X – CDS 285bps, Base Case iCDS 92bps, Negative Case iCDS 117bps, 2026 6.250% Bond YTW of 3.694%, iYTW of 1.694%, B1 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

• Credit markets are materially overstating X’s credit risk with a cash bond YTW of 3.694% and a CDS of 285bps, relative to an Intrinsic YTW of 1.694% and an Intrinsic CDS of 92bps. Meanwhile, Moody’s is materially overstating the firm’s fundamental credit risk, with its highly speculative B1 credit rating six notches below Valens’ IG4+ (Baa1) credit rating
  
• Incentives Dictate Behavior™ analysis highlights positive signals for credit holders. X’s compensation framework incentivizes management to improve all three value drivers: sales, margins, and asset utilization, which should drive Uniform ROA improvement and lead to increased cash flows available for servicing obligations going forward. Moreover, most management members are not well-compensated in a change in control, indicating they are not incentivized to pursue a sale or accept a buyout of the firm, reducing event risk. Finally, most members of management are material holders of X’s equity relative to their annual compensation, indicating they may be well-aligned with shareholders for long-term value creation
  
• Earnings Call Forensics™ of the firm’s Q2 2021 earnings call (7/30) highlights that management is confident the acquisition of Big River Steel is generating significant value and its performance has exceed their lofty expectations. Furthermore, they are confident they will repay up to $1 billion of additional debt over the next 12 months, are pursuing profitable organic growth, and will continue to align investments with their less capital-intensive and less carbon-intensive steel production strategy. Moreover, management is also confident their strategy is not about being bigger, but rather being better, translating into better results for stockholders