CORPORATESISSUER COMMENT 2 DECEMBER 2015NIKE, INC. (NKE)Moodys Senior Unsecured Rating A2Moodys Outlook STABond-Implied Rating Aa2CDS-Implied Rating Aa3EDF-Implied Rating AaaAs of 11/30/2015ANALYST 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 ReviewNIKE: Market-Implied Ratings Run in Different Directions Over the last 90 days, NIKEs two fixed income market-implied ratings showed different trends. The bond-implied rating rose from a nadir of A1 to Aa2. The CDS-implied rating fell from plateau of Aa2 to Aa3 (Figure 1). The EDF-implied rating has been steadfast at Aaa not only for the last 90 days, but since February 2012.NIKEs bond-implied rating exhibited above-average volatility over the last 12 months. It fluctuated between a peak of Aa2 and a low of A2. The CDS-implied rating for Nike is now Aa3, down by two notches from its recent peak of Aa1 one year ago.FIGURE 1. NIKE: MOODYS AND MARKET-IMPLIED RATINGS, LAST 90 DAYS (WEEKLY DATA)MOODY'S ANALYTICS CORPORATES2 2 DECEMBER 2015 MARKET SIGNALS REVIEW: NIKE: MARKET-IMPLIED RATINGS RUN IN DIFFERENT DIRECTIONSAccording to our ratings gap-conditioned transition matrices, companies rated A2 with a bond-implied rating of Aa2 have outperformed the broad market 12% of the time over the following 12 months, matched the markets performance 13% of the time, and underperformed the broad market 76% of the time.As shown in Figure 2, Nikes CDS-implied ratings gap was +1 notch three months ago. It rose briefly to +2 notches, but was unable to sustain that advance, and has retreated to +1 notch once again. The bond-implied ratings gap was +2 notches. Over the last 90 days it moved down to -1 notch briefly, and has now returned to +2 notches. The EDF-implied ratings gap has b...
