Weekly Credit Update – 15 September, 2015

Transcript

Weekly Credit Update 15 September 2015 Analyst Henrik René Andresen +45 45 13 33 27 [email protected] Investment Research www.danskebank.com/CI Important disclosures and certifications are contained from page 33 of this report Contents - General credit market news and current themes - Scandi High Yield - Scandi Investment Grade - Credit indicators - Coverage universe, credit ratings and recommendations 2 What's on our mind - General credit market news • Last week the European credit market moved more or less sideways. iTraxx Main was unchanged at 71bp, while iTraxx Crossover widened marginally to 329bp. • Thursday was one of the busiest day on the European corporate issue front this year with a total issuance volume of more than EUR7.4bn according to Bloomberg. We saw prints from amongst others Apple and Shell. Also Energais de Portugal (EDP) came to the market with a corporate hybrid bond of EUR750m (NC 5.5) and with a issue spread of approximately 545bp. • In the Nordic region we saw issuances from the Finnish real estate company CityCon Oyj with a 7-year EUR300m senior unsecured bond printing at MS+175bp. Danske Bank came with a 5 year USD1bn senior unsecured bond printing at 5-year US Treasury+125 bp. AB Fortum Värme printed a total of SEK2bn of senior unsecured bonds. • The main event this week is the FOMC meeting on Thursday. We believe the current uncertainty will stop the Fed from hiking at this meeting but that Fed chairman Janet Yellen will signal that a hike is coming later this year if global developments do not push the US economy off course. Sources: Bloomberg, Danske Bank Markets (both charts) 3 Scandi High Yield 4 Close of relative value trade in Tallink NOK 2018s (published on 8 September 2015) – Take profit in the Tallink FRN NOK 2018 following spread tightening Global median ASW measured in NOK vs selected Nordic NOK 'ferry' bonds. (ASK) • Following credit-positive quarterly results, we continue to view the credit profile of Tallink’s bond as commensurate with a ‘BB-’ shadow rating on a senior unsecured basis. • The senior unsecured Tallink 2018 performed some 30bp of spread tightening since this trade was initiated on 27 February 2015 and has delivered a total NOK-based period return in the area of some 4.1% (annualised total return 7.9%). • Tallink 2018 is currently priced some 16bp tighter than a global ‘BB-’ credit curve and 87bp tighter than an indicative Nordic `BB`curve, which seems rather a tight level to us. • We do not find this price level attractive for new investors in the name despite the recently strengthened credit profile and recommend existing investors to take profit on the earlier initiated trade. We close the trade. • We highlight the limited liquidity in the bond issue from time to time. Indicative DBDK DM to 3M Nibor (bp), ASK-spreads 600 550 500 COLLIN '19 (NR/NR/B+) 450 400 TALLNK '18 (NR/NR/BB-) 350 Nordic `BB-` Moody´s `BB-` 300 Moody's 'BB' COLLIN '16 (NR/NR/B+) 250 200 COLLIN '15 (NR/NR/B+) 150 DFDSDC '18 (NR/NR/BBB-) 100 DFDSDC '16 (NR/NR/BBB-) 50 Years to maturity 0 0 1 2 Source: Bloomberg, Moody’s, Danske Bank Markets 3 4 5 6 See Close of Trade in Tallink NOK 2018s, 8 September and Credit Update – Tallink Q2 15 – Deleveraging continues for now, 13 August. 5 Recent trade ideas (high yield) Recent ideas Type Outright Trade Idea Close of Trade Tallink NOK 2018. Bonds trade tight to `BB-`curve and bonds no longer Currency trade Sell SSAB 2019 (SEK) and BUY SSAB 2019 (EUR) The spread between the SSAB 2019 (SEK) and SSAB (EUR) 2019 is too wide Outright Buy Volvo 2075 Hybrid Outright Buy Akelius Residential 2019 in SEK The Volvo 4.2% 2075 Hybrid currently trades at attractive levels, in our view, with a pick-up of around 2025bp to the rating implied spread. The Akelius Residential SEK 2019 FRN 3M Stibor+240bps trades wide relative to other similar unrated SEK bonds. Recent performance in the SSAB EUR bond has closed the earlier 19bps gap between the EUR and the SEK 2019 bonds. FRN Tallink 2018 in NOK trades cheap to a global median ‘BB-’ credit curve (converted into NOK). attractive. We take profit on trade initiated 27 February 2015 (TR: 