QRVO – Base Case iCDS 133bps, Negative Case 199bps, 2029 4.375% Bond YTW of 5.897%, iYTW of 4.877%, Ba1 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need
April 18, 2023
- Credit markets are overstating credit risk with a YTW of 5.897% relative to an Intrinsic YTW of 4.877% and an Intrinsic CDS of 133bps. 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 mostly positive 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. Furthermore, management members have low change-in-control compensation relative to their annual compensation, indicating they are less likely to pursue a takeover or accept a sale of the company, reducing event risk for creditors.
- Earnings Call Forensics™ of QRVO’s Q3 2023 (2/1/2023) call highlights that management is excited about consolidating production in their Richardson facility.
