Valens Credit Weekly Insights for March 27, 2019

Credit and Market Mispricings

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

Most Compelling Credit Rating Dislocations
AMD, BLDR, 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                                                                                                                    AVP, CHK, CVI, CYH, DF, DISH, DNR, JCP, MTOR, R

Highlighted Top Ideas
BLDR – Builders FirstSource, Inc.
DAL – Delta Air Lines, Inc.
R – Ryder System, Inc.

Other Recent Analyses                                                                                                                                          Energy
CHK– Chesapeake Energy Corporation
Health Care
CYH– Community Health Systems, 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