FINANCIAL INSTITUTIONSISSUER COMMENT 23 JULY 2015WELLS FARGO&COMPANY (WFC)Moodys Senior Unsecured Rating A2Moodys Outlook STABond-Implied Rating A2CDS-Implied Rating A3EDF-Implied Rating A2As of 7/22/2015ANALYST 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.This report has been republished on 1 July 2015 with the correction to Outlook in the ratings box from POS to STA.Market Signals ReviewWells Fargo&Companys Market Signals Follow Dissimilar Paths Wells Fargos market-implied ratings each showed a different movement over the last year (Figure 1). One is higher, one is lower and one is unchanged.When a companys market-implied rating falls, the underlying securities have underperformed the broad market, and when a market-implied rating rises the underlying securities have outperformed the broad market.FIGURE 1. WELLS FARGO: MOODYS AND MARKET-IMPLIED RATINGS - 365 DAYS (WEEKLY OBSERVATIONS)MOODY'S ANALYTICS FINANCIAL INSTITUTIONS2 23 JULY 2015 MARKET SIGNALS REVIEW : WELLS FARGO&COMPANYS MARKET SIGNALS FOLLOW DISSIMILAR PATHSThe bond-implied rating fell from A1 a year ago to A2. Over the year it varied between a high of Aa3 and a low of A3.The EDF'-implied rating rose from A3 to A2, which matches its highest level seen over the past five years.The CDS-implied rating was A3 a year ago and is A3 today. It rose briefly to A2 on several occasions. Wells Fargos five-year CDS mid-spread of 52 bp compares to such peers JP Morgan Chase (69 bp), BankAmerica (69 bp), Citigroup (77 bp) Morgan Stanley (78 bp), and Goldman Sachs (86 bp).According 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 A2 outperformed the broad mar...
