May 3, 2018

Valens Credit Weekly Insights for May 2, 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
AVP, BZH, CHK, CYH, DNR, ENDP, JCP, MNI, PKD, SVU

Most Compelling Bond Market Mispricings
AER, AMD, AVP, BZH, CHK, CVI, ENDP, NFX, PKD, UIS

Highlighted Top Ideas
CAR – Avis Budget Group, Inc.
DNR – Denbury Resources Inc.
WU – The Western Union Company

Other Recent Analyses
Consumer Discretionary
RCL – Royal Caribbean Cruises Ltd.

Consumer Staples
UVV – Universal Corporation

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. Recently HY markets have also moved to fairly valued levels, with iCDS converging towards CDS levels. However, the XO market appears mispriced. XO CDS appears to be overstating credit risk, with CDS levels not confirmed by iCDS.  Overall, cost of borrowing have been rising thanks to improving economic activity and the rising risk free rate

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