CORPORATESISSUER COMMENT 16 February 2016RATINGSAPACHE CORPORATION (APA) Moodys SR Unsecured Rating Baa1Moodys Outlook RURBond-Implied Rating Ba2CDS-Implied Rating B1EDF-Implied Rating B2As of February 11, 2016ContactsAllerton 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 ReviewApache Corporation: Market-Implied Ratings Move to Decade Low Points The bond- and EDF'-implied ratings for Apache weakened recently to their worst levels of the last 10 years. The CDS-implied rating reached its 10-year low, B2, on December 17, 2015, rose to B3 on January 21, and has varied between B2 and Ba3 since then. Its current level is B1. The sharp decline in global energy prices is weighing heavily on the market signals of energy companies such as Apache.FIGURE 1. GLOBAL CDS-IMPLIED RATING GAPS BY SECTOREnergy companies globally have experienced a severe and rapid deterioration in their CDS-implied ratings gaps (Figure 1). For the sector of 69 global energy companies that we monitor, the average CDS-implied ratings gap is nearly -5 notches (red line) which mapped to an average CDS spread of 833 bp as of February 10. The energy sector average CDS-implied ratings gap is much worse than its -1 notch level two years ago (blue line), zero notch level four years ago (green line), and +1 notch level seven years ago (purple line). The average CDS-implied ratings of the energy sector have underperformed all sectors in comparison to the levels seven years ago and 12 months ago. Following the energy sector, global banking today has the second largest CDS-implied ratings gap of -3 notches, among 11 market-MOODY'S ANALYTICS CORPORATES2 16 February 2016 Market Signals Review: Apache Corporation: Market-Implied Ratings Move to Decade Low Pointsimplied rating categories....
