FINANCIAL INSTITUTIONSISSUER COMMENT 10 NOVEMBER 2015KEYCORP (KEY)Moodys Senior Unsecured Rating Baa1Moodys Outlook RURBond-Implied Rating A3CDS-Implied Rating A3EDF-Implied Rating Baa2As of 11/09/2015ANALYST 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 ReviewKeyCorp: Market Signals Mostly Range Bound KEYs bond and EDF'-implied ratings were mostly stable over the last 12 months.The bond-implied rating remained in a narrow range between A3 and its present level of Baa1, save for a few days in the first week of February when it climbed to A1 and a few days in July when it rose to A2. Five years ago it sank to a nadir of Baa3; thus its variation over the period has been a six notch swing from trough to peak.The EDF-implied rating stayed between a high of Baa1 and a low of Baa2 over the last year. Five years ago the EDF-implied rating was Ba1, which shows an impressive three-notch advance to its recent apex.FIGURE 1. KEYCORP: MOODYS AND MARKET-IMPLIED RATINGS IN THE LAST 365 DAYS (DAILY DATA)MOODY'S ANALYTICS FINANCIAL INSTITUTIONS2 10 NOVEMBER 2015 MARKET SIGNALS REVIEW: KEYCORP: MARKET SIGNALS MOSTLY RANGE BOUNDThe CDS-implied rating is not available on a regular basis due to illiquidity in KEYs CDS contracts, so we place very limited reliance on this market signal.According to our ratings gap-conditioned transition matrices of market performance history, companies rated Baa1 with a bond-implied rating of A3 outperformed the broad market 25% of the time in the following 12 months, matched the markets performance 27% of the time, and underperformed the broad market 47% of the time. Given that KEYs bonds already trade on top of several higher-rated super-regional bank peers, we see limited opportunity for furth...
