FINANCIAL INSTITUTIONSISSUER COMMENT 18 NOVEMBER 2015THE BANK OF NEW YORK MELLON CORP. (BK)Moodys Senior Unsecured Rating A1Moodys Outlook STABond-Implied Rating A1CDS-Implied Rating A2EDF-Implied Rating Baa1As of 11/16/2015ANALYST 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 ReviewThe Bank of New York Mellon Corp.: Market Signals Remain Strong Few US banks have better market-implied ratings than The Bank of New York Mellon Corp. Its A1 bond-implied rating is the second highest among US banking companies, exceeded only by Wells Fargo&Company (Aa3).FIGURE 1. BANK OF NY MELLON CORP., MOODYS AND MARKET-IMPLIED RATINGS LAST YEAR (DAILY DATA)BKs bond-implied rating was somewhat volatile over the last year, ranging from a high of A1 to a low of A3 (Figure 1). Since its A2 of a year ago it has risen one notch. Over the last 30 days, it has been confined to the range of A2/A1. The bond-implied ratings gap is now zero notches, versus -1 notch a year ago (Figure 2).MOODY'S ANALYTICS FINANCIAL INSTITUTIONS2 18 NOVEMBER 2015 MARKET SIGNALS REVIEW: THE BANK OF NEW YORK MELLON CORP.: MARKET SIGNALS REMAIN STRONGThe EDF'-implied rating for BK, based on a one-year EDF measure of 0.24%, is Baa1, as it was all year save for July 23, when it rose to A3. Since 2011 the EDF-implied ratings gap has greatly narrowed, from -10 notches to -3 notches.The current CDS-implied rating for BK of A2 is a less valuable indicator of credit risk than the other market implied ratings in our view, due to the less liquid five-year CDS contract for BK, but nonetheless a meaningful market signal. Over the past 12 months the CDS-implied rating has ranged from an apex of Aa2 to a bottom of A3. The five-year CDS mid-spread for BK is 51 bp versus 37 ...
