HOLX – No Traded CDS, Base Case iCDS 66bps, Negative Case iCDS 88bps, 2028 4.625% Bond YTW of 5.744%, iYTW of 4.124, Ba1 Rating from Moody’s, IG4 (equivalent to Baa1) Rating from Valens, Low Refinancing Need
September 16, 2022
- Cash bond markets are materially overstating HOLX’s credit risk with a YTW of 5.744% relative to an Intrinsic YTW of 4.124% and an Intrinsic CDS of 66bps. 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.
- HOLX’s cash flows should exceed operating obligations in each year going forward by $146 million to $992 million, an annual 104% to 203% buffer. Moreover, the combination of the firm’s cash flows plus cash on hand should be sufficient to meet all obligations including debt maturities through 2028. Furthermore, the firm’s sizable market capitalization and robust 125% recovery rate on unsecured debt should allow it to access credit markets to refinance, if necessary.
