CORPORATESISSUER COMMENT 13 June 2016RATINGSEXXON MOBIL CORPORATION (XOM) Moodys SR Unsecured Rating AaaMoodys Outlook NEGBond-Implied Rating Aa3CDS-Implied Rating A2EDF-Implied Rating Aa1As of June 8, 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 ReviewExxon Mobil: Market-Implied Ratings Gaps Remain Negative and Two Slip Lower Reflecting the continuing softness in global oil prices, the CDS-, bond-, and EDF'- implied ratings gaps for Exxon remained negative over the last 365 days. The CDS- and bond-implied ratings gaps are weaker than their levels of one year ago.Exxons CDS-implied ratings gap moved four notches lower over the year, to -5 notches (Figure 1), its worst observation over the last five years. The bond-implied ratings gap deteriorated by one notch to -3 notches over the 12-month period. The companys EDF-implied ratings gap was -1 notch in June 2015. It slipped to -3 notches between early December 2015 and February 2016, but has now returned to -1 notch.FIGURE 1. EXXON: MARKET-IMPLIED RATING GAPS, LAST 12 MONTHS (DAILY DATA)Our ratings gap conditioned transition matrices show that when a company is rated Aaa with a bond-implied rating of Aa3, over the following 12 months it was downgraded 11% of the time and remained the same 89% of the time. On February 25, 2016 Moodys affirmedMOODY'S ANALYTICS CORPORATES2 13 June 2016 Market Signals Review: Exxon Mobil: Market-Implied Ratings Gaps Remain Negative and Two Slip LowerExxons Aaa senior debt rating and changed the outlook to negative from stable (where it had been since 2003).Exxon has adjusted its strategies by indicating it will defer expansion in some areas and reduce exposures to its businesses with the weakest profit margins, while at the same ti...
