CORPORATESISSUER COMMENT 12 October 2016RATINGSBP p.l.c. (BP) Moodys SR Unsecured Rating A2Moodys Outlook POSBond-Implied Rating1 Aa3CDS-Implied Rating Baa2EDF-Implied Rating Baa2As of 10/11/2016ContactsXian Li 1.212.553.1404Senior Research Analyst xian.li@moodys.comAllerton G. Smith 212-553-4058 Sr Dir-Sr Research Analyst allerton.smith@moodys.comABOUT CAPITAL MARKETS RESEARCHAnalyses from Moodys Capital Markets Research, Inc. (CMR) focus on explaining signals from the credit and equity markets. The publications address whether market signals, in the opinion of the groups analysts, accurately reflect the risks and investment opportunities associated with issuers and sectors. CMR research thus complements the fundamentally-oriented research offered by Moodys Investors Service (MIS), the rating agency.CMR is part of Moodys Analytics, which is one of the two operating businesses of Moodys Corporation. Moodys Analytics (including CMR) is legally and organizationally separated from Moodys Investors Service and operates on an arms length basis from the ratings business. CMR does not provide investment advisory services or products.View the CMR FAQ Contact the CMR team Follow us on TwitterMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research,Inc. is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products.For further detail, please see the last page.BP p.l.c.BP p.l.c.: Three Market Signals Rebound from Bottoms All three market-implied ratings for BP have increased from their lowest points over the last year.The CDS-implied rating is Baa2 (Figure 1) now. It was Baa1 one year ago and declined to a recent low of Ba1 for some data points in January and February 2016. Since then it has varied between Baa3 and Baa1.The EDF'-implied rating for BP is Baa2. It fell by three notches from its best level of A3 over the last twelve months to its nadir. The current EDF-implied rating recovered by one notch from its recent lowest point of Baa3.The bond-implied rating is Aa3 for BP Capital Markets p.l.c. (Figure 2); we do not publish a bond-implied rating for BP p.l.c. This bond-implied rating was A1 one year ago, it sank to a bottom of Baa1 on several dates between early January and February 19, 2016 and subsequently rallied by four notches to Aa3.MOODY'S ANALYTICS CORPORATES2 12 October 2016 BP p.l.c.: BP p.l.c.: Three Market Signals Rebound from BottomsFIGURE 1. BP P.L.C.: MOODYS AND MARKET-IMPLIED RATINGS AND GAPS, LAST 12 MONTHS (DAILY OBSERVATIONS)According to our ratings gap-conditioned transition matrices, companies rated A2 with a CDS-implied rating of Baa2 have outperformed the broad market 43% of the time over the following 12 months, matched the markets performance 29% of the time, and underperformed the broad market 27% of the time.The EDF-implied ratings gap is -3 notches, do...
