CORPORATESISSUER COMMENT 8 JUNE 2015TARGET CORPORATION (TGT)Moodys Senior Unsecured Rating A2Moodys Outlook STABond-Implied Rating A2CDS-Implied Rating Aa1EDF-Implied Rating Aa2As of 6/5/2015ANALYST 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 ReviewTargets Market-Implied Ratings: Two Fall, One Rises The two fixed income oriented market-implied ratings for Target declined recently. However the EDF' implied rating stands at one notch better than 90 days ago.The bond-implied rating dropped from Aa3 three months ago to A2 (Figure 1). It has been in a narrow band from A1 to A2 for the last three months, except for a one-day decline to A3 on May 28. The CDS-implied rating fell from Aaa to Aa2 on May 19, returning to Aa1 at present. Over the last three months, the CDS-implied rating has moved primarily within a band Aa1 to Aa2. The EDF'-implied rating rose from its recent low of Aa3 to Aa2 over the last 90 days.FIGURE 1. TARGET: MARKET-IMPLIED RATINGS, LAST 90 DAYS (DAILY DATA)MOODY'S ANALYTICS CORPORATES2 8 JUNE 2015 MARKET SIGNALS REVIEW : TARGETS MARKET-IMPLIED RATINGS: TWO FALL, ONE RISESAccording to our ratings gap-conditioned transition matrices, companies rated A2 with a bond-implied rating of A2 outperformed the broad market 36% of the time over the following 12 months, matched the markets performance 21% of the time, and underperformed the broad market 42% of the time.As shown in Figure 2, the bond-implied ratings gap was +2 notches 90 days ago, and recently moved back zero notches. The CDS-implied ratings gap was +5 notches three months ago, and has shifted lower to the +4 level once again. The EDF-implied ratings gap improved over the last 90 days from +2 notches to +3 notches.Readers will recall that wh...
