QRVO – Base Case iCDS 113bps, Negative Case iCDS 176bps, 2029 4.375% Bond YTW of 6.747%, iYTW of 5.667%, Ba1 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need
November 14, 2023
- Credit markets are overstating credit risk with a YTW of 6.747% relative to an Intrinsic YTW of 5.667% and an Intrinsic CDS of 113bps. Furthermore, Moody’s is overstating QRVO’s fundamental credit risk with its Ba1 credit rating three notches below Valens’ IG4+ (Baa1) credit rating.
- Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. Most management members are material owners of QRVO equity relative to their annual compensation, indicating they may be aligned with shareholders to pursue long-term value creation for the company. Additionally, management members have low change-in-control compensation relative to their annual average compensation, indicating they may not be incentivized to pursue a takeover or accept a sale of the company, decreasing event risk for creditors.
- Earnings Call Forensics™ of QRVO’s Q2 2024 (11/1/2023) call highlights that management is confident their ultrawideband wins in automotive and android markets are significant as both customers represent the largest volume opportunities in their respective markets.
