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California Power Company has five power plants. A recent wild fire destroyed one power plant, and the company s cash flow has shrunk by 2

California Power Company has five power plants. A recent wild fire destroyed one power plant, and the companys cash flow has shrunk by 20% since the accident. However, its amount of debt is the same as before. How is the credit default swap (CDS) rate of the companys bonds likely to behave after the accident (compared to the CDS rate before the accident)?

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