FINANCIAL INSTITUTIONSISSUER COMMENT 14 March 2016RATINGSSTANDARD CHARTERED PLC (STANLN) Moodys SR Unsecured Rating A1Moodys Outlook NEGBond-Implied Rating Baa2CDS-Implied Rating Ba2EDF-Implied Rating Ba3As of March 10, 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 ReviewStandard Chartered PLC: Two Market-Implied Ratings Move Lower Two of Standard Chartered PLCs market-implied ratings weakened over the last 90 days. The bond-implied rating fell by two notches and the EDF'-implied rating slipped lower by one notch, while the CDS-implied rating was unchanged.The bond-implied rating deteriorated from A3 to Baa2, and the EDF'-implied rating from Ba2 to Ba3. The CDS-implied rating is Ba2.Readers will recall that when an implied rating falls, the underlying securities have underperformed the broad market.FIGURE 1. STANDARD CHARTERED PLC: MOODYS AND MARKET-IMPLIED RATINGS LAST 90 DAYS (WEEKLY DATA)The banks bond-implied ratings gap has now weakened to -4 notches from -3 notches three months ago (Figure 2). The CDS-implied ratings gap is -7 notches versus -8 notches on December 10, 2015. The EDF-implied ratings gap was -8 notches and maintains a -8 notch gap today. Please note the current market-implied ratings gaps give effect to a downgrade of Standard Chartereds debt from Aa1 to A3 on March 7, 2016.MOODY'S ANALYTICS FINANCIAL INSTITUTIONS2 14 March 2016 Market Signals Review: Standard Chartered PLC: Two Market-Implied Ratings Move LowerOur ratings gap-conditioned transition matrices (available on Moodys CreditView) show that historically the bonds of a company rated A1 with a bond-implied ratings gap of -4 notches (in this case a bond-implied rating of Baa2) have outperformed the broad market 36% of the time in ...
