TCG:BGR Valens Credit Analysis – CDS 1,129bps, Base Case iCDS 726bps, Negative Case iCDS 1,091bps, 2023 3.875% Bond YTW of 12.45%, iYTW of 6.85%, B2 Rating from Moody’s, IG4 (equivalent to Baa2) Rating from Valens, Low Refinancing Need

• Credit markets are grossly overstating TCG’s credit risk, with a CDS of 1,129bps and a cash bond YTW of 12.450% relative to an Intrinsic CDS of 726bps and an Intrinsic YTW of 6.850%. Furthermore, Moody’s is materially overstating the firm’s fundamental credit risk, with their highly speculative, high-yield B2 credit rating six notches lower than Valens’ IG4 (Baa2) credit rating
• Incentives Dictate Behavior™ analysis highlights that members of management do not receive change-in-control compensation, which decreases event risk as management is not incentivized to seek or accept a change-in-control
• TCG currently trades below recent averages with a 23.1x Uniform P/E (Fwd V/E’). At these levels, the market is pricing in expectations for Uniform ROA to increase from 16% in 2018 to 24% levels through 2023, accompanied by 1% Uniform Asset growth going forward