3.9% / ann. TR 7.9%). Opened Start spread Opened Start spread Currency trade Close of trade SSAB Outright Buy Tallink 2018. Outright EGASDK '20 EGASDK '20's, which we see as 'B' indicatively trade way too cheap relative to the industrial 'B' curve Outright SASSS '17 We believe the SAS 2017 offers an attractive absolute value – supported by adequate liquidity Opened Start spread Opened Start spread Opened Start spread Opened Start spread 08 Sep 2015 440 20 Aug 2015 37 16 Jun 2015 347 13 Apr 2015 225 10 Mar 2015 -2 27 Feb 2015 470 Opened 02 Feb 2015 Start spread Opened Start spread 627 18 Dec 2014 807 Source: Danske Bank Markets See the end of this presentation for a list of our coverage including shadow ratings and recommendations 6 Best and worst performers (Nordic coverage universe) - High yield 1 month in local currencies -160 Beerenberg Holdco II AS NOK 2018 SAS AB SEK 2017 -136 Prosafe SE NOK 2016 -8 Hoist Kredit AB EUR 2017 -119 Hoist Kredit AB SEK 2016 -5 Stockmann OYJ Abp EUR 2018 -95 Hoist Kredit AB EUR 2017 -4 SSAB AB EUR 2019 -76 Color Group AS NOK 2017 -3 Stora Enso OYJ EUR 2018 -70 Teekay Offshore Partners LP NOK 2016 -2 Stora Enso OYJ EUR 2018 -67 SAS AB SEK 2017 -2 Meda AB SEK 2019 -67 Teekay Offshore Partners LP NOK 2017 -1 Meda AB SEK 2018 -66 Stockmann OYJ Abp EUR 2018 -1 Ahlstrom OYJ EUR 2019 -61 Nynas AB SEK 2018 Fred Olsen Energy ASA NOK 2016 226 Golden Close Maritime Corp Ltd USD… 288 Seadrill Ltd NOK 2018 239 Solstad Offshore ASA NOK 2016 292 Solstad Offshore ASA NOK 2016 North Atlantic Drilling Ltd NOK 2018 North Atlantic Drilling Ltd NOK 2018 317 286 Farstad Shipping ASA NOK 2017 473 Fred Olsen Energy ASA NOK 2019 289 Solstad Offshore ASA NOK 2019 480 Solstad Offshore ASA NOK 2019 Fred Olsen Energy ASA NOK 2019 302 Farstad Shipping ASA NOK 2018 326 448 542 400 Stora Enso OYJ EUR 2016 -16 234 266 500 -23 Fred Olsen Energy ASA NOK 2016 207 600 YTD in local currencies 300 200 100 0 Farstad Shipping ASA NOK 2017 713 Farstad Shipping ASA NOK 2018 737 Olympic Ship AS NOK 2019 875 Olympic Ship AS NOK 2017 Olympic Ship AS NOK 2017 891 Olympic Ship AS NOK 2019 -100 Change in local currencies (bp) 1000 800 600 400 200 0 -200 -400 Change in local currencies (bp) Source: Bloomberg, Danske Bank Markets (both charts) 7 Danske Bank Markets Nordic High-Yield Index • Last week, we saw moderate flows in the Nordic high-yield market and the spreads remained more or less unchanged. • No new Nordic high-yield issues came to this market during last week. • We expect more issuance activity over the next month. Danske Bank Markets Nordic High-Yield Index 106.0 105.5 105.0 104.5 104.0 103.5 103.0 102.5 102.0 101.5 101.0 100.5 100.0 Dec-2014 Feb-2015 460 440 420 400 380 360 340 320 Apr-2015 Jun-2015 300 Aug-2015 DBM Hedged NOK Nordic HY Index Value DBM Hedged EUR Nordic HY Index Value DBM Nordic HY Index, ASW-spread (bps). RHS Key index statistics Date Yield ASW spread, bps # Bonds AVG credit rating Avg duration TR since start TR YTD TR MTD Index sector breakdown Index start Index end Change 31-dec-2014 13-sep-2015 4.4% 430 413 -17 103 BB2.9 3.9% 3.9% 0.1% Source: Bloomberg, Danske Bank Markets [all tables and charts] Real estate 13% Technology 2% Utilities 3% Consumer, Cyclical 6% Communica tions 9% Industrial 15% Diversified 4% Basic Materials 15% Consumer, non-cycli. 10% Energy 16% 8 Recent Nordic high-yield issuance Selected new issues (High Yield) Date Issuer Coupon CCY Volume Maturity S&P / Mdy / Fitch ASW/DM 03-09-2015 Lock As 7% EUR 30 m Aug-21 B+ / B2 / 505 03-09-2015 Lock As EUR003M +550bps EUR 200 m Aug-20 B+ / B2 / 550 03-09-2015 Np3 Fastigheter STIB3M +490bps SEK 300 m Oct-18 / / 490 02-09-2015 Sagax Ab EUR006M +350bps EUR 30 m Sep-20 / / 350 13-07-2015 Boa Offshore As NIBOR3M +1000bps NOK 150 m Dec-18 / / 1000 06-07-2015 Gripship As NIBOR3M +650bps NOK 210 m Jul-18 / / 650 03-07-2015 Digiplex Norway As NIBOR3M +375bps NOK 575 m Jul-19 / / 375 26-06-2015 Fastighets Gronlandet So STIB3M +275bps SEK 425 m Jun-21 / / 275 24-06-2015 Solteq Oyj 6% EUR 27 m Jul-20 / / 535 22-06-2015 Uppfinnaren 1 Ab 10% SEK 175 m PERP / / 775 10-06-2015 Sagax Ab STIB3M +320bps SEK 300 m Jun-20 / / 320 17-06-2015 Func Food Group EUR003M +900bps EUR 38 m