RIG – CDS 661bps, Base Case iCDS 191bps, Negative Case iCDS 213bps, 2024 5.875% Bond YTW of 5.499%, iYTW of 3.409%, B3 Rating from Moody’s, XO (equivalent to Baa3) Rating from Valens, High Refinancing Need

• CDS markets are grossly overstating RIG’s credit risk with a CDS of 661bps relative to an Intrinsic CDS of 191bps, while cash bond markets are materially overstating credit risk with a YTW of 5.499% relative to an Intrinsic YTW of 3.409%. Additionally, Moody’s is materially overstating RIG’s fundamental credit risk, with their highly speculative B3 credit rating six notches lower than Valens’ XO (Baa3) rating
• Incentives Dictate Behavior™ analysis highlights mostly positive signals for credit holders. Management’s compensation framework focuses them on growing revenue and asset utilization rates, which should lead to Uniform ROA expansion and higher cash flows available for servicing obligations. Furthermore, management is not well-compensated in a change-in-control event, indicating they are unlikely to accept a takeover or pursue a buyout, limiting event risk for credit holders