MTCH – Base Case CDS 238bps, Base Case iCDS 127bps, Negative Case iCDS 191bps, 2027 5.000% Bond YTW of 7.738%, iYTW of 5.438%, Ba2 Rating from Moody’s, IG4 (equivalent to Baa2) Rating from Valens, Low Refinancing Need
October 18, 2022
- Credit markets are materially overstating MTCH’s credit risk with a YTW of 7.738% relative to an Intrinsic YTW of 5.438%, while CDS markets are overstating MTCH’s credit risk with a CDS of 238bps relative to an Intrinsic CDS of 127bps. Furthermore, Moody’s is overstating MTCH’s fundamental credit risk with its speculative Ba2 credit rating three notches below Valens’ IG4 (Baa2) credit rating.
- Incentives Dictate Behavior™ analysis highlights mostly positive signals for credit holders. MTCH’s metrics should generally drive management 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 members of management have low change-in-control compensation relative to their annual compensation. This indicates they may not be incentivized to pursue or accept a takeover or sale of the company, reducing event risk for creditors.
- Earnings Call Forensics™ of MTCH’s Q2 2022 (08/03/2022) call highlights that management is confident their apps are a good way to create real-world connections.
