CORPORATESISSUER COMMENT 2 SEPTEMBER 2015CONSOL ENERGY INC. (CNX)Moodys Senior Unsecured Rating B1Moodys Outlook STABond-Implied Rating Caa3CDS-Implied Rating NAEDF-Implied Rating B3As of 8/31/2015ANALYST 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 ReviewCONSOL Energy: Two Market-Implied Ratings Decline The bond- and EDF'-implied ratings for CONSOL Energy were both down over the last year.The bond-implied rating was the worse of the two, steadily falling six notches from Ba3 to its current Caa3 (Figure 1), reflecting market concerns over the energy sector. This market-implied rating is currently at its lowest point observed over the last five years.CONSOL Energys EDF-implied rating dropped by four notches from Ba2 one year ago to B3. It recently recovered from its 12-month low point of Caa1.FIGURE 1. CONSOL ENERGY: MOODYS AND MARKET-IMPLIED RATINGS, LAST YEAR (DAILY DATA)Due to illiquidity in its CDS contracts, we do not publish a CDS-implied rating for the company.MOODY'S ANALYTICS CORPORATES2 2 SEPTEMBER 2015 MARKET SIGNALS REVIEW: CONSOL ENERGY: TWO MARKET-IMPLIED RATINGS DECLINEAccording to our ratings gap-conditioned transition matrices, companies rated B1 with a bond-implied rating of Caa3 outperformed the broad market 75% of the time over the following 12 months, matched the markets performance 6% of the time, and underperformed the broad market 20% of the time.Over the last twelve months, CONSOL Energys bond- and EDF-implied ratings gaps deteriorated. The bond-implied ratings gap slipped down six notches from +1 notch to -5 notches (Figure 2). The EDF-implied ratings gap, now at -2 notches, is four notches under its most recent apex of +2 notches.Readers will recall that when a market-implied rati...
