AMCX – Base Case iCDS 590bps, Negative Case iCDS 670bps, 2029 4.250% Bond YTW of 11.270%, iYTW of 9.865%, B2 Rating from Moody’s, XO (equivalent to Baa3) Rating from Valens, Moderate Refinancing Need
March 11, 2025
- Credit markets are overstating AMCX’s credit risk with a YTW of 11.270% relative to an Intrinsic YTW of 9.865% and an Intrinsic CDS of 590bps. Furthermore, Moody’s is materially overstating AMCX’s fundamental credit risk with its B2 credit rating five notches below Valens’ XO (Baa3) credit rating.
- Incentives Dictate Behavior™ analysis highlights mostly positive signals for credit holders. Management’s compensation metrics should drive them 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. In addition, most management members have 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
- Earnings Call Forensics™ of the firm’s Q4 2024 earnings call (02/14/2025) highlights that management generated an excitement marker when saying they are able to distribute product requiring less marketing effort through partnerships and they are confident their partnership activity continued in Q4.