Jun-19 / / 900 03-06-2015 Bw Offshore Ltd NIBOR3M +425bps NOK 900 m Jun-20 / / 425 28-05-2015 Hoegh Lng Holdings US0003M +500bps USD 130 m Jun-20 / / 500 25-03-2015 Corem Property Grp Ab STIB3M +350bps SEK 650 m Apr-18 / / 350 22-05-2015 Nelja Energia As EUR006M +650bps EUR 50 m Jun-21 / / 650 21-05-2015 Color Group Asa NIBOR3M +485bps NOK 700 m Jun-20 / / 485 21-05-2015 Technopolis Plc 3.75% EUR 150 m May-20 / / 340 12-05-2015 Norwegian Air Shuttle As NIBOR3M +575bps NOK 1 000 m May-18 / / 575 11-05-2015 Golar Lng Partners Lp US0003M +440bps USD 150 m May-20 / / 440 06-05-2015 Teekay Lng Partners NIBOR3M +370bps NOK 1 000 m May-20 / / 370 29-04-2014 Aligera Holding Ab STIB3M +500bps SEK 500 m May-19 / / 500 Source: Danske Bank Markets 9 Company news from the past week (high yield) Name Höegh LNG SAS News Höegh LNG successfully raised USD100m in equity. This will most likely trigger an order for another FSRU newbuilding to meet the increased demand for these assets following the drop in oil and LNG prices. The proceeds are sufficient to fund the USD90m of equity instalments needed per FSRU (assuming 70% debt to be secured). The reason for raising equity in HLNG rather than drop downs to HMLP is most likely the delayed drop down of Independence being pushed into 2016, which has hindered the company to order more FSRUS, as doing so beforehand would have increased the risk in HLNG substantially. SAS reported a solid Q3 15 (May-July) with pre-tax profit before non-recurring items of SEK996m vs SEK759m in Q2 14. FX headwind pares the positive effect from lower fuel prices but the impact from declining fuel prices will increase as SAS has larger spot exposure, which should continue to support the result. SAS has hedged 72% of fuel consumption for the next 12 months (this reflects 83% in Q4 15 - and 53% in Q4 16), whereas 69% of USD is hedged for the next 12 months. Furthermore, the result is supported by continued cost cutting. SAS keeps FY guidance of a pre-tax result that is clearly positive. According to SAS‘s own calculations the company is now net debt free as financial net debt is a cash position of SEK183m. Equity ratio 21% end-Q3 15. Over the past year we have had a positive view on the Nordic airline sector due to a combination of low capacity growth which supports ticket prices and lower fuel prices. We believe our view is now playing out in the numbers and we believe this will continue in H2 15 due to low capacity additions in the Nordic airspace. We maintain our positive view on the SAS 2017 bond. Implication Credit positive Credit positive Source: Danske Bank Markets 10 Scandi Investment Grade 11 Overweight – Vestas EUR 2.75% 2022 IG credit profile but priced as HY (first published on 19 August) Indicative ASW offer (bps) 290 280 270 260 250 240 230 220 210 200 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0 2014 • On 19 August, Vestas delivered strong and credit positive Q2 15 results, with a robust globally spread order intake, a record order backlog, healthy cash flows and very strong credit metrics. • Given the volatile global wind turbine markets, the high credit quality of some competitors (GE, Siemens), the recent very harsh restructuring of the company and the prudent financial targets introduced (e.g. maximum target net debt/EBITDA < 1x ), we do not expect the group to accelerate future re-leveraging aggressively in an unbalanced way. • The key risk factor for this name remains political. The global wind turbine industry is likely to be dependent on subsidies for years to come, although less and less so as the turbine produced cost per MWh is reduced. This is a strategic priority for Vestas. • Given our view of Vestas as a ‘BBB-’ credit, we reiterate that we regard the current pricing of the 2.75% 2022 as attractive at an ASW of +270bp. • In our view, a ‘fair’ credit spread for this type of bond would be in the range of 125-150bp, reflecting a ‘political/volatility’ spread add-on of 40-65bp to the ‘BBB-’ curve. VWSDC '22 (NR/NR) Corporates: BBB- 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: Bloomberg, Moody’s, Danske Bank Markets See Vestas Q2 15: Strong performance – bonds attractively priced, 19 August. 