CORPORATESISSUER COMMENT 10 DECEMBER 2015CONOCOPHILLIPS (COP)Moodys Senior Unsecured Rating A2Moodys Outlook STABond-Implied Rating Baa1CDS-Implied Rating Baa2EDF-Implied Rating Ba2As of 12/9/2015ANALYST 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 ReviewConocoPhillips: Market-Implied Ratings Fall to Five-Year Lows ConocoPhillipss bond-, CDS-, and EDF'-implied ratings all declined over the last twelve months and are at their weakest levels of the past five years (Figure 1).The companys bond-implied rating slipped one notch to Baa1. Its CDS-implied rating weakened two notches to Baa2. The EDF-implied rating retreated six notches to Ba2.FIGURE 1. CONOCOPHILLIPS: MOODYS AND MARKET-IMPLIED RATINGS, LAST 365 DAYS (DAILY DATA)According to our ratings gap-conditioned transition matrices, companies rated A2 with a bond-implied rating of Baa1 outperformed the broad market 35% of the time over the following 12 months, matched the markets performance 10% of the time, and underperformed the broad market 54% of the time.MOODY'S ANALYTICS CORPORATES2 10 DECEMBER 2015 MARKET SIGNALS REVIEW: CONOCOPHILLIPS: MARKET-IMPLIED RATINGS FALL TO FIVE-YEAR LOWSReaders will recall that when a market-implied rating is unchanged, the underlying securities have matched the performance of the broad market. However, when an implied rating falls, as occurred with ConocoPhillips, the underlying securities have underperformed the broad market. 1ConocoPhillipss EDF-implied ratings gap is -6 notches. It was -1 notch 12 months ago, and includes the effect of the rating downgrade from A1 to A2 by Moody's Investors Service (MIS) in August. Over the period the CDS-implied ratings gap swung between -2 and -3 notches (Figure 2). The bond-implied ra...
