Fitch Solutions: EMC Acquisition Sends Dell CDS Wider

NEW YORK--(BUSINESS WIRE)-- Dell Inc.'s announced acquisition of EMC Corporation is igniting market concern as its credit default swap (CDS) spreads in recent days are showing, according to Fitch Ratings in its latest CDS Case Study Snapshot.

Five-year CDS spreads on Dell widened out 17% over the last two trading days last week. This effectively reverses the tightening trend observed in the first half of the week. Dell's CDS are now at their widest levels in a year and a half. Based on current spread levels, the market is pricing Dell's credit risk in 'B' territory.

"The markets appear concerned that Dell will be funding its $67 billion acquisition of EMC by taking out additional debt, which seems to be driving the recent spread widening," said Director Diana Allmendinger.

Fitch Solutions case studies build on data from its CDS Pricing Service and proprietary quantitative models, including CDS Implied Ratings. These credit risk indicators are designed to provide real-time, market-based views of creditworthiness. As such, they can and often do reflect more short term market views on factors such as currencies, seasonal market effects and short-term technical influences. This is in contrast to Fitch Ratings' Issuer Default Ratings (IDRs), which are based on forward-looking fundamental credit analysis over an extended period of time.

Fitch Group is a global leader in financial information services with operations in more than 30 countries. Fitch Group is comprised of: Fitch Ratings, a global leader in credit ratings and research; Fitch Solutions, a leading provider of credit market data, analytical tools and risk services; BMI Research, an independent provider of country risk and industry analysis specializing in emerging and frontier markets; and Fitch Learning, a preeminent training and professional development firm. With dual headquarters in London and New York, Fitch Group is majority owned by Hearst.

View source version on businesswire.com: http://www.businesswire.com/news/home/20151012006111/en/

Fitch Solutions
Diana Allmendinger, +1-212-908-0848
Director
Fitch Solutions
33 Whitehall Street
New York, NY 10004
or
Media Relations:
Sandro Scenga, +1-212-908-0278
New York
[email protected]

Source: Fitch Solutions

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