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PARA – Base Case iCDS 63bps, Negative Case iCDS 110bps, 2028 3.375% Bond YTW of 5.292%, iYTW of 4.815%, Baa2 Rating from Moody’s, IG4 (equivalent to Baa3) Rating from Valens, Low Refinancing Need

December 18, 2024

  • Credit markets are accurately stating PARA’s credit risk with a YTW of 5.292% and a CDS of 102bps relative to an Intrinsic YTW of 4.815% and an Intrinsic CDS of 63bps. In addition, Moody’s is accurately stating PARA’s fundamental credit risk with its Baa3 credit rating, one notch below Valens’ IG4 (Baa2) credit rating.
  • Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. As a positive, management’s compensation metrics should drive them to focus on all three value drivers: margin expansion, asset efficiency, and top-line growth, which should lead to Uniform ROA expansion and increased cash flows available for servicing obligations.

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