TPR – CDS 91bps, Base Case iCDS 98bps, Negative Case iCDS 106bps, 2027 4.125% Bond YTW of 2.733%, iYTW of 1.453%, Baa2 Rating from Moody’s, IG4 (equivalent to Baa2) Rating from Valens, Low Refinancing Need

March 1, 2021

  • Cash bond markets are overstating credit risk, with a bond YTW of 2.733% relative to an Intrinsic YTW of 1.453%
  • Incentives Dictate Behavior™ analysis highlights mostly positive signals for TPR credit holders. Management’s compensation framework should drive them to focus on all three value drivers, asset efficiency, margin expansion, and revenue growth, which may lead to Uniform ROA improvement and higher cash flows available for servicing obligations. In addition, management members are not well-compensated in a change-in-control scenario, indicating they are unlikely to pursue a sale or accept a buyout of the firm, limiting event risk