12 Buy Nykredit T2 CoCo Call 2021 or Nykredit AT1 Call 2020 Published in Trade recommendation: Q2 could be the turning point for Nykredit, 10 August 2015 • ‘Nykredit Realkredit (’A’/NO, ‘A’/S) has been struggling with large deficits in its banking subsidiary (Nykredit Bank (‘A’/NO, ‘A’/S, DBM: Marketweight) due to interest swap contracts with clients. We believe this could turn in Q2 due to the spike in the 30Y DKK swap rate. • Nykredit has issued a tier 2 bond as a CoCo with a 7% trigger and an AT1 with a 7.125% trigger. Both trade at attractive spreads to their Nordic peers. We would use the expected good Q2 results to buy the two bonds. • The tier 2 bond is an ‘odd’ instrument given its CoCo feature. The reason for the CoCo feature is that Danish banks are allowed to cover the Pillar 2 requirement with either CET1 capital or CoCo bonds with a trigger of a minimum 7%. Nykredit had a 4% Pillar 2 requirement at end-Q1 15; the T2 CoCo accounted for c.1.3%. • We believe the T2 CoCo trades at a discount to peers because of the CoCo feature. We do not consider this to be justified, as we see the risk of a trigger as only possible in a restructuring scenario and hence equally possible for a ‘normal’ T2 bond. The coupon is mandatory with full write off.’ AT1bonds Tier 2 bonds 400 Indicative Z spread offer (bps) Indicative Z spread offer (bps) NYKRE '21 (BBB/NR) 350 550 NYKRE '20 (EUR) DANBNK '20 (EUR) 500 DANBNK '22 (EUR) 300 450 250 400 200 DNBNO '20 (USD) DANBNK '21 (BBB/NR) 150 DANBNK '18 (BBB/NR) SWEDA '19 (A-/Baa1) 100 SHBASS '19 (A-/A3) NDASS '17 (A-/NR)SWEDA '17 (A-/NR) DNBNO '18 (A-/NR) DNBNO '17 (A-/NR) 50 0 2015 2016 AA+/AA/AA- 350 SEB '21 (BBB/Baa1) POHBK '22 (A/NR) A+/A/A- 2018 BBB+/BBB/BBB- NDASS '21 (USD) NDASS '24 (USD) SEB '20 (USD) SHBASS '21 (USD) 300 DNBNO '20 (NOK) SBAB '20 (SEK) 250 SEB '17 (BBB/NR) 2017 NDASS '19 (USD) SWEDA '20 (USD) 2019 BB+/BB/BB- 2020 2021 Not rated by S&P/Moody's 2022 200 2019 2020 2021 2022 2023 2024 2025 Euro equivalent Source: Bloomberg, Danske Bank Markets (both charts) 13 Recent trade ideas (investment grade) Recent ideas Type Outright Trade Buy Vestas 2022 (revisited). Idea The Vestas EUR 2.75% 2022 trades cheap to a EUR corporate BBB. curve. Opened Start spread Outright Buy Nykredit AT1 (perpetual) Nykredit has issued an AT1 with a 7.125% trigger.This hybrid trade attractive to Nordic peers. Buy Nykredit T2 CoCo first call 2021 (dated) Nykredit has issued a tier 2 bond as a CoCo with a 7% trigger.We believe the T2 CoCo trades with a discount to peers because of the CoCo feature. We recommend to buy the ISS Global A/S 2020 as we believe valuation is attractive compared to ISS Global A/S’ BBB-/Positive Outlook from S&P as the bond is In our view the Destia 2019 FRN trades at a fairly attractive spread when compared to our B+ indicative senior unsecured rating. This is in our view most likely a Opened Start spread Outright Sector spread Outright Switch from Securitas 2018 to ISS Global A/S 2020 Buy Destia 2019 Opened Start spread Opened Start spread Opened Start spread 24 Aug 2015 270 10 Aug 2015 511 10 Aug 2015 361 03 Jun 2015 32 26 May 2015 433 Source: Danske Bank Markets See the end of this presentation for a list of our coverage including shadow ratings and recommendations 14 Best and worst performers (Nordic coverage universe) - Investment grade 1 week in local currencies -1 Fingrid OYJ EUR 2024 0 Nordea Bank AB EUR 2016 -1 DONG Energy A/S EUR 2022 0 Danske Bank A/S EUR 2017 -1 Svenska Cellulosa AB SCA EUR 2023 1 DNB Bank ASA EUR 2019 -1 Nordea Bank AB EUR 2022 1 Jyske Bank A/S EUR 2017 -1 TeliaSonera AB EUR 2027 1 Lansforsakringar Bank AB SEK 2020 -1 Nordea Bank AB EUR 2025 1 Pohjola Bank Oyj EUR 2017 -1 Statoil ASA EUR 2020 1 Danske Bank A/S EUR 2018 -1 SKF AB EUR 2018 1 Skandinaviska Enskilda Banken AB EUR… -1 SBAB Bank AB EUR 2018 1 Nordea Bank AB EUR 2016 TeliaSonera AB EUR 2022 -1 13 Statkraft AS EUR 2017 3 Teollisuuden Voima Oyj EUR 2021 14 Statkraft AS EUR 2019 3 DONG Energy A/S EUR 2016 14 Telenor ASA EUR 2017 3 Telefonaktiebolaget LM Ericsson EUR… 14 Telefonaktiebolaget LM Ericsson EUR… TeliaSonera AB EUR 2017 15 TDC A/S EUR 2018 15 Vattenfall AB EUR 2019 4 Vattenfall AB EUR 2019 4 5 TDC