BA – Base Case CDS 116bps, Base Case iCDS 14bps, Negative Case iCDS 26bps, 2028 3.250% Bond YTW of 4.977%, iYTW of 3.580%, Baa2 Rating from Moody’s, IG4 (equivalent to Baa2) Rating from Valens, Low Refinancing Need
May 3, 2023
- Credit markets are overstating BA’s credit risk with a YTW of 4.977% and a CDS of 116bps relative to an Intrinsic YTW of 3.580% and an Intrinsic CDS of 14bps.
- Incentives Dictate Behavior™ analysis highlights mostly positive signals for credit holders. Management’s compensation framework 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.
