FINANCIAL INSTITUTIONSISSUER COMMENT 26 May 2016RATINGSSUNTRUST BANKS, INC. (STI) Moodys SR Unsecured Rating Baa1Moodys Outlook STABond-Implied Rating Baa2CDS-Implied Rating Baa2EDF-Implied Rating Baa2As of May 23, 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 ReviewSunTrust Banks: For the Year, Two Market Signals Down, One Steady Two of the three market signals for SunTrust deteriorated over the last 12 months. The CDS-and EDF'-implied ratings are worse, but the bond-implied rating ended the year as it began.The bond-implied rating for STI fluctuated between a high point of A3 and a low point of Baa3. The current bond-implied rating of Baa2 is identical to its level observed a year ago (Figure 1).The EDF-implied rating for STI has varied between Baa1 and Baa2 for the past year. It was Baa1 on May 26, 2015 and is now Baa2.Readers should note that STI does not have liquid CDS, so we do not publish a CDS-implied rating for the company every single day, though from time to time our model will generate a CDS-implied rating. Accordingly, we rely less on this market signal as an indication of STI credit risk. Recently the CDS-implied rating shifted between A3 and Baa2 (its present level).FIGURE 1. SUNTRUST: MOODYS AND MARKET-IMPLIED RATINGS LAST 12 MONTHS (DAILY DATA)MOODY'S ANALYTICS FINANCIAL INSTITUTIONS2 26 May 2016 Market Signals Review: SunTrust Banks: For the Year, Two Market Signals Down, One SteadyThe bond-implied ratings gap is currently -1 notch, as it was a year ago (Figure 2). The CDS-implied ratings gap is -1 notch. It varied between +1 notch and -1 notch over the last year (on those days which we published a CDS-implied rating). The EDF-...
