UBER – CDS 133bps, Base Case iCDS 48bps, Negative Case iCDS 59bps, 2027 7.500% Bond YTW of 6.646%, iYTW of 4.918%, Ba3 Rating from Moody’s, IG4 (equivalent to Baa2) Rating from Valens, Low Refinancing Need

November 27, 2023

  • Cash bond markets are materially overstating credit risk with a YTW of 6.646% relative to an Intrinsic YTW of 4.918%, while CDS markets are overstating risk with a CDS of 133bps relative to an Intrinsic CDS of 48bps. In addition, Moody’s is overstating UBER’s fundamental credit risk with its Ba3 credit rating four notches below Valens’ IG4 (Baa2) credit rating.
  • Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. As positives, most members of management are material owners of UBER’s equity relative to their annual compensation, indicating they are aligned with shareholders to pursue long-term value creation for the company. Furthermore, management has low change-in-control compensation relative to their average annual compensation, indicating they are not incentivized to pursue a takeover or sale of the company.
  • Earnings Call Forensics™ of UBER’s Q3 2023 (11/07/2023) call highlights that management is confident more companies are getting travelers on the road again, that consumer spending on services is not yet back to pre-pandemic levels, and that core UberX business growth depends on adding more drivers to platform.

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