CORPORATESISSUER COMMENT 10 AUGUST 2015LINN ENERGY, LLC (LINE)Moodys Senior Unsecured Rating B3Moodys Outlook STABond-Implied Rating CaCDS-Implied Rating naEDF-Implied Rating CaAs of 8/05/2015ANALYST 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 ReviewLinn Energy: Market-Implied Ratings Decline The bond- and EDF'-implied ratings for Linn Energy both worsened over the last 365 days. Each declined by five ratings grades.The bond-implied rating fell from B2 one year ago to Ca (Figure 1). It briefly climbed to B1 for several days, but did not sustain that level. Ca is the lowest bond-implied rating ever observed for Linn.Linn Energys EDF-implied rating dropped from B2 one year ago to Ca, its lowest level observed over the last five years.FIGURE 1. LINN ENERGY: MOODYS AND MARKET-IMPLIED RATINGS, LAST 365 DAYS (DAILY DATA)MOODY'S ANALYTICS CORPORATES2 10 AUGUST 2015 MARKET SIGNALS REVIEW : LINN ENERGY: MARKET-IMPLIED RATINGS DECLINEWe do not publish a CDS-implied rating on Linn Energy due to the illiquidity of the companys CDS contracts.According to our ratings gap-conditioned transition matrices, companies rated B3 with a bond-implied rating of Ca outperformed the broad market 62% of the time over the following 12 months, matched the markets performance 5% of the time, and underperformed the broad market 33% of the time.Readers will recall that when a market-implied rating falls the underlying securities have underperformed the broad market.Over the last 12 months, each of Linn Energys market-implied ratings gaps widened. The bond-implied ratings gap slipped down three notches from -1 notch to -4 notches (Figure 2). The EDF-implied ratings gap, now at -4 notches, is three notches under its most recent apex of -...
