It would appear that the almost $1bn capital raise secondary that JCPenney successfully completed last week - inspite of the lies - has done absolutely nothing to resolve market fears as JCP 5Y CDS surges 80bps to 1280bps (equivalent), a record high (and 1Y protection at 1210bps) and the stock price falls another 3.6% to $8.40 - the lowest since 1982. Just as Goldman had warned [5], liquidity remains a major concern and anyone who had bought the protection made up their losses on the stock they bought from Goldman on the secondary. The credit markets imply around a 25% chance of default within the year and 70% within 5 years.
[6]
