MOH – Base Case CDS 201bps, Base Case iCDS 84bps, Negative Case iCDS 124bps, 2028 4.375% Bond YTW of 5.940%, iYTW of 4.560%, Ba3 Rating from Moody’s, IG3+ (equivalent to A1) Rating from Valens, Low Refinancing Need
December 21, 2022
- Credit markets are overstating MOH’s credit risk with a YTW of 5.940% and a CDS of 201bps, relative to an Intrinsic YTW of 4.560% and an Intrinsic CDS of 84bps. Furthermore, Moody’s is grossly overstating the firm’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.
