AMKR – Traded CDS 193bps, Base Case iCDS 107bps, Negative Case iCDS 153bps, 2027 6.625% Bond YTW of 3.885%, iYTW of 2.675%, Ba3 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

February 11, 2022

  • Credit markets are overstating credit risk with a YTW of 3.885% and a CDS of 193bps relative to an Intrinsic YTW of 2.675% and an Intrinsic CDS of 107bps. 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 them to improve margins and grow the business, potentially leading to Uniform 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 2021 earnings call (10/25) highlights that management is confident they are using their strong financial position to sustain dividend and revenue growth.

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