NEW YORK--(BUSINESS WIRE)--RadioShack Corporation's increasingly precarious financial standing is reflecting in its credit default swap (CDS) spreads, now trading at their widest-ever levels, according to the latest CDS case study from Fitch Solutions.
Five-year CDS on RadioShack have widened 70% over the past month, with much of the widening happening over the past week. 'Markets appear increasingly concerned over RadioShack's weak sales, which is likely why CDS has come out so significantly in such a short period of time,' said Director Diana Allmendinger.
Further evidence of RadioShack's struggles is in its dwindling CDS liquidity. After trading within the top tenth global percentile through March of this year, CDS on RadioShack are now trading in the 65th percentile. 'The drop in RadioShack's CDS liquidity is likely indicative of trader apprehension to enter into positions at such wide spread levels,' said 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.
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