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ZIP – Base Case iCDS 369bps, Negative Case iCDS 427bps, 2030 5.000% Bond YTW of 7.046%, iYTW of 7.762%, B1 Rating from Moody’s, IG4 (equivalent to Baa2) Rating from Valens, Low Refinancing Need

December 13, 2024

  • Credit markets are slightly understating ZIP’s credit risk with a YTW of 7.046% relative to an Intrinsic YTW of 7.762% and an Intrinsic CDS of 369bps. That said, 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 mostly negative signals for credit holders. That said, as a positive, 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 Q3 2024 (11/6/2024) call highlights that management is confident that long term job seeking activity is trending in the right direction and will remain persistent. Moreover, management is confident in its current cash levels.

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