XYZ – Base Case iCDS 71bps, Negative Case iCDS 100bps, 2031 3.500% Bond YTW of 5.391%, iYTW of 4.756%, Ba2 Rating from Moody’s, IG3+ (equivalent to A1) Rating from Valens, Low Refinancing Need
June 23, 2025
- Credit markets are slightly overstating credit risk with a YTW of 5.391% relative to an Intrinsic YTW of 4.756% and an Intrinsic CDS of 71bps. Furthermore, Moody’s is materially overstating XYZ’s fundamental credit risk with its speculative Ba2 credit rating seven notches below Valens’ IG3+ (A1) credit rating.
- Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. As a positive, although some management members are not material owners of XYZ equity relative to their annual compensation, Block Head & Chairman Dorsey’s material holdings indicates he may be able to persuade other NEOs to align with shareholders to pursue long-term value creation for the company. Furthermore, most members of management have low change-in-control compensation relative to their annual compensation. This indicates they may not be incentivized to pursue or accept a takeover or sale of the company, decreasing event risk for creditors.
