Valens Credit Weekly Insights for October 3, 2019

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

Most Compelling Credit Rating Dislocations
ADNT, AMD, BHC, BZH, CSTM, DOOR, EXPE, KBH, LEN, MTW

Most Compelling CDS Market Mispricings
AN, AER, BZH, CHK, CSTM, CYH, DISH, RAD, RIG, X

Most Compelling Bond Market Mispricings
ADNT, CSTM, DNR, GTT, HCA, MDR, MGM, MTW, RAD, UIS

Highlighted Top Ideas
AER – AerCap Holdings N.V.
CAR – Avis Budget Group, Inc.
CVS – CVS Health Corporation

Aggregate Credit Market and Credit Fundamental Review
IG and XO markets are currently fairly valued. HY markets have seen CDS move wider than iCDS again recently. Overall, costs of borrowing have reversed their trend higher through 2018 so far in 2019, as both the risk free rate and corporate spreads (CDS levels) have mostly tightened. Lower cost for borrowing is favorable for refinancing and borrowing for new credit creation.