CORPORATESISSUER COMMENT 1 June 2016RATINGSREPSOL S.A. (REP) Moodys SR Unsecured Rating Baa2Moodys Outlook NEGBond-Implied Rating NACDS-Implied Rating Ba2EDF-Implied Rating Ba3As of May 31, 2016ContactsXian Li 1.212.553.1404Senior Research Analyst xian.li@moodys.comAllerton 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 ReviewRepsol S.A.: Market Signals Bounce Off Bottom Repsol S.A.s market signals began to recover from their three-year low points in January and have improved steadily since then. However, the companys CDS- and EDF'-implied ratings are still below its Moodys rating. When an entitys market-implied rating is worse than its senior debt rating from Moodys, it signals that investors may perceive a greater degree of credit risk than the current Moodys Investors Service senior debt rating conveys.The CDS-implied rating for Repsol S.A. is Ba2 (Figure 1), a -3 notch CDS-implied ratings gap (Figure 2). It has been within the range of Baa2 to B3 over the last 12 months. One year ago, REPs CDS-implied rating was Baa3 and declined to its lowest level of B3 on multiple dates since then.FIGURE 1. REPSOL S.A., MOODYS AND MARKET-IMPLIED RATINGS - LAST 12 MONTHS (DAILY OBSERVATIONS)The EDF' (Expected Default Frequency)-implied rating for REP is Ba3, down by three notches from a level of Baa3 a year ago, and now represents an EDF-implied ratings gap ofMOODY'S ANALYTICS CORPORATES2 1 June 2016 Market Signals Review: Repsol S.A.: Market Signals Bounce Off Bottom-4 notches. REPs CDS- and EDF-implied ratings have both bounced up from low points of B3 and B2, respectively, at the beginning of this year.We do not publish a bond-implied rating for Repsol S.A. Its debt issuing affiliate, Repsol International Finance B.V., has a bond-im...
