MGM - Valens Credit Report - 2021 03 11
Cash bond markets are materially overstating credit risk, with a YTW of 3.667%, relative to an Intrinsic YTW of 1.557%, and CDS markets are overstating credit risk, with a CDS of 195bps, relative to an Intrinsic CDS of 92bpsIncentives Dictate Behavior™ analysis highlights mixed signals for debt holders. MGM's compensation framework should focus management on top-line growth and margins, which should drive Uniform ROA expansion. Additionally, management members have low change-in-control compensation, indicating that they may not be incentivized to pursue a sale or accept a takeover of the firm, limiting event risk. Furthermore, management members are material owners of MGM 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 Q3 2020 earnings call (10/29) highlights that management is confident their confirmed contracts have increased by over a hundred percent
MGM Resorts International is a holding company. Through its subsidiaries, the company owns and operates casino, hotel, and entertainment resorts across the United States and in Macau. The company's segments include: Las Vegas Strip Resorts, which consists of casino resorts such as Bellagio, MGM Grand Las Vegas, Mandalay Bay, The Mirage, Luxor, New York-New York, Excalibur, and Park MGM; Regional Operations, which consists of casino resorts such as MGM Grand Detroit, Beau Rivage, Gold Strike Tunica, Borgata, MGM National Harbor, MGM Springfield, Empire City, and MGM Northfield Park; and MGM China, which owns and operates casino resorts and the related gaming subconcession and land concessions.
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