CORPORATESISSUER COMMENT 14 OCTOBER 2015VODAFONE GROUP PLC (VOD)Moodys Senior Unsecured Rating Baa1Moodys Outlook STABond-Implied Rating A3CDS-Implied Rating Baa2EDF-Implied Rating Baa1As of 10/12/2015ANALYST 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 ReviewVodafone Group Plc: Two Market-Implied Ratings Dialed Down The CDS- and EDF'-implied ratings for Vodafone were off from their recent high points.The companys CDS-implied rating is Baa2, matching its level of 30 days ago and down one notch from its peak on October 8 (Figure 1).Vodafones EDF'-implied rating is Baa1. A month ago it was A3 and over the last 30 days it fluctuated between this level and Baa1 numerous times.The bond-implied rating is A3, as it was every day of the past month. Over the last 12 months the bond-implied rating varied from A1 to Baa2.FIGURE 1. VODAFONE: MOODYS AND MARKET-IMPLIED RATINGS, 30 DAYS (DAILY DATA)MOODY'S ANALYTICS CORPORATES2 14 OCTOBER 2015 MARKET SIGNALS REVIEW: VODAFONE GROUP PLC: TWO MARKET-IMPLIED RATINGS DIALED DOWNAccording to our ratings gap-conditioned transition matrices, companies rated Baa1 with a bond-implied rating of A3 outperformed the broad market 25% of the time over the following 12 months, matched the markets performance 14% of the time, and underperformed the broad market 61% of the time.Readers will recall that when a market-implied rating falls the underlying securities have underperformed the broad market. 1Vodafones CDS- and EDF-implied ratings gaps deteriorated over the last month. The CDS-implied ratings gap is now at -1 notch, one notch under its most recent peak. The EDF-implied ratings gap is now zero notches, one notch worse than 30 days ago. The bond-implied ratings gap maintained a +1 ...
