CCS – No Traded CDS, Base Case iCDS 200bps, Negative Case iCDS 276bps, 2027 6.750% Bond YTW of 4.019%, iYTW of 2.879%, B1 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

April 12, 2021

  • Credit markets are overstating CCS’s credit risk with a YTW of 4.019%, relative to an Intrinsic YTW of 2.879% and an Intrinsic CDS of 200bps. Meanwhile, Moody’s is materially overstating the firm’s fundamental credit risk, with its speculative B1 credit rating six notches lower than Valens’ IG4+ (Baa1) credit rating
  • Incentives Dictate Behavior™ analysis highlights that CCS’s management compensation framework is mostly negative for credit holders. That said, management’s compensation framework should drive them to focus primarily on top-line growth and margin expansion, leading to potential Uniform ROA improvement
  • Earnings Call Forensics™ of the firm’s Q4 2020 earnings call (2/4) highlights that management is confident 2020 pretax income is the highest in firm history