OREANDA-NEWS. Dell Inc.'s announced acquisition of EMC Corporation is igniting market concern as its credit default swap (CDS) spreads in recent days are showing, according to Fitch Ratings in its latest CDS Case Study Snapshot.

Five-year CDS spreads on Dell widened out 17% over the last two trading days last week. This effectively reverses the tightening trend observed in the first half of the week. Dell's CDS are now at their widest levels in a year and a half. Based on current spread levels, the market is pricing Dell's credit risk in 'B' territory.

'The markets appear concerned that Dell will be funding its $67 billion acquisition of EMC by taking out additional debt, which seems to be driving the recent spread widening,' said Director Diana 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.