KSS – Base Case CDS 447bps, Base Case iCDS 254bps, Negative Case iCDS 301bps, 2029 7.250% Bond YTW of 8.679%, iYTW of 7.009%, Ba2 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

May 16, 2024

  • Credit markets are materially overstating KSS’ credit risk with a YTW of 8.679% and CDS of 447bps, relative to an Intrinsic YTW of 7.009% and an Intrinsic CDS of 254bps. Furthermore, Moody’s is overstating the company’s fundamental credit risk, with its speculative Ba2 credit rating four notches lower than Valens’ IG4+ (Baa1) credit rating.
  • Incentives Dictate Behavior™ analysis highlights mostly positive signals for credit holders. Management’s compensation framework should drive them to focus on all three value drivers: margin expansion, asset efficiency, and top-line growth, which should lead to Uniform ROA expansion and increased cash flows available for servicing obligations. In addition, management has low change-in-control compensation relative to their average annual compensation indicating they may not be incentivized to pursue a takeover or accept a sale of the company, decreasing event risk for creditors.
  • Earnings Call Forensics™ of KSS’ Q3 2023 (03/12/2024) earnings call highlights that management generated an excitement marker when saying they feel well positioned to achieve positive traffic growth.

You don’t have access to the Valens Research Premium Application.

To get access to our best content including the highly regarded Conviction Long List and Market Phase Cycle macro newsletter, please contact our Client Relations Team at 630-841-0683 or email

Please fill out the fields below so that our client relations team can contact you

Or contact our Client Relationship Team at 630-841-0683