MTCH – CDS 187bps, Base Case iCDS 126bps, Negative Case iCDS 203bps, 2027 5.000% Bond YTW of 5.101%, iYTW of 3.807%, Ba2 Rating from Moody’s, IG3 (equivalent to A2) Rating from Valens, Low Refinancing Need
- Cash bond markets are overstating credit risk with a cash bond YTW of 5.101% relative to an Intrinsic YTW of 3.807%, while CDS markets are slightly overstating credit risk with a CDS of 187bps relative to an Intrinsic CDS of 126bps. Furthermore, Moody’s is materially overstating the firm’s fundamental credit risk, with its Ba2 credit rating six notches lower than Valens’ IG3 (A2) credit rating.
- Incentives Dictate Behavior™ analysis highlights that MTCH’s management compensation framework is positive for credit holders. Specifically, MTCH’s compensation metrics should focus management on all three value drivers: asset efficiency, margins, and revenue growth, which should lead to Uniform ROA expansion and increased cash flows available to service obligations. Additionally, management members are material owners of MTCH equity relative to their average annual compensation, indicating they are well-aligned with shareholders for long-term value creation.