The cost of protecting AMD’s debt from default has spiked this month. Contracts on AMD’s bonds jumped to 39.3 percent, from 14.5 percent on Sept. 1, CMA Datavision prices show.
This is the financial crisis we’re facing. No one trusts anyone, so no one is willing to lend money to anyone. I didn’t know this before the current crisis exploded: the economy runs on commercial paper (companies/banks lending money to each other). When commercial paper becomes prohibitively-expensive or unavailable, an otherwise healthy surviving company like AMD can find itself in dire straits in a matter of weeks.
AMD was lucky to find an investor. Other companies won’t be so lucky.