MOH – Base Case CDS 195bps, Base Case iCDS 91bps, Negative Case iCDS 151bps, 2028 4.375% Bond YTW of 6.138%, iYTW of 4.428%, Ba3 Rating from Moody’s, IG3+ (equivalent to A1) Rating from Valens, Low Refinancing Need
April 12, 2023
- Cash bond markets are materially overstating MOH’s credit risk with a YTW of 6.138% relative to an Intrinsic YTW of 4.428%, while CDS markets are overstating credit risk with a CDS of 195bps relative to an Intrinsic CDS of 91bps. Furthermore, Moody’s is grossly overstating MOH’s fundamental credit risk with its highly speculative Ba3 credit rating eight notches below Valens’ IG3+ (A1) credit rating.
- Incentives Dictate Behavior™ analysis highlights mostly negative signals for credit holders. That said, most management members are material owners of MOH equity relative to their average annual compensation, indicating that they are well-aligned with shareholders to pursue long-term value creation for the company.
