Valens Credit Weekly Insights for March 13, 2019

Credit and Market Mispricings

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

Most Compelling Credit Rating Dislocations
AMAG, AMD, BZH, KBH, LEN, MTW, NAV, RIG, X, YRCW

Most Compelling CDS Market Mispricings                                                                                                                        AVP, CHK, CYH, DF, DISH, DNR, ESV, JCP, RAD, YRCW

Most Compelling Bond Market Mispricings                                                                                                                    AKS, AVP, CVI, DISH, DF, DNR, JCP, LEE, MTOR, R  

Highlighted Top Ideas
EXPE – Expedia Group, Inc.
AXL – American Axle & Manufacturing Holdings, Inc.
X – United States Steel Corporation

Other Recent Analyses
Consumer Staples
UVV – Universal Corporation
Industrials
MTW – The Manitowoc Company, Inc.

Quantitative Credit Outlier Report Review
JCP tops our quantitative outlier report this week.

Aggregate Credit Market and Credit Fundamental Review

IG markets are currently fairly valued. XO markets have also moved to fairly valued levels, with iCDS converging towards CDS levels. However, the HY market appears mispriced. HY CDS appears to be understating credit risk, with CDS levels not confirmed by iCDS. Overall, cost of borrowing have been rising thanks to improving economic activity and the rising risk free rate