CORPORATESISSUER COMMENT 13 OCTOBER 2015ALCOA, INC. (AA)Moodys Senior Unsecured Rating Ba1Moodys Outlook DEVBond-Implied Rating Ba1CDS-Implied Rating B1EDF-Implied Rating Ba2As of 10/12/2015ANALYST CONTACTSAllerton 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.Market Signals ReviewAlcoa, Inc.: Market-Implied Ratings Recently Recover from Long-Term Lows The bond-, EDF'-, and CDS-implied ratings for Alcoa are all better than their lowest points of the last 30 days. The bond- and CDS-implied ratings now match their levels of a month ago and the EDF-implied rating is one notch higher than it was (Figure 1).FIGURE 1. ALCOA: MOODYS AND MARKET-IMPLIED RATINGS, 30 DAYS (DAILY DATA)The bond-implied rating was Ba1 a month ago, fell to Ba3 on September 29 (its lowest level over the last five years) and subsequently regained Ba1 again.MOODY'S ANALYTICS CORPORATES2 13 OCTOBER 2015 MARKET SIGNALS REVIEW: ALCOA, INC.: MARKET-IMPLIED RATINGS RECENTLY RECOVER FROM LONG-TERM LOWSThe companys CDS-implied rating is B1. In the last week of September it fell to B3 on several days (its worst observation over the past five years), but rebounded.Alcoas EDF-implied rating is Ba2. On several dates over the last month it climbed to Ba1, but was unable to sustain that advance. One month ago it was Ba3.According to our ratings gap-conditioned transition matrices, companies rated Ba1 with a bond-implied rating of Ba1 outperformed the broad market 3% of the time over the following 12 months, matched the markets performance 11% of the time, and underperformed the broad market 50% of the time.Readers will recall that when a market-implied rating falls the underlying securities have underperformed the broad market. 1Alcoas bond-, CDS- and EDF-implied ratings gaps improved...
