CORPORATESISSUER COMMENT 21 MAY 2015BEST BUY CO., INC (BBY)Moodys Senior Unsecured Rating Baa2Moodys Outlook STABond-Implied Rating Ba1CDS-Implied Rating B1EDF-Implied Rating B2As of 5/20/2015ANALYST 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 ReviewBest Buy: Fixed-Income Market Signals Are Better The bond- and CDS-implied ratings for Best Buy both improved over the last 90 days (Figure 1).The bond-implied rating rose from Ba2 to Ba1 and the CDS-implied rating from B2 to B1. The EDF'-implied rating remained unchanged at B2.FIGURE 1. BEST BUY: MOODYS AND MARKET-IMPLIED RATINGS, LAST 90 DAYS (DAILY DATA)According to our ratings gap-conditioned transition matrices, companies rated Baa2 with a bond-implied rating of Ba2 outperformed the broad market 49% of the time over the following 12 months, matched the markets performance 25% of the time, and underperformed the broad market 24% of the time.MOODY'S ANALYTICS CORPORATES2 21 MAY 2015 MARKET SIGNALS REVIEW : BEST BUY: FIXED-INCOME MARKET SIGNALS ARE BETTERThe CDS-implied ratings gap is -5 notches, as shown in Figure 2. Ninety days ago the CDS-implied ratings gap was -6 notches. The bond-implied ratings gap is -2 notches today, one notch better than the -3 notch gap observed 90 days ago. Since February 20, the EDF-implied ratings gap has been unchanged at -6 notches.Readers will recall that when an implied rating rises, the underlying securities have outperformed the broad market. 1FIGURE 2. BEST BUY: MARKET-IMPLIED RATING GAPS, LAST 90 DAYS (DAILY DATA)MOODY'S ANALYTICS CORPORATES3 21 MAY 2015 MARKET SIGNALS REVIEW : BEST BUY: FIXED-INCOME MARKET SIGNALS ARE BETTEROver the last three years Best Buys bond-implied rating varied over a six-notch range ...
