WDC – Traded CDS 300bps, Base Case iCDS 90bps, Negative Case iCDS 229bps, 2026 4.750% Bond YTW of 5.977%, iYTW of 3.909%, 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 5.977% and a CDS of 300bps relative to an Intrinsic YTW of 3.909% and an Intrinsic CDS of 90bps. 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, most management members have low change-in-control compensation relative to their annual compensation, indicating they may not be incentivized enough to pursue a takeover or accept a sale of the company, reducing event risk for creditors.