Valens Credit Weekly Insights for March 15, 2023

March 15, 2023

Featured Top Idea
UBER – Uber Technologies, Inc.
Action: Buy 2026 8.000% Bonds, CUSIP: 90353TAD2 (6.738% YTW, 4.638% iYTW)
Buy 2027 7.500% Bonds, CUSIP: 90353TAE0 (6.932% YTW, 4.826% iYTW)
Buy 2028 6.250% Bonds, CUSIP: 90353TAG5 (6.614% YTW, 4.614% iYTW)
Buy 2029 4.500% Bonds, CUSIP: 90353TAK6 (6.731% YTW, 4.931% iYTW)

Aggregate Credit Market and Credit Fundamental Review
Recently, the Aggregate cost to borrow for all credits (High Yield – HY, Cross-Over – XO, and Since the Fed started communicating plans to aggressively raise rates in the face of inflationary pressures, the Fed has changed from a dovish benefit cost to borrow to a hawkish headwind. After the recent ~250bps rise in the risk-free rate from 2021 lows, the aggregate corporate cost to borrow has risen to levels that are at the high end of the prior bull market. They are nowhere near levels that signal a freeze or panic but are high enough to put pressure on corporates borrowing for growth. The newly elevated cost of borrowing for corporates may make refinancing decisions and growth investment decisions tougher. This is why it is important that corporations have such healthy financial statements currently.

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