BA – Traded CDS 138bps, Base Case iCDS 15bps, Negative Case iCDS 30bps, 2026 2.250% Bond YTW of 4.475%, iYTW of 3.135%, Baa2 Rating from Moody’s, IG4 (equivalent to Baa2) Rating from Valens, Low Refinancing Need
- Credit markets are overstating BA’s credit risk with a YTW of 4.475% and CDS of 138bps, relative to an Intrinsic YTW of 3.135% and Intrinsic CDS of 15bps.
- Incentives Dictate Behavior™ analysis highlights mostly favorable signals for credit holders. Management’s compensation metrics should drive them to focus on expanding revenues and margins, which could lead to Uniform ROA expansion. Moreover, the cash flow metrics will also improve asset utilization since it will drive management to focus on managing spending for inventories, working capital, and capex which will improve asset utilization. Furthermore, the safety metrics should drive higher asset utilization through less employee and operational downtime.