Credit Analysis: H&R Block

A detailed credit analysis on tax prep firm H&R Block.

Some highlights…

  • H&R Block CDS has more than doubled over the summer while its peer BBB-rated Financials have more or less remained steady.
  • In a previous study conducted by the DTCC ending in March 2010, an average of $22.5 million in 3 contracts traded every day for an H&R Block wholly-owned subsidiary, Block Financial LLC ($112.5 million and 15 contracts on a weekly basis).
  • In a subsequent study conducted over the following 3-month period (between March 22, 2010 – June 20, 2010, an average of $50 million in 4 contracts traded every day for Block Financial LLC ($250 million and 20 contracts on a weekly basis).
  • For the last week ending September 10, 2010, Block Financial LLC saw $243.43457 million in gross notional (about in line with its most recently available average) trade across 50 contracts (~2.5 times its average). This compares with $1 billion across 236 contracts the previous week and just $417 million across 82 contracts the week before that.

Note: DTCC does not report credit default swap volumes related directly to Block Financial LLC’s parent entity, H&R Block.

Also mentioned in report: Overseas Shipping, RR Donnelley and Windstream.

Credit analysis provided by Marc Bosset


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