CORPORATESISSUER COMMENT 19 NOVEMBER 2015WAL-MART STORES, INC. (WMT)Moodys Senior Unsecured Rating Aa2Moodys Outlook STABond-Implied Rating Aa1CDS-Implied Rating A1EDF-Implied Rating Aa2As of 11/17/2015ANALYST 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 ReviewWal-Mart: Two Market-Implied Ratings Fall and One Rises Wal-Marts bond-implied rating rose by two notches over the last year. The companys CDS-and EDF'-implied ratings declined by four notches and by two notches, respectively (Figure 1).One year ago the CDS-implied rating was Aaa. Over the last 12 months it weakened to a five-year low point of A1. The EDF-implied rating was also Aaa and has slipped to Aa2, a nadir not observed since February 2012. The bond-implied rating climbed from Aa3 twelve months ago to Aa1.FIGURE 1. WALMART: MOODYS AND MARKET-IMPLIED RATINGS, LAST 365 DAYS (DAILY DATA)MOODY'S ANALYTICS CORPORATES2 19 NOVEMBER 2015 MARKET SIGNALS REVIEW: WAL-MART: TWO MARKET-IMPLIED RATINGS FALL AND ONE RISESAccording to our ratings gap-conditioned transition matrices, companies rated Aa2 with a bond-implied rating of Aa1 outperformed the broad market 10% of the time over the following 12 months, matched the markets performance 16% of the time, and underperformed the broad market 74% of the time.Readers will recall that when a market-implied rating is unchanged, the underlying securities have matched the performance of the broad market. However, when an implied rating falls, the underlying securities have underperformed the broad market. 1Over the last twelve months, the CDS-implied ratings gap has swung from +2 notches to -2 notches (Figure 2). The EDF-implied ratings gap dipped two notches to zero notches over the same period. The bond-implied r...
