SKT – No Traded CDS, Base Case iCDS 364bps, Negative Case iCDS 431bps, 2027 3.875% Bond YTW of 4.708%, iYTW of 6.508%, Baa3 Rating from Moody’s, HY1 (equivalent to Ba2) Rating from Valens, High Refinancing Need

May 20, 2022

  • Credit markets are materially understating credit risk, with a cash bond YTW of 4.708%, relative to an Intrinsic YTW of 6.508% and an Intrinsic CDS of 364bps. 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 Q1 2022 earnings call (5/5) highlights that management may lack confidence in their ability to continue acquiring partnership opportunities and maintain lease renewal momentum from existing tenants. In addition, they may be overstating the potential of TangerClub and their deals with Foxwoods. Furthermore, management may lack confidence in their ability to successfully execute on their marketing initiatives for tenants, benefit from non-rental revenues, and replace underperforming retailers with better-performing retailers. Finally, they may be downplaying concerns about the potential drop in consumer spending due to inflationary pressures and they may have concerns about their liquidity, particularly for their Nashville project

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