UBER – CDS 262bps, Base Case iCDS 52bps, Negative Case iCDS 60bps, 2025 7.500% Bond YTW of 6.409%, iYTW of 3.579%, B1 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

August 25, 2022

  • Credit markets are grossly overstating credit risk with a YTW of 6.409% relative to an Intrinsic YTW of 3.579%, while CDS markets are materially overstating UBER’s credit risk with a CDS of 262bps relative to an Intrinsic CDS of 52bps. In addition, Moody’s is materially overstating UBER’s fundamental credit risk with its highly speculative B1 credit rating six notches below Valens’ IG4+ (Baa1) credit rating
  • Incentives Dictate Behavior™ analysis highlights positive signals for credit holders. UBER’s compensation framework should drive them to focus on margin expansion and revenue growth, which should lead to Uniform ROA expansion. Moreover, management members have low change-in-control compensation indicating they are not incentivized to pursue a buyout. Finally, most management members are material owners of UBER equity relative to their annual compensation, indicating they are well-aligned with shareholders for long-term value creation

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