FL – Base Case iCDS 176bps, Negative Case iCDS 209bps, 2029 4.000% Bond YTW of 9.076%, iYTW of 5.906%, Ba1 Rating from Moody’s, HY1 (equivalent to Ba2) Rating from Valens, Low Refinancing Need

July 31, 2023

  • Credit markets are still grossly overstating FL’s credit risk with an elevated YTW of 9.076% relative to an Intrinsic YTW of 5.906% and an Intrinsic CDS of 176bps. That said, a deterioration in the firm’s fundamental credit outlook makes it a less compelling holding from a creditor’s perspective. Meanwhile, Moody’s is accurately stating FL’s fundamental credit risk with its Ba1 credit rating, which is only one notch above Valens’ HY1 (Ba2) credit rating.

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