October 18, 2018

Valens Credit Weekly Insights for October 17, 2018


Credit and Market Mispricings

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

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

Most Compelling CDS Market Mispricings
AVP, CHK, CYH, DISH, DNR, ESV, HOV, HTZ, JCP, PKD

Most Compelling Bond Market Mispricings
AKS, AER, AVP, CHK, DISH, DNR, JCP, LEE, MTOR, PKD

Highlighted Top Ideas
BZH – Beazer Homes USA, Inc.
UIS – Unisys Corporation
YRCW – YRC Worldwide Inc.

Other Recent Analyses
Consumer Discretionary
AN – AutoNation, Inc.
Materials
SUM – Summit Materials, Inc.
Information Technology
AMKR – Amkor Technology, 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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