FINANCIAL INSTITUTIONSISSUER COMMENT 3 May 2016RATINGSCREDIT SUISSE GROUP AG (CS) Moodys SR Unsecured Rating Baa3Moodys Outlook STABond-Implied Rating naCDS-Implied Rating Ba1EDF-Implied Rating Ba2As of April 29, 2016CREDIT SUISSE (USA), INC. (CS-USA) Moodys SR Unsecured Rating A2Moodys Outlook STABond-Implied Rating Baa2CDS-Implied Rating Ba1EDF-Implied Rating naAs of April 29, 2016ContactsAllerton 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 ReviewCredit Suisse: Market Signals Are Weaker Credit Suisse Group AG and Credit Suisse (USA) Inc. continue to struggle to recover from the financial crisis and to adapt to fresh regulatory requirements and management challenges. Despite both entities ongoing restructuring and refocusing efforts, and the shifts in executive leadership, their market-implied ratings are below their Moodys ratings. When a market-implied rating is worse than an entitys senior debt rating from Moodys, it signals that investors perceive a greater degree of credit risk than the current MIS rating conveys.FIGURE 1. CREDIT SUISSE GROUP AG, MOODYS AND MARKET-IMPLIED RATINGS LAST 12 MONTHSThe CDS-implied rating for Credit Suisse Group AG is Ba1, a -1 notch CDS-implied ratings gap (Figure 1). The EDF' (Expected Default Frequency)-implied rating for CS is Ba2, down by three notches from a year ago, and now represents an EDF-implied ratings gap of -2 notches. Based on CSs market signals, and reflecting its most recent financial results, it would appear that investors are still waiting for CS to show more progress in its reorientation and demonstration of tighter financial controls. Since 2012, the Moodys rating for CS has shifted from Aa2 to Baa3. This seven notch deterioration is one of the more profound amongMOODY'S AN...
