CORPORATESISSUER COMMENT 13 June 2016RATINGSFEDEX CORPORATION (FDX) Moodys SR Unsecured Rating Baa2Moodys Outlook STABond-Implied Rating Baa2CDS-Implied Rating A2EDF-Implied Rating Aa2As of June 8, 2016ContactsXian Li 1.212.553.1404Senior Research Analyst xian.li@moodys.comAllerton 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 ReviewFedEx Corp.: Two Market Signals Down Moodys downgraded FedExs senior unsecured rating by one notch to Baa2 in March 2016. FedEx's three market-implied ratings responded idiosyncratically: the bond- and EDF'-implied ratings are down; the CDS-implied rating is up.FedExs bond-implied rating stands at Baa2, one notch below its level of twelve months ago (Figure 1). This rating moved briefly up to A2 in April 2016, but it remained relatively stable between A3 and Baa2 over the last year. The companys EDF'-implied rating is Aa2, down by two notches. The CDS-implied rating is A2, one notch better than 365 days ago. Over the last year the CDS-implied rating varied in a narrow band between A3 and A1.FIGURE 1. FEDEX: MOODYS AND MARKET-IMPLIED RATINGS, LAST 365 DAYS (DAILY DATA)According to our ratings gap-conditioned transition matrices, companies rated Baa1 with a bond-implied rating of Baa1 have outperformed the broad market 31% of the time over the following 12 months, matched the markets performance 37% of the time, and underperformed the broad market 32% of the time.FedExs market-implied ratings gaps remain healthy, with none straying into negative territory currently. The bond-implied ratings gap is now at zero notches, identical to its level one year ago. The EDF-implied ratings gap is down by one notch, but still at a remarkableMOODY'S ANALYTICS CORPORATES2 13 June 2016 Market Signals Review: FedEx C...
