CORPORATESISSUER COMMENT 14 January 2016RATINGSROYAL DUTCH SHELL PLC (RDSA) Moodys SR Unsecured Rating Aa1Moodys Outlook STABond-Implied Rating naCDS-Implied Rating Ba1EDF-Implied Rating Ba2As of 1/12/2016ContactsAllerton 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 ReviewRoyal Dutch Shell Plc: Market-Implied Ratings Fall to Lows The CDS- and EDF'-implied ratings for Shell are at their lowest points ever observed over the past 10 years. This is typical for large integrated energy companies in the current economic climate. The continuing slide in oil prices and rising production costs are the likely drivers of this market signals decline for Shell and we do not expect meaningful recovery in Shells market-implied ratings until oil prices begin to recover.FIGURE 1. SHELL: MOODYS AND MARKET-IMPLIED RATINGS, LAST 365 DAYS (WEEKLY DATA)The CDS-implied rating for Shell worsened by three notches to Ba1 from Baa1 one year ago. On several occasions over the prior 12 months the CDS-implied rating rose to Aa3, so it is now down by four notches from that high point (Figure 1).Shells EDF-implied rating was Aa1 one year ago and has deteriorated to Ba2, a huge ten-notch drop. The EDF measure of 0.16% worsened from 0.01% over that time frame. This implied rating was Aaa briefly in July 2015.There is no bond-implied rating available for Royal Dutch Shell; however, Shell International Finance B.V. issues debt on behalf of the company to finance Royal Dutch Shells variousMOODY'S ANALYTICS CORPORATES2 14 January 2016 Market Signals Review: Royal Dutch Shell Plc: Market-Implied Ratings Fall to Lowsoperating subsidiaries. Shell International Finance B.V.s backed debt (unconditionally guaranteed by Royal Dutch Shell) is rated Aa1 and has a bond-implied...
