CORPORATESISSUER COMMENT 9 DECEMBER 2015HESS CORPORATION (HES)Moodys Senior Unsecured Rating Baa2Moodys Outlook STABond-Implied Rating Baa3CDS-Implied Rating B2EDF-Implied Rating Ba3As of 12/8/2015ANALYST 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 ReviewHess Corp.: All Three Market-implied Ratings Decline to Five-Year Lows The bond-, CDS-, and EDF'-implied ratings for Hess retreated from their high points of the past year to their lowest of the past five years.The drop in oil prices and the rising costs in the oil production sector are likely drivers of these market signals. Oil prices reached a six-year low this week.FIGURE 1. HESS: MOODYS AND MARKET-IMPLIED RATINGS, LAST 365 DAYS (DAILY DATA)The bond-implied rating fell by one notch, from Baa2 twelve months ago to Baa3 (Figure 1). Save for a single day (February 2, 2015) when it dipped to Ba1, the bond-implied rating has not been lower over the last five years. The CDS-implied rating moved down by four notches from Ba1 on December 8, 2014 to B2. The EDF'-implied rating weakened from Baa3 12 months ago to Ba3.MOODY'S ANALYTICS CORPORATES2 9 DECEMBER 2015 MARKET SIGNALS REVIEW: HESS CORP.: ALL THREE MARKET-IMPLIED RATINGS DECLINE TO FIVE-YEAR LOWSAccording to our ratings gap-conditioned transition matrices, companies rated Baa2 with a bond-implied rating of Baa3 outperformed the broad market 40% of the time over the following 12 months, matched the markets performance 41% of the time, and underperformed the broad market 45% of the time.Over the last twelve months, all of Hesss market-implied ratings gaps slid below their best observations. The CDS-implied ratings gap slipped down three notches to -5 notches (Figure 2). The bond-implied ratings gap is now -1...
