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PPC – No Traded CDS, Base Case iCDS 119bps, Negative Case iCDS 252bps, 2025 5.750% Bond YTW of 5.293%, iYTW of 2.023%, Ba3 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

March 29, 2021

  • Credit markets are grossly overstating PPC’s credit risk with a YTW of 5.293%, relative to an Intrinsic YTW of 2.023% and an Intrinsic CDS of 119bps. Meanwhile, Moody’s is materially overstating the firm’s fundamental credit risk, with its speculative Ba3 credit rating five notches lower than Valens’ IG4+ (Baa1) credit rating
  • Incentives Dictate Behavior™ analysis highlights mostly positive signals for creditors. Management’s compensation framework should drive them to focus on all three value drivers; asset efficiency, margin expansion, and revenue growth, which should lead to Uniform ROA improvement and higher cash flows available for servicing obligations. In addition, members of management are material holders of PPC equity relative to their annual compensation, indicating they may be well-aligned with shareholders for long-term value creation