Morgan Stanley: Oracle's 5-year CDS rises to 260bps, chip leasing SPVs expected to become the new vehicle for AI financing.

According to Chaoxiang Research, a Morgan Stanley research report dated October 7, 2026, indicates that Oracle's 10-year USD bond yield has reached 7.5%, while its 5-year credit default swap (CDS) has risen from 57 basis points to 260 basis points. The Wall Street Journal reported that Oracle may be purchasing chips through a third-party entity and leasing them back, though the scale remains undisclosed and the loan-to-cost ratio exceeds 50%. Morgan Stanley considers this structure highly consistent with its long-term hypothesized framework for a chip-leasing SPV, under which the credit exposure is booked as debt on the balance sheet and incorporated into the parent company's adjusted leverage assessment. Morgan Stanley judges that the bond market's reaction is primarily driven by investors' capacity to absorb the broader chip financing wave, with Oracle's individual transaction playing a secondary role. From a trading perspective, the firm recommends buying Oracle's 5-year CDS and selling the 2035 and 2055 maturing bonds, positioning for a deterioration in Oracle's credit profile.