FINANCIAL INSTITUTIONSISSUER COMMENT 16 NOVEMBER 2015BANK OF NOVA SCOTIA (BNS)Moodys Senior Unsecured Rating Aa2Moodys Outlook RURBond-Implied Rating Aa3CDS-Implied Rating naEDF-Implied Rating A2As of 11/13/2015ANALYST 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 Nova Scotia: Two Market Signals Lower Both of BNSs market signals declined recently from their best levels of the past 12 months. The bond-implied rating fell three notches from Aaa to Aa3 and the EDF'-implied rating slipped two notches from Aa3 to A2 (Figure 1).FIGURE 1. BANK OF NOVA SCOTIA. MOODYS AND MARKET-IMPLIED RATINGS LAST 12 MONTHS (DAILY OBSERVATIONS)On November 2 Moodys placed the ratings of BNS under review for downgrade (please see discussion below). Moodys senior-most (deposit) rating for BNS was last lowered, from Aa1 to Aa2, in January, 2013.The bond-implied rating was A1 one year ago, and stands one notch better today at Aa3. Most recently it weakened from Aaa on November 6 following the ratings review byMOODY'S ANALYTICS FINANCIAL INSTITUTIONS2 16 NOVEMBER 2015 MARKET SIGNALS REVIEW: BANK OF NOVA SCOTIA: TWO MARKET SIGNALS LOWERMoodys. The bond-implied rating moved up very briefly to Aaa three times over the last 12 months in February and August and early November before falling back again. Its low point over the last year was A3.The EDF-implied rating was A1 one year ago. It rose to Aa3 twice for brief periods, but was unable to sustain either advance for long. In the first week of September it weakened to A2, and has remained there.We do not publish a CDS-implied rating for BNS due to illiquidity in the banks CDS contracts.The bond-implied ratings gap was-2 notches a year ago. It rose to +2 notches in earl...
