WDC – Base Case CDS 290bps, Base Case iCDS 135bps, Negative Case iCDS 400bps, 2026 4.750% Bond YTW of 7.205%, iYTW of 5.399%, Baa3 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need
- Credit markets are materially overstating credit risk, with a cash bond YTW of 7.205% and a CDS of 290bps relative to an Intrinsic YTW of 5.399% and an Intrinsic CDS of 135bps. Furthermore, Moody’s is overstating WDC’s fundamental credit risk with its Baa3 credit rating two notches below Valens’ IG4+ (Baa1) credit rating.
- Incentives Dictate Behavior™ analysis highlights mostly negative signals for credit holders. That said, management has low change-in-control compensation relative to their annual compensation, indicating they may not be incentivized to pursue a takeover or accept a sale of the company, thereby reducing event risk for creditors.