SYNA – Base Case iCDS 152bps, Negative Case iCDS 209bps, 2029 4.000% Bond YTW of 7.693%, iYTW of 6.133%, Ba2 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

September 29, 2023

  • Credit markets are materially overstating SYNA’s credit risk with a YTW of 7.693% relative to an Intrinsic YTW of 6.133% and an Intrinsic CDS of 152bps. Furthermore, Moody’s is overstating SYNA’s fundamental credit risk with its speculative Ba2 credit rating four notches below Valens’ IG4+ (Baa1) credit rating.
  • Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. Although most management members are not material owners of SYNA equity relative to their annual compensation, CEO Hurlston’s significant equity ownership indicates he may be able to convince other NEOs to align with shareholders to pursue long-term value creation. In addition, members of management have low change-in-control compensation relative to their annual compensation. This indicates they may not be sufficiently incentivized to pursue a takeover or sale of the company, decreasing event risk for creditors.
  • Earnings Call Forensics™ of SYNA’s Q4 2023 (08/03/2023) call highlights management is confident they got a very good price on their deal with Broadcom and that they ended the quarter and fiscal year with $934 million of cash.

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