AMKR – CDS 192bps, Base Case iCDS 127bps, Negative Case iCDS 208bps, 2027 6.625% Bond YTW of 7.146%, iYTW of 5.226%, Ba3 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

March 20, 2023

  • Cash bond markets are materially overstating credit risk with a YTW of 7.146% relative to an Intrinsic YTW of 5.226%, while CDS markets are overstating credit risk with a CDS of 192bps relative to an Intrinsic CDS of 127bps. 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. While most management members are not material owners of AMKR’s equity relative to their annual compensation, CEO Rutten’s significant holdings indicate he may influence other NEOs to align with shareholders and pursue long-term value creation for the firm. Moreover, management members have low change-in-control compensation relative to their annual compensation, indicating they are unlikely to pursue a takeover or accept a sale of the company, decreasing event risk for creditors.
  • Earnings Call Forensics™ of AMKR’s Q4 2022 (02/13/2022) call highlights that management is confident they will continue to invest into increasing the capability of their test services and that they are well positioned to outgrow the market.

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