FINANCIAL INSTITUTIONSISSUER COMMENT 15 March 2016RATINGSU.S. BANCORP (USB) Moodys SR Unsecured Rating A1Moodys Outlook STABond-Implied Rating A2CDS-Implied Rating A2EDF-Implied Rating A3As of March 14, 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.U.S. BancorpU.S. Bancorps Market Signals Follow Different Paths US Bancorps three market-implied ratings made idiosyncratic adjustments over the last three months.The companys bond-implied rating remained in a narrow band between A1 and A2 (Figure 1). Its CDS-implied rating advanced from A3 to A2. And the EDF'-implied rating was unchanged at A3.FIGURE 1. U.S. BANCORP MOODYS AND MARKET-IMPLIED RATINGS LAST 90 DAYS (DAILY OBSERVATIONS)The bond-implied rating, now A2, fluctuated between A1 and A2 numerous times since December 15, when it was A1. It was also A1 12 months ago.The CDS-implied rating has been the most volatile of the three. It moved up two notches from its low point of Baa1 to A2 over the last three months and improved three notches over its Baa2 a year ago.The EDF-implied rating is one notch below its A2 of one year ago.Readers will recall that when a market-implied rating rises, as USBs CDS-implied rating has, the underlying securities have outperformed the broad market.1MOODY'S ANALYTICS FINANCIAL INSTITUTIONS2 15 March 2016 U.S. Bancorp: U.S. Bancorps Market Signals Follow Different PathsThe CDS-implied ratings gap narrowed over the last three months from -3 notches at its low point to -1 notch (Figure 2). The bond-implied ratings gap varied between -one notch and zero notches. The EDF-implied ratings gap was -2 notches every day of the last three months.FIGURE 2. U.S. BANCORP MOODYS AND MARKET-IMPLIED RATINGS GAPS LAST 90 DAYS (DAILY OBSERVATIONS)MOODY'S ...