A/S EUR 2018 5 TDC A/S EUR 2022 4 2 0 -2 Change in local currencies (bp) DONG Energy A/S EUR 2016 16 Fortum OYJ EUR 2016 20 Fortum OYJ EUR 2016 6 TeliaSonera AB EUR 2017 16 Neste Oyj EUR 2016 6 6 Swedbank AB EUR 2016 1 Telenor ASA EUR 2017 3 8 1 month in local currencies Neste Oyj EUR 2016 23 25 20 15 10 5 0 -5 Change in local currencies (bp) Source: Bloomberg, Danske Bank Markets (both charts) 15 Selected new investment-grade issues Date Issuer Coupon CCY Volume Maturity S&P / Mdy / Fitch ASW/DM 10/09/2015 Apple Inc 2% EUR 1 000 m Sep/27 AA+ / Aa1e / 85 10/09/2015 Shell International Fin 1.25% EUR 1 250 m Mar/22 / Aa1e / 67 10/09/2015 Fce Bank Plc 0.942% EUR 700 m Sep/19 BBB / Baa3e / BBB-e 98 09/09/2015 Bmw Us Capital Llc 1.125% EUR 1 000 m Sep/21 / A2e / 65 Source: Danske Bank Markets 16 Company news from the past week (investment grade) Name SR-Bank Maersk A/S Maersk A/S News Moody's published a rather reassuring note on SR-Bank on Thursday last week with the headline: "Prudent Underwriting Upholds Strong Performance In Challenging Environment". We don't disagree with most of the conclusions. However, we believe Moody's is missing the biggest uncertainty for SR-Bank (and for the other Norwegian banks) and that is consumer spending. We fear that consumers will cut back in spending due to the ongoing uncertainty around oil-related activities and not least the property prices, which are likely to hurt the domestic SMEs and hence the banks. This is what happened in Denmark after the property bubble burst in 2007 and the financial crisis hit the economy in 2009. For that reason we continue to be cautious on the Norwegian banks. Following the Annual Capital Markets Day where the main take-away was the CEO's wording of the Group's increased desire to make acquisitions, the Danish press had several articles on this topic. Berlingske Business interviewed the CEO of Maersk Oil, Jakob Thomasen, who states that ‘in 2015 and 2016 there is a window for "in-organic" growth (e.g. M&A) as several oil companies reduce their portfolios’. He also stated that Maersk Oil's current portfolio is ‘not as promising as it used to be’. Interestingly, the CEO of APMM, Smedegaard, states in the interview that ‘since 2009 our debt has been lowered by USD10bn - so we can without any problem buy for USD10bn - and probably more’. Our take remains unchanged => expect credit metrics to weaken over the next 12-18 months due to M&A but expect APMM to remain committed to the BBB+ rating. As APMM EUR bonds trade on the BBB+ curve we struggle to see upside - although valuation will be supported by the strong name and strong underlying financials. We maintain our Marketweight on APMM. APMM has signed an agreement to buy Spanish-based Grup TCB and its 11 container terminals. Terms and price not disclosed - deal expected to close by end of 2015. APMM Terminals currently operates 173 terminals so it is a smaller scale addition but it still shows that APMM is looking to use its strong balance sheet to grow its business over the coming 12-24 months. Overall credit neutral as the deal is not significant from a Group perspective but highlights risk of credit metrics weakening from the current strong levels for the BBB+ rating to more fair levels for the BBB+ rating. We believe APMM bonds are fairly valued and maintain our Marketweight recommendation. Implication Credit positive Credit neutral Credit neutral Source: Danske Bank Markets 17 Company news from the past week (investment grade) Name Maersk A/S Maersk A/S News Moody’s states that it is credit positive for APMM that the British authorities have approved the development of the Culzean gas field - the largest gas field in the UK. Maersk Oil expects peak daily production of 60-90,000boepd when fully up and running in 2020-21. Maersk has a 49.99% share and Maersk Oil expects around 285,000boepd in 2015 in the current Maersk Oil. The additional contribution from Culzean corresponds to some 10-15% of the current total production. Our take on this is 1) positive but this also comes with heavy capex in the coming five years - production is backend loaded from a credit perspective 2) from a total Group perspective this has minor