Courtesy of ZeroHedge. View original post here.
Following Valeant's confirmation that it had received a Federal subpoena, most eyes are on the stock's inexorable decline. However, it is the bond market that not only started showing concerns earlier but is now spiking to record credit risk highs. At a cost of 515bps to protect against a Valeant default, based on market-standard recovery rates, the CDS market implies a 36% chance of default for the former Biotech darling.
Of course, given Bill Ackman's huge positions, we couldn't help but find it ironic if Valeant goes Chapter 11 before Herbalife.
Chart: Bloomberg
