Oracle Corporation Bonds: Too Much Good News from the Bond Market

In this note we analyze the current levels and past history of default probabilities for Oracle Corporation (ORCL), and we compare them to the credit spreads on secondary market trading in Oracle Corporation bonds on Friday, June 6, 2014. We compare our results to our earlier analysis of Oracle using data from July 12, 2013. Since our July 2013 report, Oracle CEO Larry Ellison engineered a miraculous come-back win in the America’s Cup yacht race. Just a year earlier, he bought theHawaiian island of Lanai in his spare time.

This would be more than enough for most CEOs, but, since our July report, Oracle’s financial strength has improved significantly in the eyes of financial markets. We review our findings in this report.

Conclusion: First, the default probabilities of the firm are low and they have become much stronger relative to peers since our July 2013 report. Second, traded credit spreads and matched-maturity default probabilities are very low compared to peers in technology, media and telecommunications and to the legacy investment grade peer group. We believe sophisticated analysts would be nearly unanimous in ranking Oracle Corporation as “investment grade” by the modern Dodd-Frank definition.


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The Association of International Wealth Management of India (AIWMI) is a not-for-profit organization and a globally recognized membership association for finance professionals. AIWMI primarily focuses on the broad and strategic role of developing a more robust and forward-looking training infrastructure for the financial services sector and to promote more active industry involvement and collaboration in training and continuing education. AIWMI is offering advanced international certification programs along with a wide variety of high-quality executive education programs. AIWMI programs combine state-of-the-art knowledge and skills with practical experience and insights into the functioning of the financial sector. All AIWMI courses and educational events have an intense and pragmatic curriculum. Participants are exposed to the latest developments within the financial services sector. AIWMI plays a key role in guiding the development of the financial services sector. AIWMI works with key industry participants’ viz. the Government, the Regulators, the Industries/Associations, the Corporate, the Media and the General Public to achieve its objectives. Besides enhancing technical competence and professionalism in the industry, AIWMI organizes events and facilitates discussions to promote best practices in leadership and talent development in the financial sector with an aim to become Asia’s premier center of excellence for financial education.

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