Oracle Corp (NYSE:ORCL) five-year credit default swaps remain elevated after surging past 160 basis points this year, their highest reading since the 2008 financial crisis.

The company carries over $100 billion in debt to fund its AI buildout.

Billionaire Chamath Palihapitiya posted the chart with a one-word reaction: “Gulp.”

Steve Eisman disagrees. “I don’t think Oracle is going bankrupt,” the Big Short investor said on the Prof G Markets podcast this week.

The CDS market is “extremely illiquid,” he said. A single hedge fund can blow out spreads without much volume.

Eisman also dismissed the Iran conflict as a long-term market risk, saying it changes his investment thesis “not by a single dollar.”

He acknowledged the war may last longer than markets initially expected because the Iranian regime is “essentially a death cult” but said oil prices will likely settle within weeks regardless.

What Actually Worries Him

Instead, Eisman pointed to a different risk: Private equity firms, including KKR & Co Inc (NYSE:KKR), have spent the past decade buying life insurance companies, then directing those insurers to invest in credit paper the PE firms themselves generate.

On top of that, he says they’ve reinsured parts of their books not to independent third parties but to their own offshore subsidiaries.

Eisman called the transactions “very, very opaque” and said they “appear to pretty dramatically increase the leverage.”

On his own podcast, Eisman and forensic accountant Tom Gober went deeper.

Gober claimed one insurer had $7 billion in liabilities backed by roughly $200 million in real assets. “The only thing I can guarantee,” Eisman said, “is that it’s a hell of a lot more levered than it looks.”

Unlike in 2008, when Eisman could track every subprime securitization through monthly data from Moody’s and S&P for about $10,000 a year, private credit offers no equivalent. “There’s no data,” he said.

Blue Owl At The Center

Blue Owl Capital Inc (NYSE:OWL) halted quarterly redemptions in its retail fund last month and liquidated $1.4 billion in assets. The stock is down over 38% year-to-date.

Over 70% of its loan book is in software, the same sector where AI disruption fears have hammered public SaaS names like Salesforce and ServiceNow.

Blue Owl CEO Craig Packer has called the headlines a “complete mischaracterization,” noting the firm sold $1.4 billion in loans at 99.7 cents on the dollar.

If sophisticated institutional buyers are paying near par, the underlying credit quality may not be as bad as the stock price suggests.

What Prediction Markets Say

Polymarket’s “US recession by end of 2026” contract prices roughly 32% odds, up sharply from February.

CEO Jamie Dimon sparked a firestorm by comparing recent credit bankruptcies to seeing a “cockroach,” suggesting that where one default appears, many more remain hidden.

Eisman said replicating his 2008 trade today would be “very, very difficult.” The obvious remaining trade is shorting Blue Owl, TPG Inc (NASDAQ:TPG) and KKR, “but those stocks have gotten obliterated.”

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