AMCX – Base Case iCDS 458bps, Negative Case iCDS 513bps, 2029 4.250% Bond YTW of 12.652%, iYTW of 8.879%, B1 Rating from Moody’s, XO (equivalent to Baa3) Rating from Valens, Low Refinancing Need

February 20, 2024

  • Credit markets are grossly overstating AMCX’s credit risk with a YTW of 12.652% relative to an Intrinsic YTW of 8.879% and an Intrinsic CDS of 458bps. Furthermore, Moody’s is materially overstating AMCX’s fundamental credit risk with its B1 credit rating four notches below Valens’ XO (Baa3) credit rating.
  • Incentives Dictate Behavior™ analysis highlights mostly positive signals for credit holders. AMCX’s compensation metrics should drive management to focus on all three value drivers: margin expansion, asset efficiency, and top-line growth, which should lead to Uniform ROA expansion and increased cash flows available for servicing obligations. Additionally, management has low change-in-control compensation relative to their annual compensation, indicating they may not be incentivized to pursue a takeover or accept a sale of the company, decreasing event risk for creditors.

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