CORPORATESISSUER COMMENT 24 SEPTEMBER 2015AMAZON.COM, INC. (AMZN)Moodys Sr. Unsecured Rating Baa1Moodys Outlook NEGBond-Implied Rating A1CDS-Implied Rating A2EDF-Implied Rating Aa3As of 9/23/2015ANALYST 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 ReviewAmazon.com: Two Market-Implied Ratings Improve Since a year ago the bond- and EDF-implied ratings for Amazon are both higher by two notches. The CDS-implied rating, which provides fewer observations, presently matches its level of June 26, 2015 (our earliest observation).Figure 1. Amazon: Moodys and market-implied ratings, last year (daily data)The bond-implied rating progressed from A3 12 months ago to A1 (Figure 1). Over the period it has been as high as Aa3 and as low as A3.Amazons EDF-implied rating climbed from A2 one year ago to Aa3 at present. On multiple dates during the period it rose to Aa2, but was not able to sustain that. The lowest EDF-implied rating was Baa2, observed over several dates in April.MOODY'S ANALYTICS CORPORATES2 24 SEPTEMBER 2015 MARKET SIGNALS REVIEW: AMAZON.COM: TWO MARKET-IMPLIED RATINGS IMPROVEThe CDS-implied rating is A2, identical to its level in June. Since June it remained in a range between A2 and A3. Given the illiquidity of Amazons CDS contracts, we would place less reliance on this market signal.According to our ratings gap-conditioned transition matrices, companies rated Baa1 with a bond-implied rating of A1 outperformed the broad market 18% of the time over the following 12 months, matched the markets performance 7% of the time, and underperformed the broad market 75% of the time.Over the last twelve months, Amazons bond-implied ratings gap moved from +1 notch to +3 notches (Figure 2). The +4 notch EDF-implied ratin...
