company, which has lost $7 billion over the past four years, is trying to avoid the fate of RadioShack Corp., another once-iconic retailer that filed for bankruptcy protection this month. Sears has divested assets and received cash infusions from Lampert, one of its largest shareholders. In November, the Hoffman Estates, Illinois-based company said it was considering the sale and leaseback of as many as 300 stores as part of its turnaround effort.
Sears has to regain its footing. If they can do that by stopping the bleeding they buy time. Their options for buying time are running out however so I have to agree with the traders here.
Happy Reading,
J.W. Gant
It now costs more to insure against a Sears default for a year than for five years, a dynamic that indicates traders anticipate a credit event such as a default in the near term. The relationship was reversed as recently as last month, according to prices compiled by CMA in the privately negotiated market for credit swaps.
The 129-year-old company, which has lost $7 billion over the past four years, is trying to avoid the fate of RadioShack Corp., another once-iconic retailer that filed for bankruptcy protection this month. Sears has divested assets and received cash infusions from Lampert, one of its largest shareholders. In November, the Hoffman Estates, Illinois-based company said it was considering the sale and leaseback of as many as 300 stores as part of its turnaround effort.
Sears has to regain its footing. If they can do that by stopping the bleeding they buy time. Their options for buying time are running out however so I have to agree with the traders here.
Happy Reading,
J.W. Gant
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