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SKT – No Traded CDS, Base Case iCDS 309bps, Negative Case iCDS 367bps, 2026 3.125% Bond YTW of 2.214%, iYTW of 3.894%, Ba1 Rating from Moody’s, HY1 (equivalent to Ba2) Rating from Valens, High Refinancing Need

May 17, 2021

  • Credit markets are materially understating credit risk, with a cash bond YTW of 2.214%, relative to an Intrinsic YTW of 3.894% and an Intrinsic CDS of 309bps. Meanwhile, Moody’s is accurately stating the firm’s fundamental credit risk, with its Ba1 credit rating one notch higher than Valens’ HY1 (Ba2) credit rating
  • Earnings Call Forensics™ of the firm’s Q1 2021 earnings call (05/06) highlights that management may lack confidence in their ability to address ESG issues, restart marketing efforts for their Nashville development, and capitalize on increased traffic levels. Finally, management may also be concerned about the pace of their sales recovery, the sustainability of stock issuance proceeds, and the possible pressures from vaccines, store closures, and rent modifications