Valens Credit Weekly Insights for March 21, 2018
Credit and Market Mispricings
Most Compelling Credit v Equity Market Mispricings
AVP, CYH, MNI, NAV, UIS
Most Compelling Credit Rating Dislocations
AMD, BLDR, CHK, EXPE, JCP, MNI, R, UIS, X, YRCW
Most Compelling CDS Market Mispricings
BZH, CHK, CVI, CYH, DNR, JCP, MNI, PKD, SVU, YRCW
Most Compelling Bond Market Mispricings
AKS, AMD, AVP, BLDR, CHK, CVI, FCX, JCP, PKD, UIS
Highlighted Top Ideas
CSTM – Constellium N.V
MEG:CAN – MEG Energy Corp.
R – Ryder System, Inc.
Other Recent Analyses
Materials
AKS – AK Steel Holding Corporation
Consumer Discretionary
RCII – Rent-A-Center, Inc.
Energy
CVI – CVR Energy, Inc.
Quantitative Credit Outlier Report Review
CYH tops our quantitative outlier report this week.
Aggregate Credit Market and Credit Fundamental Review
IG markets are currently fairly valued. However, XO and HY markets appear mispriced in opposite directions. XO CDS appears to be overstating credit risk, with CDS levels not confirmed by iCDS. On the other hand, tight HY CDS spreads have not been confirmed by HY iCDS, signaling HY credit risk is being understated by the credit markets. Overall, cost of borrowing have been rising thanks to improving economic activity and the rising risk free rate