MTCH – No Traded CDS, Base Case iCDS 105bps, Negative Case iCDS 174bps, 2027 5.000% Bond YTW of 3.276%, iYTW of 2.586%, Ba2 Rating from Moody’s, IG4 (equivalent to Baa2) Rating from Valens, Low Refinancing Need

January 14, 2022

  • Credit markets are slightly overstating credit risk, with a cash bond YTW of 3.276%, relative to an Intrinsic YTW of 2.586% and an Intrinsic CDS of 105bps. Meanwhile, Moody’s is overstating the firm’s fundamental credit risk, with its Ba2 credit rating three notches lower than Valens’ IG4 (Baa2) 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.

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