impact. Maersk Oil - the oil and gas business of A.P. Møller Mærsk A/S - received the UK Oil and Gas Authority’s approval to develop the Culzean field, the UK’s largest gas field. In a challenging environment for independent oil and gas companies, the approval is credit positive for Maersk Oil because it will grow the company’s entitlement production and proved reserves. It will also slightly improve the company’s resource diversification given that Maersk Oil today mostly focuses on oil. Implication Credit neutral Credit positive Source: Danske Bank Markets 18 Credit Indicators 19 Chart pack: euro spreads and returns Euro IG ASW, iBoxx indices IG total return, iBoxx indices, 2014-01=100 Euro HY ASW, Merrill Lynch indices HY total return, Merrill Lynch indices, 2014-01=100 Source: Macrobond Financial, Danske Bank Markets [all charts] 20 Chart pack: relative value iTraxx vs iBoxx EUR CDS spreads – Nordic banks Euro vs US CDS indices - IG (Markit) Euro vs US HY bond indices (Merrill Lynch) Source: Bloomberg, Macrobond Financial, Danske Bank Markets [all charts] 21 Chart pack: general market development European swap and government yields 3M Libor, US and euro area Euro swap curve spread EUR/USD basis swaps Source: Macrobond Financial , Danske Bank Markets [all charts] 22 Chart pack: high-yield funds flow High yield US ETF fund flow 1,800 8,000 1,600 7,000 Cumulative ETF-flow MEUR Cumulative ETF-flow MEUR High-yield Europe ETF fund flow 1,400 1,200 1,000 800 600 400 200 0 decjanfebmar- aprmajjunjulaug2014 2015 2015 2015 2015 2015 2015 2015 2015 High Yield - Europe - Fixed Income 6,000 5,000 4,000 3,000 2,000 1,000 0 -1,000 decjan- febmar- aprmaj- jun-20 julaug2014 2015 2015 2015 2015 2015 15 2015 2015 High Yield - North America - Fixed Income Source: Bloomberg, Danske Bank Markets [all charts] 23 Chart pack: fund flows Europe, net sales US, net sales Sweden, net sales Norway, net sales Source: Macrobond Financial, Danske Bank Markets [all charts] 24 Chart pack: macro GDP y/y growth, calendar adjusted Purchasing Manager Indices Euro area y/y change in bank lending Euro area lending standards Source: Macrobond Financial, Danske Bank Markets [all charts] 25 Coverage universe, credit ratings and recommendations 26 Our coverage and shadow ratings 1 of 5 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings Company Ahlstrom Oyj Akelius Residential Property Ab Ambu A/S Ap Moeller - Maersk A/S Arla Foods Amba Atlas Copco Ab Avinor As Bank 1 Oslo Akershus As Bank Norwegian As Beerenberg Holdco Ii As Billerudkorsnas Ab Bw Offshore Cargotec Oyj Carlsberg Breweries A/S Cermaq Asa Citycon Oyj Color Group As Com Hem Holding Ab Corem Property Group Ab Danfoss A/S Danske Bank A/S Dfds A/S Dlg Finance As Dna Ltd Dnb Bank Asa Dong Energy A/S Dsv A/S Eg Holding Eika Boligkreditt As Eika Gruppen As Eksportfinans Asa Electrolux Ab Rating B+ Danske Bank Outlook Sr. Unsec Stable BBB- Stable BBB Stable BBB+ BBB B BBBBB+ BBB- Stable Stable Stable Stable Stable Stable BB Stable BB- Stable B+ BB- Stable B+ BBBBBBBB- BBB B ABBB S&P Rating Outlook Moody's Rating Outlook BBB- Stable BBB+ Stable Baa1 Pos A AA- Stable Stable A2 A1 Stable Stable Baa2 Neg Baa2 Stable A2 Stable BBB Stable BB- Pos BBB A Stable Stable Fitch Rating Outlook BBB Stable A Stable Stable Stable Stable A+ BBB+ Neg Stable Aa3 Baa1 Stable Stable BBBBBB Pos Stable Ba3 Wr Stable BBB+ Stable Stable Stable Stable WD Stable Analyst(s) Recomm. Mads Rosendal Emil Hjalmarsson Jakob Magnussen Brian Børsting MARKETWEIGHT Mads Rosendal Mads Rosendal UNDERWEIGHT Ola Heldal MARKETWEIGHT T. Hovard / L. Holm T. Hovard / L. Holm Øyvind Mossige Mads Rosendal Øyvind Mossige Mads Rosendal Brian Børsting MARKETWEIGHT Knut-Ivar Bakken Emil Hjalmarsson OVERWEIGHT Niklas Ripa Ola Heldal Emil Hjalmarsson Jakob Magnussen Niklas Ripa Mads Rosendal Ola Heldal T. Hovard / L. Holm UNDERWEIGHT Jakob Magnussen MARKETWEIGHT Brian Børsting Jakob Magnussen T. Hovard / L. Holm T. Hovard / L. Holm T. Hovard / L. Holm Brian Børsting MARKETWEIGHT 27 Our coverage and shadow ratings 2 of 5 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings Danske Bank Company Rating Outlook Sr. Unsec Elenia Oy Elisa Oyj Entra Eiendom As AStable Farstad