CIEN – Base Case iCDS 105bps, Negative Case iCDS 148bps, 2030 4.000% Bond YTW of 5.965%, iYTW of 5.295%, Ba1 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

February 22, 2024

  • Credit markets are slightly overstating CIEN’s credit risk with a YTW of 5.965% relative to an Intrinsic YTW of 5.295% and an Intrinsic CDS of 105bps. Furthermore, Moody’s is overstating the company’s fundamental credit risk, with its speculative Ba1 credit rating three notches lower than Valens’ IG4+ (Baa1) credit rating.
  • Incentives Dictate Behavior™ analysis highlights mostly negative signals for credit holders. As a positive, management has low change-in-control compensation relative to their average annual compensation indicating that they may not be incentivized to pursue a takeover or accept a sale of the company, decreasing event risk for creditors.
  • Earnings Call Forensics™ highlights management generated an excitement marker when saying they expect to bring finished inventory down to a level more in line with what they’ve experienced historically.

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