American Axle & Manufacturing Holdings, Inc.

From the Desk of Dr Rhesus, founder, Dr Rhesus Labs:

A fixed income reshoring play

American Axle & Manufacturing.

Coupon: 5.00% Maturity: October 1, 2029

Current price, approximately $96

Yield to maturity: ~ 6.15%, approximately 250 bps over the 5 year

B3/B+ rated

Callable with a make-whole call (generally, the call price rises as interest rates decline.)

Cusip: 02406PBB5

American Axle & Manufacturing Holdings, Inc. (AAM) is a U.S.-based Tier-1 automotive supplier headquartered in Detroit. AXL is a leading global supplier of drivelines.

American Axle is currently integrating its Dowlais acquisition. Dowlais was a similarly-sized competitor headquartered in Great Britain. AXL’s acquisition will broaden AXL’s global reach and diversify away from GM as its main customer.

AXL is focused on:

· Driveline systems Axles, drive shafts, transfer cases, AWD/4WD systems.

· Metal forming Forged components for powertrains and chassis.

· EV-specific components e-Drive units, electric beam axles, and other electrified propulsion products.

AAM supplies major OEMs including General Motors, Stellantis, Ford, and several global automakers.

AXL’s net debt to EBITDA is approximately 2.7x, signaling moderate leverage. AXL is working to deleverage and should attain modest deleveraging benchmarks as the Dowlais deal is integrated.

Why Dr Rhesus likes, in brief:

American Axle was punished for its dependence on internal combustion platforms as well as tariff and general automotive industry headwinds. However, Dr Rhesus Labs focused on the optimal coupon, maturity, and industry for fixed income alpha capture. The current market environment is favoring internal combustion over EVs, and AXL margins are much higher on internal combustion platforms.

Modified duration is approximately 3.95. We feel given the likelihood of lower short rates on the horizon, plus the macro-drive for American manufacturing re-shoring, these bonds will outperform

.