FINANCIAL INSTITUTIONSISSUER COMMENT 3 May 2016RATINGSHSBC HOLDINGS PLC (HSBH) Moodys SR Unsecured Rating A1Moodys Outlook NEGBond-Implied Rating Baa2CDS-Implied Rating Baa2EDF-Implied Rating Baa3As of May 2, 2016HSBC BANK PLC (HSB) Moodys SR Unsecured Rating Aa2Moodys Outlook STABond-Implied Rating A3CDS-Implied Rating Baa2EDF-Implied Rating naAs of May 2, 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 ReviewHSBC: Some Market Signals Rise But Challenges Remain Most of the market-implied ratings for HSBC Holdings plc (HSBH) and HSBC Bank plc (HSB) have rebounded off their recent lows, but the market-implied ratings gaps remain significant.For HSBH both the CDS- and EDF'- implied ratings recently improved, while the bond-implied rating remained unchanged. At HSB both the CDS- and bond-implied ratings strengthened by one notch over the last few weeks.FIGURE 1. HSBC HOLDINGS PLC, MOODYS AND MARKET-IMPLIED RATINGS - LAST 12 MONTHSThe CDS-implied rating for HSBC Holdings plc is Baa2, a -4 notch CDS-implied ratings gap (Figure 1). The EDF' (Expected Default Frequency)-implied rating for HSBH is Baa3, up by two notches from Ba2 in mid-March, and now represents an EDF-implied ratings gap of -5 notches versus -7 notches on March 12. The bond-implied rating for HSBH has been Baa2 since February 17, and is one notch under the Baa1 level observed one year ago. Despite the recent advances in the market-implied ratings the current significant market-implied ratings gaps indicate that investors are still waiting for HSBH to show better trends in intrinsic financial strengths, and are concerned over the deteriorating market conditions in HongMOODY'S ANALYTICS FINANCIAL INSTITUTIONS2 3 May 2016 Market Signals Review: HSBC: S...
