FINANCIAL INSTITUTIONSISSUER COMMENT 19 OCTOBER 2015JP MORGAN CHASE&CO.(JPM)Moodys Senior Unsecured Rating A3Moodys Outlook STABond-Implied Rating Baa1CDS-Implied Rating Baa2EDF-Implied Rating Baa1As of 10/15/2015ANALYST 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 ReviewJPMs Market-Implied Ratings Slip Lower JP Morgan Chase&Co.s three market-implied ratings worsened over the last 90 days. The bond-implied rating is lower by three notches from its best observation over the last three months, while the CDS-implied rating and the EDF'-implied rating each slipped by one notch (Figure 1).FIGURE 1. JPMORGAN CHASE&CO.: MOODYS AND MARKET-IMPLIED RATINGS LAST 90 DAYS (DAILY DATA)Investor caution about a difficult operating environment, pending regulatory challenges (TLAC), uncertainty about the path of interest rates, and the banks exposures to the commercial lending and energy sectors likely contributed to the fall in the implied ratings.MOODY'S ANALYTICS FINANCIAL INSTITUTIONS2 19 OCTOBER 2015 MARKET SIGNALS REVIEW: JPMS MARKET-IMPLIED RATINGS SLIP LOWERThird-quarter results, released this week, showed revenue declines in JPMs four principle business segments.The bond-implied rating fell by three notches from A1 to Baa1 since July 15. The CDS-implied rating is Baa2, one notch down. The EDF'-implied rating declined by one notch, to Baa1.Readers will recall that when an implied rating worsens, the underlying securities have underperformed the broad market.Our ratings gap-conditioned transition matrices (available on Moodys CreditView) show that historically the bonds of a company rated A3 with a bond-implied ratings gap of -1 notch (in this case a bond-implied rating of Baa1) have outperformed the broad ...
