CORPORATESISSUER COMMENT 13 JULY 2015HONEYWELL INTERNATIONAL INC (HON)Moodys Senior Unsecured Rating A2Moodys Outlook RU STABond-Implied Rating Aa3CDS-Implied Rating Aa2EDF-Implied Rating AaaAs of 7/8/2015ANALYST 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 ReviewHoneywell: Three Market-Implied Ratings Follow Different Paths Recently Over the last 90 days the market-implied ratings for Honeywell moved along different routes.Honeywells bond-implied rating fluctuated several times between Aa3 and A1. It presently stands at Aa3, matching its level of 90 days ago (Figure 1). The CDS-implied rating fell by two notches from Aaa, reaching the Aa2 level. The EDF'-implied rating has not varied from Aaa.FIGURE 1. HONEYWELL: MOODYS AND MARKET-IMPLIED RATINGS, LAST 90 DAYS (DAILY DATA)According to our ratings gap-conditioned transition matrices, companies rated A2 with a bond-implied rating of Aa3 outperformed the broad market 19% of the timeMOODY'S ANALYTICS CORPORATES2 13 JULY 2015 MARKET SIGNALS REVIEW : HONEYWELL: THREE MARKET-IMPLIED RATINGS FOLLOW DIFFERENT PATHS RECENTLYover the following 12 months, matched the markets performance 9% of the time, and underperformed the broad market 72% of the time.As shown in Figure 2, the bond-implied ratings gap was +2 notches 90 days ago. On multiple dates it fell to +1 notch but has returned to +2 notches at present. The CDS-implied ratings gap was +5 notches and now has shifted lower to the +3 notch level. The EDF-implied ratings gap is unchanged over the last 90 days at +5 notches.Readers will recall that when an implied rating falls, as Honeywells CDS-implied rating has recently, the underlying securities have underperformed the broad market. 1FIGURE 2. HONEYWELL: MARKET...
