GPS – 155bps CDS, Base Case iCDS 67bps, Negative Case iCDS 127bps, 2025 8.625% Bond YTW of 2.393%, iYTW of 1.493%, Ba2 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

• Credit markets are overstating GPS’ credit risk with a cash bond YTW of 2.393% and a CDS of 155bps, relative to an Intrinsic YTW of 1.493% and an Intrinsic CDS of 67bps. Furthermore, Moody’s is overstating the firm’s fundamental credit risk, with its Ba2 credit rating four notches lower than Valens’ IG4+ (Baa1) credit rating
• Incentives Dictate Behavior™ analysis highlights mostly negative signals for credit holders. That said, management has low change-in-control compensation, indicating they are unlikely to seek or accept a buyout or takeover, limiting event risk for credit holders. Moreover, management’s compensation framework should drive them to improve margins and grow the top-line, which should lead to Uniform ROA expansion