CORPORATESISSUER COMMENT 15 OCTOBER 2015THE HERSHEY COMPANY (HSY)Moodys Senior Unsecured Rating A1Moodys Outlook STABond-Implied Rating Aa3CDS-Implied Rating A1EDF-Implied Rating AaaAs of 10/13/2015ANALYST 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 Hershey Company: Market-Implied Ratings Remain Sweet The bond-, EDF'-, and CDS-implied ratings for Hershey all match their levels of 30 days ago (Figure 1). The market-implied ratings gaps for the bond-implied rating and EDF-implied rating remain positive; the CDS-implied ratings gap is zero notches.FIGURE 1. HERSHEY: MOODYS AND MARKET-IMPLIED RATINGS, 30 DAYS (DAILY DATA)The bond-implied rating was Aa3 a month ago, fell to A1 for a few days in late September but subsequently recovered to Aa3 again.The companys CDS-implied rating is A1. Each daily observation since June 26 has been A1. Prior to that date over the last year the CDS-implied rating varied from Aa2 to A3.MOODY'S ANALYTICS CORPORATES2 15 OCTOBER 2015 MARKET SIGNALS REVIEW: THE HERSHEY COMPANY: MARKET-IMPLIED RATINGS REMAIN SWEETHersheys EDF'-implied rating is Aaa, the highest possible level. Since March of 2012 the EDF-implied rating has not varied from Aaa.According to our ratings gap-conditioned transition matrices, companies rated A1 with a bond-implied rating of Aa3 outperformed the broad market 19% of the time over the following 12 months, matched the markets performance 9% of the time, and underperformed the broad market 72% of the time.Readers will recall that when a market-implied rating is unchanged the underlying securities have matched the performance of the broad market, and when an implied-rating falls the underlying securities have underperformed the broad market. 1Hersheys...
