You will be redirected back to your article in seconds

Disney better risk than U.S. Treasury

Protection against default costs investors less

By at least one measure, the Mouse House is a better credit risk than Uncle Sam.

That measure is the credit default swap (CDS) “spread” — the fee changed by investors who agree to pay the face value of a loan instrument in the event of a default.

If you want to protect yourself against the unlikely event of the U.S. Treasury going bust, it’ll cost you more than the same protection against the apparently less likely demise of Walt Disney Co.

According to Strategas Research Partners, in early October, 17 U.S. corporations had lower CDS spreads than the five-year U.S. Treasury note. The only entertainment name on the list: Walt Disney.

The buyer of Disney default protection would pay the seller 48.2 basis points (0.482%) of the underlying value of the loan every year. Should Disney default over the typical five-year term of the CDS, the buyer of the protection would get the face value of the defaulted loan. It’s called a “swap” because the seller of the protection gets the busted loan and hopes to collect on it eventually.

Buyers of CDS protection on the five-year Treasury note would have to pony up 51.25 basis points.

More Digital

  • Drop Your Assumptions About Asian Streaming

    'Lose All Your Assumptions About Asian Streaming,' Says Iflix CEO Mark Britt

    By at least one measure, the Mouse House is a better credit risk than Uncle Sam. That measure is the credit default swap (CDS) “spread” — the fee changed by investors who agree to pay the face value of a loan instrument in the event of a default. If you want to protect yourself against […]

  • Apple Park Visitor Center sign

    Apple Projected to Spend $4.2 Billion on Original Content by 2022

    By at least one measure, the Mouse House is a better credit risk than Uncle Sam. That measure is the credit default swap (CDS) “spread” — the fee changed by investors who agree to pay the face value of a loan instrument in the event of a default. If you want to protect yourself against […]

  • HBO Snapchat Black Friday

    HBO's Black Friday Buy: A Snapchat Story Telling You to Stream Instead of Shop

    By at least one measure, the Mouse House is a better credit risk than Uncle Sam. That measure is the credit default swap (CDS) “spread” — the fee changed by investors who agree to pay the face value of a loan instrument in the event of a default. If you want to protect yourself against […]

  • 'Star Wars: Battlefront II' Controversy Signals

    'Star Wars' Video Game Microtransactions Ignite Controversy

    By at least one measure, the Mouse House is a better credit risk than Uncle Sam. That measure is the credit default swap (CDS) “spread” — the fee changed by investors who agree to pay the face value of a loan instrument in the event of a default. If you want to protect yourself against […]

More From Our Brands

Access exclusive content