UBER – CDS 158bps, Base Case iCDS 50bps, Negative Case iCDS 64bps, 2027 7.500% Bond YTW of 6.519%, iYTW of 4.605%, Ba3 Rating from Moody’s, IG4 (equivalent to Baa2) Rating from Valens, Low Refinancing Need

August 16, 2023

  • Credit markets are materially overstating credit risk with a YTW of 4.605% relative to an Intrinsic YTW of 6.519%, while CDS markets are overstating credit risk with a CDS of 158bps relative to an Intrinsic CDS of 50bps. 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 a positive, 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. Finally, 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.

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