[Meta and Broadcom's Credit Default Swap Costs Rise to High Levels]
According to Jin10 Data, the five-year CDS for Meta and Broadcom has risen to approximately 90 basis points, while Nvidia, Amazon, and Alphabet have climbed to around 65–70 basis points, all reaching recent record highs. At 90 basis points, purchasing one year of protection for $10 million in debt would cost approximately $90,000. Oracle's five-year CDS has increased from 144 basis points at the beginning of the year to 215 basis points. High-computing-power companies are expected to reach approximately $875 billion in capital expenditures this year, with Alphabet and Oracle recently turning negative in free cash flow. The bond market is raising risk premiums to compensate for uncertainties in AI financing.
