CORPORATESISSUER COMMENT 29 JULY 2015FORD MOTOR COMPANY (F)Moodys Senior Unsecured Rating Baa3Moodys Outlook RU STABond-Implied Rating Baa2CDS-Implied Rating Baa2EDF-Implied Rating Ba1As of 7/28/2015ANALYST 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 ReviewFord Motor Co.: Market Signals on Cruise Control Fords market signals all have been stable lately, reflecting investor comfort with the companys results. Over the last three months Fords market-implied ratings remained within a narrow band, up or down one notch, and each ended the period at the same level as at the start (Figure 1).The bond-implied rating has varied from Baa2 to Baa3. It stands at Baa2 today. The CDS-implied rating has been at Baa3 for the last three months. The EDF'-implied rating fluctuated between Ba2 and Ba3 and is Ba2 currently.FIGURE 1. FORD: MOODYS AND MARKET-IMPLIED RATINGS, LAST 90 DAYS (DAILY DATA)MOODY'S ANALYTICS CORPORATES2 29 JULY 2015 MARKET SIGNALS REVIEW : FORD MOTOR CO.: MARKET SIGNALS ON CRUISE CONTROLThe bond-implied ratings gap moved between zero and +1 notch over the last 90 days, starting and ending the period at +1 notch. The CDS-implied has been zero notches for each observation over the three months. The EDF-implied ratings gap is -2 notches, the same as its observation of April 28. It dipped to as low as -3 notches on several days over the span. (Figure 2.)Our ratings gap-conditioned transition matrices show that historically companies rated Baa3 with a bond-implied ratings gap of +1 notch outperformed the broad market 34% of the time, matched the markets performance 17% of the time, and underperformed the market 50% of the time over the following 12 months.Readers will recall that when an implied rating improv...
