November 8, 2018

Valens Credit Weekly Insights for November 7, 2018


Credit and Market Mispricings

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

Most Compelling Credit Rating Dislocations
AKS, AMD, BHC, CSTM, JCP, MTW, NAV, R, X, YRCW

Most Compelling CDS Market Mispricings
AKS, AVP, CYH, DISH, DNR, ESV, HTZ, JCP, PKD, YRCW

Most Compelling Bond Market Mispricings
AKS, AVP, DISH, DNR, FCX, JCP, LEE, MTOR, PKD, R

Highlighted Top Ideas
AKS – AK Steel Holding Corporation
DLX – Deluxe Corporation
FCX – Freeport-McMoRan Inc.

Other Recent Analyses
Communication Services
LEE – Lee Enterprises, Incorporated
Industrials
MTOR – Meritor, Inc.
Information Technology
AMD – Advanced Micro Devices, 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. 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

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