CORPORATESISSUER COMMENT 8 SEPTEMBER 2015MEDTRONIC, INC. (MDT)Moodys Senior Unsecured Rating A3Moodys Outlook NEGBond-Implied Rating A2CDS-Implied Rating A2EDF-Implied Rating Aa2As of 9/4/2015ANALYST 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 ReviewMedtronic, Inc.: Two Market-Implied Ratings Decline The EDF'- and CDS-implied ratings for Medtronic, Inc. both worsened over the last year. The EDF-implied rating dropped from Aaa to Aa2 (Figure 1). It has not been this low since May 2013.The companys CDS-implied rating is A2, down four notches from Aa1 a year ago. It dipped to A3 on several occasions briefly over the last 12 months.The bond-implied rating matches its A2 of one year ago. Over the year it has varied from a high of A1 to a low of A3.FIGURE 1. MEDTRONIC, INC.: MOODYS AND MARKET-IMPLIED RATINGS, LAST YEAR (DAILY DATA)MOODY'S ANALYTICS CORPORATES2 8 SEPTEMBER 2015 MARKET SIGNALS REVIEW: MEDTRONIC, INC.: TWO MARKET-IMPLIED RATINGS DECLINEAccording to our ratings gap-conditioned transition matrices, companies rated A3 with a bond-implied rating of A2 outperformed the broad market 24% of the time over the following 12 months, matched the markets performance 10% of the time, and underperformed the broad market 65% of the time.Readers will recall that when a market-implied rating falls the underlying securities have underperformed the broad market. 1Over the last twelve months, Medtronic, Inc.s EDF- and CDS-implied ratings gaps widened. The EDF-implied ratings gap, now at +4 notches, is two notches under its most recent apex of +6 notches and one notch lower than a year ago. The CDS-implied ratings gap dropped from +4 notches to +1 notch. The bond-implied ratings gap is +1 notch versus zero notches a yea...
