CORPORATESISSUER COMMENT 4 AUGUST 2015CHEVRON CORPORATION (CVX)Moodys Senior Unsecured Rating Aa1Moodys Outlook STABond-Implied Rating Aa3CDS-Implied Rating A2EDF-Implied Rating Baa2As of 8/03/2015ANALYST 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 ReviewChevron Corp.: Market-Implied Ratings Decline The CDS-, bond-, and EDF'-implied ratings for Chevron all worsened over the last 90 days. The EDF-implied rating experienced the worst recent performance of the three, falling seven notches from Aa1 to Baa2 since late January.FIGURE 1. CHEVRON: MOODYS AND MARKET-IMPLIED RATINGS, LAST 90 DAYS (DAILY DATA)The companys CDS-implied rating moved down by four notches from Aa1 three months ago to A2 (Figure 1). It rose again to Aa1 for a few days but was not able to maintain that advance. It now matches its lowest level observed over the last year.MOODY'S ANALYTICS CORPORATES2 4 AUGUST 2015 MARKET SIGNALS REVIEW : CHEVRON CORP.: MARKET-IMPLIED RATINGS DECLINEThe bond-implied rating is lower by two notches, from Aa1 on May 3 to Aa3. It briefly slipped to A1 on two days, but has now made a recovery from that level. A1 is the lowest bond-implied rating observed since June 2013.Chevrons EDF-implied rating dropped from Aa1 90 days ago to Baa2, its lowest level observed over the last five years. Since January 29 the EDF-implied rating has worsened by seven notches, falling from its most recent high of Aa1 to the current Baa2.The recent decline in oil prices and the rising production costs in the oil production sector are likely drivers of this market signals decline. Chevron announced a 90% drop in earnings on July 31. It went from bringing in $5.7 billion in the second quarter of 2014 to reporting just $571 million in Q2 of ...
