The cost for insurance against a J.C. Penney default has shot back to near record-high levels during the last week. With about $2.6 billion in bonds outstanding, the company has a "CCC+" credit rating from Standard & Poor's, reflecting a substantial risk in owning its debt.
The company's benchmark five-year credit default swap contract price surged by more than 13 percent on Wednesday, according to Markit data. The cost to insure $10 million of Penney bonds against a default for five years now requires an upfront payment of about $2.2 million plus quarterly payments of about $300,000 for the duration of the contract. The contract's pricing reflects a default probability of nearly 65 percent.
time to run-away.