PBF – Base Case iCDS 74bps, Negative Case iCDS 103bps, 2028 6.000% Bond YTW of 6.755%, iYTW of 4.935%, Ba3 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

January 29, 2024

  • Credit markets are materially overstating credit risk with a YTW of 6.755% relative to an Intrinsic YTW of 4.935% and an Intrinsic CDS of 74bps. Meanwhile, credit markets are materially overstating the firm’s fundamental credit risk, with its Ba3 credit rating five notches lower than Valens’ IG4+ (Baa1) credit rating.
  • Incentives Dictate Behavior™ analysis highlights mostly negative signals for credit holders. That said, as a positive, management members are material owners of PBF equity relative to their annual compensation, indicating they are aligned with shareholders to pursue long-term value creation for the company.
  • Earnings Call Forensics™ of the firm’s Q3 2023 (11/2/2023) earnings call highlights that management is confident their jet fuel production is higher than many competitors.

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