WMS – Base Case iCDS 107bps, Negative Case iCDS 128bps, 2030 6.375% Bond YTW of 5.840%, iYTW of 5.045%, Ba1 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need
June 2, 2025
- Cash bond markets are overstating credit risk with a YTW of 5.581% relative to an Intrinsic YTW of 4.600% and an Intrinsic CDS of 65bps. Meanwhile, Moody’s is overstating ON’s fundamental credit risk, with its Ba1 credit rating three notches lower than Valens’ IG4+ (Baa1) rating.
- Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. That said, as positives, most management members are material owners of ON equity relative to their annual compensation, indicating they may be aligned with shareholders to pursue long-term value creation for the company. Also, management members have low change-in-control compensation relative to their annual compensation. This indicates that they may not be incentivized to pursue a takeover or accept a sale of the company, decreasing event risk for creditors.
