CORPORATESISSUER COMMENT 7 March 2016RATINGSVALE S.A. (VALEBZ) Moodys SR Unsecured Rating Ba3Moodys Outlook NEGBond-Implied Rating B3CDS-Implied Rating Caa1EDF-Implied Rating Caa1As of March 2, 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 ReviewVale S.A.: Two Market-Implied Ratings Move Off Lows The EDF'- and bond-implied ratings for Vale moved up one notch recently from their worst points of the last five years. However, all three market-implied rating for Vale are worse than their high points of the last year (Figure 1).The EDF-implied rating was B2 one year ago. It declined two notches to Caa2 on multiple dates from December 2015 to February 2016, and has now rebounded by a one notch to Caa1. But a one notch rise in such a context is not surely a good sign.FIGURE 1. VALE: MOODYS AND MARKET-IMPLIED RATINGS, LAST 365 DAYS (DAILY DATA)The bond-implied rating was Baa2 a year ago. Since then it fell seven notches to B3. It was Caa1 on multiple dates over the last 60 days, and has now recovered by one notch to B3.Over the same period the CDS-implied rating moved down by two notches from B2 to Caa1. It is now at its lowest level of the last five years.The sharp deterioration in global commodity prices and the sell-off in the emerging markets sector have both weighed on the market signals of raw materials producers such as Vale.MOODY'S ANALYTICS CORPORATES2 7 March 2016 Market Signals Review: Vale S.A.: Two Market-Implied Ratings Move Off LowsReaders will recall that when market-implied ratings rise, the underlying securities have outperformed the broad market, and when they fall the underlying securities underperformed the broad market.1According to our ratings gap-conditioned transition matrices, companies rated ...
