F – Base Case iCDS 96bps, Negative Case iCDS 181bps, 2031 7.450% Bond YTW of 5.791%, iYTW of 4.994%, Ba1 Rating from Moody’s, IG4 (equivalent to Baa2) Rating from Valens, Low Refinancing Need
July 18, 2025
- Credit markets are overstating Ford’s credit risk with a YTW of 5.791% and a CDS of 170 bps relative to an Intrinsic YTW of 4.994% and an Intrinsic CDS of 96bps. Furthermore, Moody’s is overstating the firm’s fundamental credit risk, with its speculative Ba1 credit rating two notches below Valens’ IG4 (Baa2) credit rating.
- Incentives Dictate Behavior™ analysis highlights positive signals for credit holders. Management’s compensation framework should encourage enhancements across all three key value drivers: sales, margins, and asset utilization, which could lead to Uniform ROA expansion and increased cash flows available for obligations.
- Earning Call Forensics™ of the firm’s Q1 2025 earnings call (05/05/2025) earnings call highlights that management is confident in their pricing power and the growth of high-margin software subscriptions, as well as their ability to offset tariff pressures through targeted recovery actions and cost control.