CORPORATESISSUER COMMENT 27 MAY 2015COLGATE-PALMOLIVE COMPANY (CL)Moodys Senior Unsecured Rating Aa3Moodys Outlook STABond-Implied Rating Aa2CDS-Implied Rating Aa1EDF-Implied Rating AaaAs of 5/26/2015ANALYST 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 ReviewColgate-Palmolive: Market-Implied Ratings Drop The CDS-, and bond-implied ratings for Colgate-Palmolive have both moved lower recently.Despite the recent drops, Colgate-Palmolives three market-implied ratings gaps have remained positive on each day over the last five years - a highly constructive market signal.The CDS-implied rating for Colgate-Palmolive was Aaa 90 days ago, but presently stands at Aa1 (Figure 1). Over the last 12 months it has varied numerous times from a peak of Aaa to a low point of Aa2.FIGURE 1. COLGATE-PALMOLIVE: MOODYS AND MARKET-IMPLIED RATINGS, LAST 90 DAYS (DAILY DATA)MOODY'S ANALYTICS CORPORATES2 27 MAY 2015 MARKET SIGNALS REVIEW : COLGATE-PALMOLIVE: MARKET-IMPLIED RATINGS DROPThree months ago the bond-implied rating for Colgate-Palmolive was Aa1. Over the last three months it has fluctuated between that level and Aa2, where it remains today. On three dates over the last year it rose to Aaa, but was unable to sustain that advance.Colgate-Palmolives EDF-implied rating has been Aaa for the last five years, save for a single date (August 11, 2011) when it dipped to Aa1.According to our ratings gap-conditioned transition matrices, companies rated Aa3 with a bond-implied rating of Aaa2 outperformed the broad market 24% of the time over the following 12 months, matched the markets performance 23% of the time, and underperformed the broad market 53% of the time.Readers will recall that when a market-implied rating falls, as Colgate-...
