REGI – No Traded CDS, Base Case iCDS 123bps, Negative Case iCDS 183bps, 2028 5.875% Bond YTW of 4.988%, iYTW of 2.618%, B1 Rating from Moody’s, IG3+ (equivalent to A1) Rating from Valens, Low Refinancing Need

• Credit markets are materially overstating REGI’s credit risk with a YTW of 4.988%, relative to an Intrinsic YTW of 2.618% and an Intrinsic CDS of 123bps. Meanwhile, Moody’s is grossly overstating the firm’s fundamental credit risk, with its highly speculative B1 credit rating nine notches lower than Valens’ IG3+ (A1) credit rating.
  
• Incentives Dictate Behavior™ analysis highlights mixed signals for creditors. Specifically, REGI’s compensation framework should focus management on margin expansion and revenue growth, which could lead to Uniform ROA expansion and increased cash flow generation. Additionally, members of management are material holders of REGI equity relative to their annual compensation, indicating they may be well-aligned with shareholders for long-term value creation. Furthermore, management has low change-in-control compensation relative to their average annual compensation, indicating they may not be incentivized to accept a takeover or pursue a sale of the company, reducing event risk.
  
• Earnings Call Forensics™ of the firm’s Q2 2021 earnings call (8/5) highlights that management is confident their customers want to demonstrate to consumers that they are decarbonizing. They are also confident many COVID-related headwinds have faded and that their biodiesel production facilities operate with used cooking oils that get double credit in the European market.