CORPORATESISSUER COMMENT 17 SEPTEMBER 2015TOSHIBA CORPORATION (TOSBF)Moodys Sr. Unsecured Rating Baa2Moodys Outlook STABond-Implied Rating A3CDS-Implied Rating Baa3EDF-Implied Rating Ba3As of 9/15/2015ANALYST 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 ReviewToshiba Corporation: All Three Market-Implied Ratings Decline The bond-, CDS-, and EDF'-implied ratings for Toshiba all worsened over the last three months.Toshibas bond-implied rating drop was the worst of the three, falling two notches to A3 (Figure 1). It declined to Baa1 on several dates during the period. The companys CDS-implied rating is Baa3, down one notch. It dipped to Ba1 on multiple occasions briefly over the last three months. Toshibas EDF-implied rating dropped from Ba2, its best level over the last three months, to Ba3. It was as low as B1 on several dates.FIGURE 1. TOSHIBA: MOODYS AND MARKET-IMPLIED RATINGS, LAST 90 DAYS (DAILY DATA)MOODY'S ANALYTICS CORPORATES2 17 SEPTEMBER 2015 MARKET SIGNALS REVIEW: TOSHIBA CORPORATION: ALL THREE MARKET-IMPLIED RATINGS DECLINEAccording to our ratings gap-conditioned transition matrices, companies rated Baa2 with a bond-implied rating of A3 outperformed the broad market 23% of the time over the following 12 months, matched the markets performance 9% of the time, and underperformed the broad market 68% of the time.Readers will recall that when a market-implied rating falls the underlying securities have underperformed the broad market. 1Over the last three months, Toshibas bond-, CDS-, and EDF-implied ratings gaps have all changed negatively. The bond-implied ratings gap slipped down two notches to +2 notches (Figure 2). The CDS-implied ratings gap dropped from its zero notch level to -2 notches. The ...
