EXIT OF OLD NAVY CEO EQUALS MORE BAD NEWS FOR GAP INC

Gap, Inc. has reported that its credit default swap (CDS), or the insurance on its debt, has increased significantly, according to Fitch Solutions in its latest CDS Case Study Snapshot. The change is due to the exit of Old Navy’s CEO, Stefan Larsson, who will be taking over as CEO in November at Ralph Lauren Corp as previously reported by MR.

Five-year CDS spreads, which reflects the sum investors pay annually to insure Gap, Inc.’s debt, have widened 50 percent over the past week and 94 percent over the month to price at the widest levels in over three years. After pricing consistently in line with ‘BBB’ levels over the course of this year, credit protection for Gap, Inc. is now pricing in below investment grade territory.

As of 10:45am on October 6, Gap, Inc.’s stock is down 0.34 points to $28.74. Gap had traded as high as $43.45 this past March.