UBER – CDS 423bps, Base Case iCDS 54bps, Negative Case iCDS 71bps, 2025 7.500% Bond YTW of 7.417%, iYTW of 3.457%, B1 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need
- Credit markets are grossly overstating credit risk with a CDS of 423bps and a YTW of 7.417% relative to an Intrinsic CDS of 54bps and an Intrinsic YTW of 3.457%. 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 mostly positive signals for credit holders. UBER’s compensation framework should drive them to focus on margin expansion and revenue growth, which may lead to Uniform ROA expansion. Moreover, management members have low change-in-control compensation indicating they are not incentivized to pursue a buyout. Finally, CEO Khosrowshahi is a material owner of UBER stock relative to his compensation, indicating he may be able to push other NEOs to be well-aligned with shareholders for long-term value creation.