UBER – No Traded CDS, Base Case iCDS 61bps, Negative Case iCDS 71bps, 2026 8.000% Bond YTW of 4.278%, iYTW of 1.598%, Ba2 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

March 15, 2021

  • Credit markets are grossly overstating credit risk with a cash bond YTW of 4.278% relative to an Intrinsic YTW of 1.598% and an Intrinsic CDS of 61bps. Meanwhile, Moody’s is materially overstating UBER’s fundamental credit risk with its highly speculative B2 credit rating seven notches below Valens’ IG4+ (Baa1) credit rating
  • Incentives Dictate Behavior™ analysis highlights mostly positive signals for investors. UBER’s compensation framework should drive management to focus largely on margin expansion and top-line growth, which should lead to Uniform ROA improvement. Additionally, management members have low change-in-control compensation indicating they are not incentivized to pursue a buyout, and UBER’s large market capitalization limits event risk related to a sale of the company
  • Earnings Call Forensics™ analysis of the firm’s Q3 2020 earnings call (11/5) highlights that management generated an excitement marker when saying that Mexico is one of the leading markets of Cornershop. They are also confident demand for Uber is high in Brazil and Latin America