FINANCIAL INSTITUTIONSISSUER COMMENT 2 February 2016RATINGSWELLS FARGO&COMPANY (WFC) Moodys SR Unsecured Rating A2Moodys Outlook STABond-Implied Rating A1CDS-Implied Rating A2EDF-Implied Rating A3As of February 1, 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 ReviewWells Fargo&Company: Two Market Signals Rally Wells Fargos two fixed income oriented market-implied ratings improved from their lowest points of the last 30 days.The bond-implied rating is A1 (Figure 1). Over the last month it dipped from A1 to A2, but on January 21, following Wells Fargos Q42015 earnings announcement on January 14, it recovered to A1 once again.The CDS-implied rating is A2 now, as it was on January 1. It declined briefly to A3 before ascending once again to A2 on January 11. Wells Fargos five-year CDS mid-spread of 58 bp compares to such peers as JP Morgan Chase (81 bp), BankAmerica (95 bp), Morgan Stanley (101 bp), Goldman Sachs (99 bp), and Citigroup (101 bp).FIGURE 1. WELLS FARGO: MOODYS AND MARKET-IMPLIED RATINGS - LAST 30 DAYS (DAILY OBSERVATIONS)The EDF'-implied rating is A3, unchanged in each daily observation over the last month. It currently stands just one notch below the A2 peak achieved in 2015 and which was the best level reached by WFCs EDF-implied rating for last five years.MOODY'S ANALYTICS FINANCIAL INSTITUTIONS2 2 February 2016 Market Signals Review: Wells Fargo&Company: Two Market Signals RallyAccording to our ratings gap-conditioned transition matrix, shown under the Market Signals tab on Moodys CreditView, a company rated A2 with a bond-implied rating of A1 outperformed the broad market 28% of the time in the following 12 months, matched the markets performance 10% of the time, and underperformed the ...
