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DISH – CDS 460bps, Base Case iCDS 123bps, Negative Case iCDS 167bps, 2026 7.750% Bond YTW of 5.590%, iYTW of 1.730%, B1 Rating from Moody’s, XO (equivalent to Baa3) Rating from Valens, High Refinancing Need

January 26, 2021

  • Credit markets are grossly overstating credit risk, with a CDS of 460bps and a bond YTW of 5.590% relative to an Intrinsic CDS of 123bps and an Intrinsic YTW of 1.730%. Furthermore, Moody’s is overstating DISH’s fundamental credit risk, with its B1 rating four notches lower than Valens’ XO (Baa3) rating
  • Incentives Dictate Behavior™ analysis highlights DISH’s compensation framework should drive management to improve all three value drivers, which should lead to Uniform ROA expansion, and greater cash flows available for servicing obligations. Furthermore, management members have no change-in-control compensation, indicating that they are not incentivized to accept a buyout or pursue a sale of the company, reducing event risk
  • Earnings Call Forensics™ of the firm’s Q3 2020 earnings call (11/6) highlights management generated an excitement marker when talking about the progress of their retail wireless business expansion. In addition, they are confident T-Mobile is giving them visibility into the decommissioning of underperforming Sprint sites