FINANCIAL INSTITUTIONSISSUER COMMENT 22 JUNE 2015BANK OF AMERICA CORP. (BAC)Moodys Senior Unsecured Rating Baa1Moodys Outlook STABond-Implied Rating Baa1CDS-Implied Rating Baa1EDF-Implied Rating A2As of 6/17/2015ANALYST 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 ReviewBank of America: All Market Signals Rally Each of BACs three market-implied ratings improved over the last 30 days (Figure 1). Readers will recall that if an entitys implied ratings rise, the underlying securities have outperformed the broad market.FIGURE 1. BANK OF AMERICA CORP.: MOODYS AND MARKET-IMPLIED RATINGS, LAST 30 DAYS (DAILY DATA)The CDS-implied rating for BAC was Baa2 one month ago. Most recently, it climbed to Baa1 on June 5. BACs five-year CDS mid-spread of 74 bp compares to such peers as Wells Fargo (52 bp), JP Morgan Chase (68 bp), Citigroup (83 bp), Morgan Stanley (83 bp), and Goldman Sachs (94 bp).MOODY'S ANALYTICS FINANCIAL INSTITUTIONS2 22 JUNE 2015 MARKET SIGNALS REVIEW : BANK OF AMERICA: ALL MARKET SIGNALS RALLYThe bond-implied rating rose one notch to Baa1 in the first week of June, and has maintained that level since.The EDF-implied rating was A3 on May 18. It rose one notch to A2 in the last week of May, and remains at A2.Our ratings gap-conditioned transition matrices (available on Moodys CreditView) show that historically the bonds of a company rated Baa1 with a bond-implied ratings gap of zero notches outperformed the broad market 33% of the time in the following 12 months, matched the markets performance 28% of the time, and underperformed 32% of the time.The market-implied ratings gaps reflect Moodys upgrade of BACs senior unsecured debt from Baa2 to Baa1 on May 28. The CDS-implied ratings gap presently match...
