CORPORATESISSUER COMMENT 9 May 2016RATINGSUNITED STATES STEEL CORP. (X) Moodys SR Unsecured Rating Caa1Moodys Outlook NEGBond-Implied Rating B2CDS-Implied Rating Caa2EDF-Implied Rating Caa1As of May 4, 2016ContactsAllerton 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 ReviewUS Steel Corp.: Market Signals Rally, Then Slip Lower The bond-, CDS-, and EDF'-implied ratings for U.S. Steel are down from their best recent observations.Slack demand, oversupply and discounting of steel prices have all contributed to the pressures on the market-implied ratings. In the last three years Chinas steel exports have doubled and prices globally have dropped sharply. Over the last ten years, the bond-implied rating for U.S. Steel deteriorated by six notches from its Baa2 high point, the CDS-implied rating is lower by nine notches from its Baa2 peak, and the EDF'-implied rating is eight notches under its apex of Baa2. We note Moodys has lowered the ratings for U.S. Steel twice over the last 12 months to Caa1, well under its Baa3 pinnacle of the last decade.FIGURE 1. U.S. STEEL: MOODYS AND MARKET-IMPLIED RATINGS, 365 DAYS (DAILY DATA)The bond-implied rating for U.S. Steel was B1 one year ago (Figure 1). It deteriorated to C (the lowest possible rating) for multiple dates in December 2015 and January 2016. It rallied sharply to B1 for a single day (May 1 of this year) before retracing its path to B2.MOODY'S ANALYTICS CORPORATES2 9 May 2016 Market Signals Review: US Steel Corp.: Market Signals Rally, Then Slip LowerThe companys CDS-implied rating was Caa1 a year ago and fluctuated from a bottom of C for most dates between October 2015 and late February 2016 to a recent high point of Caa1. It recently reverted to Caa2.U.S. Steels EDF'-implied rating was...
