ZIP – Base Case iCDS 265bps, Negative Case iCDS 317bps, 2030 5.000% Bond YTW of 7.368%, iYTW of 6.737%, B1 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

March 18, 2024

  • Credit markets are slightly overstating ZIP’s credit risk with a YTW of 7.368% relative to an Intrinsic YTW of 6.737% and an Intrinsic CDS of 265bps. Furthermore, Moody’s is materially overstating ZIP’s fundamental credit risk with its B1 credit rating six notches below Valens’ IG4+ (Baa1) credit rating.
  • Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. As a positive, most members of management are material owners of ZIP equity relative to their annual compensation, indicating they may be aligned with shareholders to pursue long-term value creation for the company. Additionally, management has low change-in-control compensation relative to their annual compensation, indicating they may not be incentivized to pursue a takeover or accept a sale of the company, decreasing event risk for creditors.
  • Earnings Call Forensics™ of ZIP’s Q4 2023 earnings call (02/22/2023) highlights that management is confident online recruitment is taking share from offline recruitment and that their Phil AI tool interacts with job seekers more fluently than alternatives.

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