MAT – CDS 235bps, Base Case iCDS 226bps, Negative Case iCDS 323bps, 2026 6.750% Bond YTW of 5.518%, iYTW of 3.078%, Ba2 Rating from Moody’s, IG4 (equivalent to Baa2) Rating from Valens, Low Refinancing Need

• Cash bond markets are materially overstating credit risk with a YTW of 5.518% relative to an Intrinsic YTW of 3.078%. Meanwhile, Moody’s is overstating MAT’s fundamental credit risk with its Ba2 credit rating three notches below Valens’ IG4 (Baa2) credit rating
• Incentive Dictates Behavior™ analysis highlights mostly positive signals for credit holders. Management’s compensation framework should drive them to focus on improving all three value drivers: margins, top-line growth, and asset utilization, which should lead to Uniform ROA improvement and higher cash flows available for servicing obligations. Additionally, management members have low change-in-control compensation indicating they are not incentivized to accept a buyout or pursue a sale of the firm, reducing event risk
• Earnings Call Forensics ™ analysis of the Q3 2020 earnings call (10/22) highlights that management is confident in their ability to improve free cash flow generation, grow EBITDA, and reduce their leverage ratios. In addition, they are confident in their overall business execution, including the structural simplification program