Shipping Asa BB Neg BBFingrid Oyj Finnair Oyj BB Stable Fortum Oyj Fortum Varme Holding Samagt Med Stockholms Stad Ab Fred Olsen Energy Asa BBStable B+ G4S Plc Getinge Ab BB+ Neg Golar Lng Partners Lp BB Stable BBGolden Close Maritime Corp Ltd BHeimstaden Ab BB Stable BBHemso Fastighets Ab BBB+ Stable BBB Hkscan Oyj BB Stable Hoist Kredit Ab BBStable B+ Husqvarna Ab BBBPos Hoegh Lng Holdings Ltd BBStable B+ Ikano Bank Ab BBB Stable Investor Ab Iss A/S J Lauritzen A/S B Stable BJernhusen Ab AStable Jyske Bank A/S Kemira Oyj BBBStable Kesko Oyj BBB Stable Klaveness Ship Holding As BBStable B+ Loomis Ab BBBStable Luossavaara-Kiirunavaara Ab BBB+ Neg Meda Ab BBStable Metsa Board Oyj Metso Oyj S&P Rating Outlook Moody's Rating Outlook Fitch Rating Outlook BBB+ Stable Baa2 Stable A+ Stable A1 Stable A+ Stable BBB+ BBB+ Stable Stable Baa1 Stable A- Neg BBB- Stable A- Stable AABBB- Stable Pos A1 Stable A- Stable Baa1U Wr Stable BB BBB Stable Stable Ba2 Baa2 Stable Stable Analyst(s) Recomm. Jakob Magnussen Ola Heldal Ola Heldal Øyvind Mossige Jakob Magnussen Brian Børsting Jakob Magnussen Jakob Magnussen Sondre Stormyr Brian Børsting Louis Landeman Bjørn Kristian Røed Sondre Stormyr Louis Landeman Emil Hjalmarsson Brian Børsting Gabriel Bergin Emil Hjalmarsson Bjørn Kristian Røed T. Hovard / L. Holm Brian Børsting Brian Børsting Bjørn Kristian Røed Emil Hjalmarsson T. Hovard / L. Holm Mads Rosendal Mads Rosendal Bjørn Kristian Røed Brian Børsting Louis Landeman Louis Landeman Mads Rosendal Mads Rosendal OVERWEIGHT OVERWEIGHT MARKETWEIGHT UNDERWEIGHT MARKETWEIGHT MARKETWEIGHT OVERWEIGHT OVERWEIGHT OVERWEIGHT OVERWEIGHT MARKETWEIGHT 28 Our coverage and shadow ratings 3 of 5 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings Company Ncc Ab Neste Oyj Nibe Industrier Ab Nokia Oyj Nokian Renkaat Oyj Nordax Bank Ab Nordea Bank Ab North Atlantic Drilling Ltd Norwegian Air Shuttle Asa Norwegian Property Asa Nykredit Bank A/S Nynas Group Ocean Yield Asa Odfjell Se Olav Thon Eiendomsselskap Asa Olympic Ship As Orava Residential Reit Plc Orkla Asa Outokumpu Oyj Pohjola Bank Oyj Posten Norge As Postnord Ab Prosafe Se Ramirent Oyj Saab Ab Sandnes Sparebank Sandvik Ab Sas Ab Sbab Bank Ab Scania Ab Schibsted Asa Seadrill Ltd Rating BBBBBBBBB- Danske Bank Outlook Sr. Unsec Stable Stable Stable BBB+ BBB- Stable Stable BBBBBBB- Neg Neg Stable B+ B+ B+ BB B+ BBB+ B+ B+ BBB+ B Stable B+ BBB ABBB+ BBBB+ BBB+ BBB+ Stable Stable Stable Stable Stable Stable Stable Stable Stable Stable Pos Neg S&P Rating Outlook Stable Stable Fitch Rating Outlook BB+ Pos Ba2 Stable BB Pos AA- Neg Aa3 Stable AA- Stable A Neg Baa3U Stable A Stable AA- Neg Aa3 Stable A+ Stable B B+ Wr BBB BA A- BBB BB- Moody's Rating Outlook B+ Neg Stable Neg Stable Wr A2 Stable Stable Analyst(s) Emil Hjalmarsson Jakob Magnussen Emil Hjalmarsson Ola Heldal Jakob Magnussen T. Hovard / L. Holm T. Hovard / L. Holm Sondre Stormyr Brian Børsting Ola Heldal T. Hovard / L. Holm Jakob Magnussen Øyvind Mossige Bjørn Kristian Røed Ola Heldal Øyvind Mossige Mads Rosendal Ola Heldal Mads Rosendal T. Hovard / L. Holm Ola Heldal Gabriel Bergin Sondre Stormyr Brian Børsting Emil Hjalmarsson T. Hovard / L. Holm Mads Rosendal Brian Børsting T. Hovard / L. Holm Mads Rosendal Ola Heldal Sondre Stormyr Recomm. OVERWEIGHT MARKETWEIGHT UNDERWEIGHT OVERWEIGHT MARKETWEIGHT MARKETWEIGHT MARKETWEIGHT MARKETWEIGHT 29 Our coverage and shadow ratings 4 of 5 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings Company Securitas Ab Skandinaviska Enskilda Banken Ab Skanska Ab Skf Ab Sognekraft As Solstad Offshore Asa Spar Nord Bank A/S Sparebank 1 Boligkreditt As Sparebank 1 Nord Norge Sparebank 1 Smn Sparebank 1 Sr-Bank Asa Sponda Oyj Ssab Ab St1 Nordic Oy Statkraft Sf Statnett Sf Statoil Asa Steen & Strom As Stena Ab Stockmann Oyj Abp Stolt-Nielsen Ltd Stora Enso Oyj Storebrand Bank Asa Storebrand Livsforsikring As Sunnfjord Energi As Suomen Hypoteekkiyhdistys Swedavia Ab Swedbank Ab Swedish Match Ab Svensk Fastighetsfinansiering Ab Svenska Cellulosa Ab Sca Svenska Handelsbanken Ab Rating Danske Bank Outlook Sr. Unsec BBB+ Stable BBB BBBBB+ A- Stable Stable Stable Stable S&P Rating Outlook BBB Pos A+ Neg BBB BBB- Stable BB Stable