KSS – Base Case CDS 572bps, Base Case iCDS 274bps, Negative Case iCDS 348bps, 2031 5.125% Bond YTW of 9.133%, iYTW of 6.635%, B2 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need
May 7, 2026
- Credit markets are materially overstating KSS’ credit risk with a YTW of 9.133% and a CDS of 572bps relative to an Intrinsic YTW of 6.635% and an Intrinsic CDS of 274bps. Furthermore, Moody’s is materially overstating the company’s fundamental credit risk, with its speculative B2 credit rating seven notches lower than Valens’ IG4+ (Baa1) credit rating.
- Incentives Dictate Behavior™ analysis highlights mostly negative signals for credit holders. As a positive, management has low change-in-control compensation relative to their annual compensation, indicating that they may not be incentivized to pursue a takeover or accept a sale of the company, decreasing event risk for creditors.
- Earnings Call Forensics™ analysis of the firm’s Q4 2025 earnings call (3/10/2026) highlights management is excited they can be more competitive by offering better value through sharper price points in seasonal items and is confident they can optimize store productivity, inventory management and cost management initiatives.