CORPORATESISSUER COMMENT 19 SEPTEMBER 2015ROCKWELL COLLINS INC. (COL)Moodys Sr. Unsecured Rating A3Moodys Outlook STABond-Implied Rating A2CDS-Implied Rating Baa2EDF-Implied Rating Aa3As of 9/16/2015ANALYST 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 ReviewRockwell Collins: Market-Implied Ratings Follow Different Paths The bond-implied rating for Rockwell Collins is down over the last year, the CDS-implied rating matches its level on September 15, 2014, and the EDF'-implied rating is up.The bond-implied rating fell from A1 to A2 (Figure 1). It has been the most volatile of COLs market-implied ratings, changing frequently. Over the last 12 months it has been as high as Aa3 and as low as Baa2.The CDS-implied rating is Baa2, identical to its level a year ago. Over the period it remained in a range between Baa1 and Baa3.Rockwell Collinss EDF-implied rating has climbed from A3 one year ago to Aa3 at present. On multiple dates over the last year the EDF-implied rating rose to Aa2, but was not able to sustain that.FIGURE 1. ROCKWELL COLLINS: MOODYS AND MARKET-IMPLIED RATINGS, LAST YEAR (DAILY DATA)MOODY'S ANALYTICS CORPORATES2 19 SEPTEMBER 2015 MARKET SIGNALS REVIEW: ROCKWELL COLLINS: MARKET-IMPLIED RATINGS FOLLOW DIFFERENT PATHSAccording 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.Over the last twelve months, Rockwell Collinss bond-implied ratings gap weakened, slipping down from +2 notches to +1 notch (Figure 2). The CDS-implied ratings gap today matches its level from 12 month...
