CORPORATESISSUER COMMENT 4 JUNE 2015JOHNSON&JOHNSON (JNJ)Moodys Senior Unsecured Rating AaaMoodys Outlook STABond-Implied Rating Aa1CDS-Implied Rating AaaEDF-Implied Rating AaaAs of 5/29/2015ANALYST 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 ReviewJohnson&Johnson: Market-Implied Ratings Remain Robust The market-implied ratings for Johnson&Johnson remain very strong and highlight the companys financial solidity.The CDS-implied rating is Aaa (Figure 1). It has been Aaa most of the last five years, with a few short dips to Aa1 in 2011-2013. The bond-implied rating, now Aa1, has been somewhat more volatile. Over the last five years it ranged from Aaa to a brief low point of A2. The EDF'-implied rating has been at Aaa for the last five years.FIGURE 1. JOHNSON&JOHNSON: MOODYS AND MARKET-IMPLIED RATINGS, LAST 90 DAYS (WEEKLY DATA)MOODY'S ANALYTICS CORPORATES2 4 JUNE 2015 MARKET SIGNALS REVIEW : JOHNSON&JOHNSON: MARKET-IMPLIED RATINGS REMAIN ROBUSTAccording to our ratings gap-conditioned transition matrices, companies rated Aaa with a bond-implied rating of Aa1 outperformed the broad market 27% of the time over the following 12 months, matched the markets performance 45% of the time, and underperformed the broad market 28% of the time.Readers will recall that when a market-implied rating remains unchanged, the underlying securities have matched the performance of the broad market. 1The bond-implied ratings gap is -1 notch (Figure 2). The CDS-implied ratings gap has been zero notches on each day since January 18, 2013. The EDF-implied ratings gap remains unchanged from five years ago at zero notches.FIGURE 2. JOHNSON&JOHNSON: MARKET-IMPLIED RATINGS GAPS, LAST 90 DAYS (WEEKLY DATA)EDF credit measure obs...
