MTCH – Base Case CDS 225bps, Base Case iCDS 191bps, Negative Case iCDS 259bps, 2027 5.000% Bond YTW of 6.657%, iYTW of 5.427%, Ba2 Rating from Moody’s, IG3- (equivalent to A3) Rating from Valens, Low Refinancing Need
May 23, 2023
- Credit markets are overstating MTCH’s credit risk with a YTW of 6.657% relative to an Intrinsic YTW of 5.427%, while CDS markets are accurately stating MTCH’s credit risk with a CDS of 225bps relative to an Intrinsic CDS of 191bps. Furthermore, Moody’s is materially overstating MTCH’s fundamental credit risk with its speculative Ba2 credit rating five notches below Valens’ IG3- (A3) credit rating.
- Incentives Dictate Behavior™ analysis highlights mostly positive signals for credit holders. Management’s compensation framework should generally drive them to focus on all three value drivers: margins, turns, and growth, which could lead to Uniform ROA expansion and increased cash flows available for obligations. Furthermore, most management members have low change-in-control compensation relative to their annual compensation, indicating they may not be sufficiently incentivized to pursue a takeover or accept a sale of the company, reducing event risk for creditors.
