CORPORATESISSUER COMMENT 29 JUNE 2015RITE AID CORPORATION (RAD)Moodys Senior Unsecured Rating B3Moodys Outlook STABond-Implied Rating Ba3CDS-Implied Rating B2EDF-Implied Rating B2As of 6/26/2015ANALYST 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 ReviewRite Aid Corp.: Two Market-Implied Ratings Slide from Recent Peaks Over the last two weeks the two fixed income oriented market-implied ratings for Rite Aid were not able to maintain their recent improvements. However the EDF' implied rating has not varied over the last 90 days.FIGURE 1. RITE AID: MOODYS AND MARKET-IMPLIED RATINGS, LAST 90 DAYS (DAILY DATA)Rite Aids bond-implied rating advanced to Ba2 for several days over the last two weeks, but has now retreated to Ba3 once again, matching its level of three months ago (Figure 1).The CDS-implied rating fell by three notches from Ba2 90 days ago, reaching the B2 level on June 26. The Ba2 observation matches the best level seen over the last three years. The B2 level is the lowest observed since last November.MOODY'S ANALYTICS CORPORATES2 29 JUNE 2015 MARKET SIGNALS REVIEW : RITE AID CORP.: TWO MARKET-IMPLIED RATINGS SLIDE FROM RECENT PEAKSThe EDF'-implied rating has not varied from B2 over the last 90 days.According to our ratings gap-conditioned transition matrices, companies rated B3 with a bond-implied rating of Ba3 outperformed the broad market 47% of the time over the following 12 months, matched the markets performance 7% of the time, and underperformed the broad market 46% of the time.As shown in Figure 2, the bond-implied ratings gap was +3 notches 90 days ago and recently moved up to +4 notches, but was unable to sustain that advance, returning down to +3 notches at present. The CDS-implied ratings g...
