Wyndham Worldwide Lodges Riskier Credit Market Spreads

CDS markets are understating Wyndham Worldwide Corporation’s (NYSE:WYN) fundamental credit risk with a CDS of 149bps, while cash bond markets are slightly understating credit risk with a cash bond YTW of 3.011%. Our fundamental analysis highlights a riskier credit profile for WYN. Despite having cash flows that would service operating obligations and an expected cash build that will allow them to service all obligations, they have a nonexistent recovery rate on unsecured debt driven by negative net working capital and limited asset backing. This factor drives our riskier Intrinsic CDS of 263bps and an Intrinsic YTW of 3.721%.

Meanwhile, Moody’s is accurately reflecting WYN’s credit risk with its cross-over Baa3 credit rating, in line with our XO (equivalent to Baa3) rating.

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