CIEN – Base Case iCDS 89bps, Negative Case iCDS 122bps, 2030 4.000% Bond YTW of 5.820%, iYTW of 4.990%, Ba1 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need
March 31, 2025
- Credit markets are overstating CIEN’s credit risk with a YTW of 5.820% relative to an Intrinsic YTW of 4.990% and an Intrinsic CDS of 89bps. 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.
- Earning Call Forensics™ of the firm’s Q1 2025 earnings call (03/11/2025) highlights that management is confident customers are investing heavily to scale networks including their MOFN solutions with cloud providers and that the positive service provider spending trend will continue moving forward.
