April 12, 2018

Valens Credit Weekly Insights for April 11, 2018


Credit and Market Mispricings

Most Compelling Credit v Equity Market Mispricings
AVP, CYH, MNI, NAV, UIS

Most Compelling Credit Rating Dislocations
AMD, BLDR, EXPE, JCP, MNI, PKD, R, UIS, X, YRCW

Most Compelling CDS Market Mispricings
BZH, CHK, CVI, CYH, DNR, JCP, MNI, PKD, SVU, YRCW

Most Compelling Bond Market Mispricings
AER,  AMD,  AVP,  BLD R,  CHK,  CVI,  ENDP,  JCP,  NFX,  PKD

Highlighted Top Ideas
AER– AerCap Holdings N.V.
CHK – Chesapeake Energy Corporation
NFX – Newfield Exploration Company

Other Recent Analyses
Healthcare
ENDP – Endo International plc

Industrials
OC
– Owens Corning

Quantitative Credit Outlier Report Review
CYH tops our quantitative outlier report this week.

Aggregate Credit Market and Credit Fundamental Review
IG markets are currently fairly valued. However, XO and HY markets appear mispriced in opposite directions. XO CDS appears to be overstating credit risk, with CDS levels not confirmed by iCDS. On the other hand, tight HY CDS spreads have not been confirmed by HY iCDS, signaling HY credit risk is being understated by the credit markets.  Overall, cost of borrowing have been rising thanks to improving economic activity and the rising risk free rate

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