FINANCIAL INSTITUTIONSISSUER COMMENT 29 OCTOBER 2015U.S. BANCORP (USB)Moodys Senior Unsecured Rating A1Moodys Outlook STABond-Implied Rating A2CDS-Implied Rating A3EDF-Implied Rating A3As of 10/28/2015ANALYST 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 ReviewU.S. Bancorp: Two Market-Implied Ratings Slip Lower U.S. Bancorps bond-implied rating weakened from A1 three months ago to A2 (Figure 1). The EDF'-implied rating moved one notch lower from A2 to A3. The CDS-implied rating matches its A3 level of July 28.FIGURE 1. U.S. BANCORP MOODYS AND MARKET-IMPLIED RATINGS LAST 90 DAYS (DAILY OBSERVATIONS)Over the period the A2 bond-implied rating briefly rose to a peak of Aa3 but was unable to sustain that advance. The CDS-implied rating dipped to Baa1 on several days, but recovered to A3 after each instance.The CDS-implied ratings gap is currently -2 notches, identical to the level three months ago (Figure 2). The bond-implied ratings gap varied between +1 and -1 notch. It stands at -1 notch today. The EDF-implied ratings gap fell from -1 notch to -2 notches.MOODY'S ANALYTICS FINANCIAL INSTITUTIONS2 29 OCTOBER 2015 MARKET SIGNALS REVIEW: U.S. BANCORP: TWO MARKET-IMPLIED RATINGS SLIP LOWERReaders will recall that if a market-implied rating worsens, the underlying securities have underperformed the broad market.FIGURE 2. U.S. BANCORP: MOODYS AND MARKET-IMPLIED RATINGS GAPS LAST 90 DAYS (DAILY OBSERVATIONS)MOODY'S ANALYTICS FINANCIAL INSTITUTIONS3 29 OCTOBER 2015 MARKET SIGNALS REVIEW: U.S. BANCORP: TWO MARKET-IMPLIED RATINGS SLIP LOWEREDF' credit measures observationsEDF-implied ratings are based on EDFTM metrics, which are derived from information about an entitys equity price and its capital struct...
