MOH – Base Case CDS 118bps, Base Case iCDS 84bps, Negative Case iCDS 155bps, 2028 4.375% Bond YTW of 5.513%, iYTW of 4.781%, Ba2 Rating from Moody’s, IG3 (equivalent to A2) Rating from Valens, Low Refinancing Need
September 2, 2024
- Cash bond markets are slightly overstating MOH’s credit risk with a YTW of 5.513% relative to an Intrinsic YTW of 4.781%, while CDS markets are accurately stating credit risk with a CDS of 118bps relative to an Intrinsic CDS of 84bps. Furthermore, Moody’s is materially overstating MOH’s fundamental credit risk with its speculative Ba2 credit rating six notches below Valens’ IG3 (A2) credit rating.
- Incentives Dictate Behavior™ analysis highlights mostly negative signals for credit holders. As a positive, most management members are material owners of MOH equity relative to their average annual compensation, indicating they are well-aligned with shareholders to pursue long-term value creation for the company.
- Earnings Call Forensics™ analysis of the firm’s Q2 2024 earnings call (07/25/2024) highlights that management is confident their Medicaid medical cost ratio will be lower in the second half of the year.
