SQ – No Traded CDS, Base Case iCDS 62bps, Negative Case iCDS 113bps, 2026 2.750% Bond YTW of 5.382%, iYTW of 3.522%, Ba2 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need
- Credit markets are materially overstating credit risk, with a cash bond YTW of 5.382% relative to an Intrinsic YTW of 3.522% and an Intrinsic CDS of 62bps. Furthermore, Moody’s is overstating SQ’s fundamental credit risk with its Ba2 credit rating four notches below Valens’ IG4+ (Baa1) credit rating.
- Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. Most management members are material owners of SQ equity relative to their annual compensation, indicating they are well-aligned with shareholders for long-term value creation. Moreover, most management members have low change-in-control compensation relative to their annual average compensation, indicating they are less likely to pursue a takeover or sale of the company.