MUR – Base Case CDS 290bps, Base Case iCDS 163bps, Negative Case iCDS 321bps, 2028 6.375% Bond YTW of 7.195%, iYTW of 5.310%, Ba2 Rating from S&P, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

March 24, 2023

  • Cash bond markets are materially overstating MUR’s credit risk with a YTW of 7.195% relative to an Intrinsic YTW of 5.310%, while CDS markets are overstating credit risk with a CDS of 290bps relative to an Intrinsic CDS of 163bps. Furthermore, Moody’s is overstating MUR’s fundamental credit risk with its highly 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 framework incentivizes management to improve all three value drivers: sales, margins, and asset utilization, which should drive Uniform ROA improvement and lead to increased cash flows available for servicing obligations going forward. Additionally, management members are material owners of MUR equity relative to their average annual compensation, which indicates they are well-aligned with shareholders for long-term value creation.

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