AMCX – Base Case iCDS 566bps, Negative Case iCDS 670bps, 2029 4.250% Bond YTW of 12.803%, iYTW of 10.157%, B1 Rating from Moody’s, XO (equivalent to Ba1) Rating from Valens, Low Refinancing Need

May 14, 2024

  • Credit markets are grossly overstating AMCX’s credit risk with a YTW of 12.803% relative to an Intrinsic YTW of 10.157% and an Intrinsic CDS of 566bps. Furthermore, Moody’s is materially overstating AMCX’s fundamental credit risk with its B1 credit rating three notches below Valens’ XO (Ba1) credit rating.
  • Incentives Dictate Behavior™ analysis highlights mostly positive signals for credit holders. Management’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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