SKT – No Traded CDS, Base Case iCDS 321bps, Negative Case iCDS 388bps, 2027 3.875% Bond YTW of 5.144%, iYTW of 6.124%, Baa3 Rating from Moody’s, HY1 (equivalent to Ba2) Rating from Valens, High Refinancing Need

August 22, 2022

  • Credit markets are understating credit risk, with a cash bond YTW of 5.144% relative to an Intrinsic YTW of 6.124% and an Intrinsic CDS of 321bps. Meanwhile, Moody’s is understating the firm’s fundamental credit risk, with its Baa3 credit rating two notches higher than Valens’ HY1 (Ba2) credit rating
  • Earnings Call Forensics™ of the firm’s Q2 2022 earnings call (8/9) highlights that management may lack confidence in their ability to drive customer traffic to shopping centers through performance marketing, maintain elevated traffic levels, and compel retailers to sign high-quality leases. Moreover, they may be overstating the success of their renewed or retenanted lease execution and the progress of their new lease structure implementation. Lastly, they may be concerned about the proportion of their debt outstanding with fixed interest rates

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