BBB+ Stable B+ BB+ Stable Stable BBB+ Stable BBBAA- Stable Stable Stable BBB Stable Moody's Rating Outlook Wr Aa3 Stable Baa1 Neg A1 A1 A1 Stable Stable Stable Fitch Rating Outlook A+ Pos BBB B+ A AA- Stable Stable Stable BB- Stable AA+ AA- Stable Stable Stable Aaa Wr Aa2 Stable Stable Stable BB Stable B2 Stable BB BBB+ BBB+ Stable Neg Stable Ba2 Nr Baa1 Stable Stable Stable WD BBB Neg A+ BBB Stable Stable Aa3 Baa2 Stable Stable A+ Pos AAA- Stable Neg Baa1 Aa2 Stable Stable AA- Stable BB BBB- Stable Analyst(s) Recomm. Brian Børsting T. Hovard / L. Holm Emil Hjalmarsson Mads Rosendal Jakob Magnussen Øyvind Mossige T. Hovard / L. Holm T. Hovard / L. Holm T. Hovard / L. Holm T. Hovard / L. Holm T. Hovard / L. Holm Emil Hjalmarsson Mads Rosendal Jakob Magnussen Jakob Magnussen Jakob Magnussen Jakob Magnussen Ola Heldal Niklas Ripa Mads Rosendal Bjørn Kristian Røed Mads Rosendal T. Hovard / L. Holm T. Hovard / L. Holm Jakob Magnussen T. Hovard / L. Holm Gabriel Bergin T. Hovard / L. Holm Brian Børsting Louis Landeman Mads Rosendal T. Hovard / L. Holm MARKETWEIGHT OVERWEIGHT UNDERWEIGHT UNDERWEIGHT MARKETWEIGHT UNDERWEIGHT OVERWEIGHT MARKETWEIGHT UNDERWEIGHT UNDERWEIGHT MARKETWEIGHT MARKETWEIGHT MARKETWEIGHT MARKETWEIGHT MARKETWEIGHT 30 Our coverage and shadow ratings 5 of 5 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings Company Sydbank A/S Tallink Grupp As Tdc A/S Technopolis Oyj Teekay Lng Partners Lp Teekay Offshore Partners Lp Tele2 Ab Telefonaktiebolaget Lm Ericsson Telenor Asa Teliasonera Ab Teollisuuden Voima Oyj Thon Holding As Tine Sa Upm-Kymmene Oyj Vasakronan Ab Vattenfall Ab Vestas Wind Systems A/S Victoria Park Ab Wihlborgs Fastigheter Ab Wilh Wilhelmsen Asa Volvo Ab Yit Oyj Rating Danske Bank Outlook Sr. Unsec BB Stable BB- BB+ BB BBBBB Stable Stable Stable Stable BB BBB+ BBB+ BBB+ Stable Stable A- Stable S&P Rating Outlook Stable Stable Stable B Stable Fitch Rating Outlook BBB Neg Baa3 Stable BBB Neg BBB+ A ABBB- Stable Stable Stable Neg Baa1 A3 A3 Wr Stable Stable Neg BBB+ Stable ABBB Stable Stable BB+ Stable Ba1 Stable WD A3 Neg A- Neg Baa2 Stable BBB Stable ABBBBBBB+ BBB- Moody's Rating Outlook Baa1 Stable B+ BB BBB Neg Analyst(s) Recomm. T. Hovard / L. Holm Niklas Ripa Ola Heldal Louis Landeman Bjørn Kristian Røed Bjørn Kristian Røed Ola Heldal Ola Heldal Ola Heldal Ola Heldal Jakob Magnussen Ola Heldal Ola Heldal Mads Rosendal Emil Hjalmarsson Jakob Magnussen Niklas Ripa Louis Landeman Louis Landeman Bjørn Kristian Røed Mads Rosendal Emil Hjalmarsson OVERWEIGHT MARKETWEIGHT MARKETWEIGHT MARKETWEIGHT UNDERWEIGHT OVERWEIGHT MARKET WEIGHT UNDERWEIGHT OVERWEIGHT MARKETWEIGHT Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 31 Fixed Income Credit Research team Thomas Hovard, Chief Analyst Head of Credit Research +45 45 12 85 05 [email protected] Brian Børsting, Senior Analyst Industrials +45 45 12 85 19 [email protected] Ola Heldal, Senior Analyst TMT +47 85 40 84 33 [email protected] Louis Landeman, Senior Analyst TMT, Industrials +46 8 568 80524 [email protected] Lars Holm, Senior Analyst Financials +45 45 12 80 41 [email protected] Sondre Dale Stormyr, Senior Analyst Offshore Rigs +47 85 40 70 70 [email protected] Mads Rosendal, Analyst Industrials, Pulp & Paper +46 8 568 80594 [email protected] Gabriel Bergin, Analyst Strategy, Industrials +46 8 568 80602 [email protected] Henrik René Andresen, Senior Analyst Credit Portfolios +45 45 13 33 27 [email protected] Jakob Magnussen, Senior Analyst Utilities, Energy +45 45 12 85 03 [email protected] Niklas Ripa, Senior Analyst High Yield, Industrials +45 45 12 80 47 [email protected] Øyvind Mossige, Senior Analyst Oil Services +47 85 40 54 91 [email protected] Knut-Ivar Bakken, Senior Analyst Fish Farming +47 85 40 70 74 [email protected] Bjørn Kristian Røed, Senior Analyst Shipping +47 85 40 70 72 [email protected] Emil Hjalmarsson, Analyst Real Estate, Construction +46 8 568 80634 [email protected] Katrine Jensen, Analyst Financials +45 45 12 80 56 [email protected] Iver Christian Båtvik, Analyst Shipping +47 [email protected] 32 Disclosures This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S ('Danske Bank'). 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