FINANCIAL INSTITUTIONSSECTOR IN-DEPTH 4 May 2016TABLE OF CONTENTS Negative Headlines Do Not Sideline Bank Fixed Income Investors 1Market-implied ratings tables for global banking regions and companies 3 Monthly Bank Risk Report: key CDS credit metrics4Monthly Bank Risk Report: key bond credit metrics 8 Appendix: Moodys Capital Markets Research - recent publications on finance sector16ContactsAllerton 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.Bank Risk ReportNegative Headlines Do Not Sideline Bank Fixed Income Investors There was a lot not to like in the bank sector headlines over the last month. Most banks did not pass their regulatory review of SIFI banks living wills (the surprise champ was CitiGroup). New regulatory pressure for faster credit loss recognition under IFRS #9 portends further earnings pressure. And Q12016 bank earnings results mostly ranged from unexciting to disappointing. Nevertheless, globally many bank credit spreads performed well over the last 30 days.The five-year CDS-mid-spread tightened for five of the six regions we monitor in this publication, with average improvement of 4%. The laggard was the Asia-Pacific region where the average CDS spread widened by 10% by 18 bp from 178 bp at the end of March to 196 bp at the beginning of May.The widest CDS spreads remain in the Russia and Eastern Europe region and the South American region, with averages of 470 bp and 400 bp respectively. The tightest CDS spread is seen in North America at 77 bp, highlighting investor preferences moving away from emerging regions into more stable and mature economies.Average CDS-implied ratings were unchanged for four regions over the month of April: Asia-Pacific (Ba1), Europe (Ba3), North America (Baa1) and South America (B2). This rating improved by on...
