AMKR – CDS 134 BPS, Base Case iCDS 119bps, 2027 6.625% Bond YTW of 2.855%, iYTW of 1.865%, Ba3 (Moody’s), IG4+ (Baa1) Valens Rating, Low Refi Need

• Cash bond markets are overstating credit risk with a YTW of 2.855% relative to an Intrinsic YTW of 1.865%. Meanwhile, Moody’s is materially overstating AMKR’s fundamental credit risk, with its Ba3 credit rating five notches lower than Valens’ IG4+ (Baa1) rating
  
• Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. Management’s compensation metrics should drive management to improve margins and grow the business, potentially leading to ROA expansion. In addition, management members have low change-in-control compensation, indicating they are not well-incentivized to accept a buyout or pursue a sale of the company, reducing event risk
  
• Earnings Call Forensics™ of the firm’s Q3 2020 earnings call (10/26) highlights that management is confident they are well positioned in the industry and that they will grow the business despite smartphone units declining