Valens Credit Weekly Insights for June 12, 2019

Credit and Market Mispricings

Most Compelling Credit v Equity Market Mispricings
AVP, CYH, DISH, HTZ, UIS

Most Compelling Credit Rating Dislocations
AMD, BHC, BZH, CSTM, KBH, LEN, MTW, RIG, X, YRCW 

Most Compelling CDS Market Mispricings
AER, CHK, DISH, GT, HTZ, LB, MTOR, R, RIG, UIS 

Most Compelling Bond Market Mispricings
ADNT, AN, CHK, DISH, GTT, MDR, MGM, R, RAD, X

Highlighted Top Ideas
AXL – American Axle & Manufacturing Holdings, Inc.
GTT – GTT Communications, Inc.
MCK – McKesson Corporation

Quantitative Credit Outlier Report Review
TCG:GBR tops our quantitative outlier report this week.

Aggregate Credit Market and Credit Fundamental Review
IG markets are currently fairly valued. XO and HY markets have also moved to fairly valued levels, with CDS converging towards iCDS levels. Overall, cost of borrowing have reversed their trend higher through 2018 so far in 2019, as both the risk free rate and corporate spreads (CDS levels) have tightened. Lower cost for borrowing is favorable for refinancing and borrowing for new credit creation.