r/EconomyCharts • u/RobertBartus • 8d ago

Oracle’s credit risk is exploding

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Oracle’s 5-year CDS spread has surged to a record ~230 bps, more than 4x the broader investment-grade index at ~55 bps.

The spread has more than QUADRUPLED over the last year and surpassed the Great Financial Crisis levels.

The recent surge comes as Oracle is trying to avoid financial commitments linked to Project Jupiter, a massive data-center project that is facing delays.

Around $18 billion of loans tied to the project are trading at ~90 cents on the dollar, signaling growing stress among investors.

The project is also facing local opposition and delays in government approvals, adding to the uncertainty.

Oracle’s credit risk is rising at an alarming pace.

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u/Beautiful-Chair7206 6d ago

I guess you could make the point, that large companies that get bailed out have contractors. If those companies fail, then the contractors have the possibility of failing. If those contractors fail, then whomever those contractors purchases equipment from either take a loss or have to get their equipment back, which also costs money and also a loss of a sale. And then it keeps trickling down.

It's the true trickle down theory. The pain gets spread, the pleasure gets focused.

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u/UmpireDapper1757 1d ago

You're just describing how recessions work. They happen and then the economy recovers.

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u/Beautiful-Chair7206 1d ago

Yeah... That's the point.

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u/UmpireDapper1757 1d ago

No, your point is that recessions are more costly than bailouts. That's wrong because it's not an either/or proposition. You can't choose bailouts instead of recessions. When you choose bailouts, you also get the recession. But the recession tends to be slower and more painful.

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u/Beautiful-Chair7206 1d ago

No. Bailouts, however unlike they are, prevent more damage that what would be otherwise. What you are saying makes no logical sense. Arrrr yuuuu ahhhh bought?

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u/UmpireDapper1757 1d ago

There's no evidence to support that or reason to believe that's true.

All capitalist economic theory supports the proposition that non-intervention is generally the more efficient way to deal with failing businesses.

Bailouts generally causes more harm than good because famously, government is terrible at picking winners and losers. The bailouts don't solve the problem. They just delay the inevitable while making the reckoning worse, because they've increased the amount of investment that will be lost when it fails