TDG Valens Credit Analysis – CDS 352bps, Base Case iCDS 215bps, Negative Case iCDS 269bps, 2025 8.000% Bond YTW of 4.393%, iYTW of 2.493%, B+ Rating from S&P, XO- (equivalent to BB+) Rating from Valens, High Refinancing Need

October 15, 2020

  • Cash bond markets are materially overstating TDG’s credit risk with a YTW of 4.393% relative to an intrinsic YTW of 2.493%. Meanwhile, CDS markets are overstating the firm’s credit risk with a CDS of 352bps relative to an Intrinsic CDS of 215bps. Furthermore, S&P is also overstating the firm’s fundamental credit risk, with its highly speculative B+ credit rating three notches lower than Valens’ XO- (BB+) credit rating
  • Incentives Dictate Behavior™ analysis highlights management members are not well compensated in a change-in-control scenario, limiting event risk for creditors