MUR – Base Case CDS 261bps, Base Case iCDS 168bps, Negative Case iCDS 301bps, 2028 6.375% Bond YTW of 6.600%, iYTW of 5.445%, Ba2 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

May 30, 2023

  • Credit markets are overstating MUR’s credit risk with a YTW of 6.600% and a CDS of 261bps relative to an Intrinsic YTW of 5.445% and an Intrinsic CDS of 168bps. Furthermore, Moody’s is overstating MUR’s fundamental credit risk with its speculative Ba2 credit rating four notches below Valens’ IG4+ (Baa1) credit rating.

  • Incentives Dictate Behavior™ analysis highlights mostly positive signals for credit holders. MUR’s compensation metrics should generally drive management to focus on improving margins and asset utilization, which could lead to Uniform ROA expansion and increased cash flows available for obligations going forward. Additionally, management members are material owners of MUR equity relative to their average annual compensation, indicating they are well-aligned with shareholders for long-term value creation.

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