Weekly Credit Update - Danske Analyse

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Weekly Credit Update 19 January 2016 Analysts Thomas Hovard +45 45 12 85 05 [email protected] Katrine Jensen +45 45 12 80 56 [email protected] Investment Research www.danskebank.com/CI Important disclosures and certifications are contained from page 37 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 minds - General credit market news • The trend from the first week of the year was repeated last week with very low risk appetite. Indeed, the sell-off makes it one of the weakest starts ever. The most significant message from investors is that they remain sidelined waiting for primary issuance and repricing of secondary markets. Stocks are generally hit harder than credits but still iTraxx Main widened 11bp last week to approximately 96bp and iTraxx Crossover widened around 30bp to 384bp. • Further, they have relatively high liquidity despite initiations of fund outflows, as the sell-off began late in 2015. • Corporate issuance has been relatively modest and we expect a pickup in activity before entering black-out periods. This said, AB InBev did a record USD46bn deal (in several tranches) funding the takeover of SABMiller, which is the second-highest issue ever. Our overall expectation for spreads in 2016 remains for a (relatively modest) widening. See Credit Outlook 2016: ECB still on the throttle but the road ahead looks bumpy , 11 January. • Norway continues to be the big uncertainty amid the oil price collapse. We have already seen restructuring cases in the Norwegian oil-related markets (and much more to come) and we remain bearish on these markets and banking, which is typically late cycle. Thus, we expect a significant pickup in provisioning levels in companies’ Q4 reports (spurred by the Norwegian FSA on the back of surprisingly low levels currently) and to be continued in 2016. Source: Bloomberg, Danske Bank Markets (both charts) 3 Scandi high yield 4 Sell DONG Energy call 2023 (EUR) – stay exposed to the short end Published on 18 January 2016 Key arguments for the trade • Spread on the DONGAS call 2023 hybrid not adequate. The bond trades ‘only’ slightly wider than the ‘BBB-’ fair value curve (see below) and is rated ‘BB+’ by S&P. • Several longer term risks. We see a broad range of longer term challenges for DONG Energy, which are not reflected in the longer end of the curve. • The call 2023 has call event risk. Being a high-coupon hybrid, the cash price is somewhat above 101, making the hybrid exposed to event risks allowing an issuer call (due to i.e. rating methodology or accounting change). Relative value (EUR), indicative mid spreads • Longer term risks revolve around longer term shareholder friendliness after IPO, PSO (feed-in tariff) run-off on old wind parks, uncertainty about future of PSO, weak oil price (hedged only in 2016) and weak power prices. • Recommendation. We prefer the short end of the DONG curve. In particular, we find the DONGAS 6.25% call 2023 too tight. We recommend selling this, possibly replacing it with the shorter DONGAS 4.875% call 2018. We also consider the DONGAS 3% call 2020 too tight. • Trade Idea - Sell DONG Energy 6. 25% call 2023 (EUR), 18 January. Credit spread development Mid Spread (EUR)* ASW spread Corporate hybrids BB+ 500 600 GASSM (Ba1/BB+) 3.4% '24 RWE (Ba1/BB+) 3.5% '25 450 550 GASSM (Ba1/BB+) 4.1% '22 Corporate hybrids BBB- ENBW (Baa2/BBB-) 3.6% '21 500 VATFAL (Baa2/BB+) 3% '27 Corporate hybrids BBB DONGAS (Baa3/BB+) 6.3% '23 350 450 ENECO (NR/BBB) 3.3% '21 DONGAS (Baa3/BB+) 3% '20 EDF (Baa1/BBB) 4.1% '22 DONGAS (Baa3/BB+) 4.9% '18 SSELN (Baa2/BBB) 2.4% '21 VATFAL (Baa2/BB+) 6.1% '23 ENGIFP (A3/BBB+) 3.9% '24 400 350 300 250 VATFAL (Baa2/BB+) 3.1% '22 SEVFP (Baa2/NR) 2.5% '22 ENGIFP (A3/BBB+) 3.9% '18 ENELIM (Ba1/BB+) 6.5% '19 300 400 Corporate hybrids BBB+ 200 SSELN (Baa2/BBB) 5.6% '17 IBESM (Baa3/BB+) 5.8% '18 250 150 Mar-2015 ENBW (Baa2/BBB-) 7.4% '17 200 1 2 3 4 5 6 7 8 9 * Z-spreads. Discount margin for floaters. Swapped to indicated currency. ** Years-to-worst Note: Fair value curve(s) based on Danske Bank Markets' (mid) peer group of European issuers Source: Bloomberg, Danske Bank Markets 10 11 12 YTW** May-2015 Jul-2015 Sep-2015 VATFAL EUR 3% 2027 (Hybrid) DONGAS EUR 4.875% 2018 (Hybrid) DONGAS EUR 6.25% 2023 (Hybrid) Source: Bloomberg, Danske Bank Markets Nov-2015 Jan-2016 Buy Stena 2017 (EUR) – underweight on all other Stena bonds Published on 14 January 2016 Key arguments for the trade • Attractive valuation. Following recent spread widening, we believe the Stena 2017 trades at an attractive level. • Strong short-term liquidity profile. The full redemption of the 2017 bond is covered by Stena’s current and expected liquid resources by a healthy margin over the next 12 months (as also confirmed by Stena’s CFO during the Q3 15 conference call). • Covenant. We do not expect any bank covenant breach to occur before the maturity of the Stena 2017 bond. Relative value (EUR), indicative ask spreads Credit risk set to increase in Stena. Due to the high exposure to oil drilling (c.40% of EBITDA), we expect lower cash flows, significantly higher leverage (possibly over 8x adjusted net debt/EBITDA) and higher refinancing risk in Stena in coming years. • Recommendation. We remain underweight on all Stena’s bonds except the Stena 2017 bond. We recommend buying the 2017 solely due to the strong liquidity coverage and the attractive valuation. • Trade idea – Buy Stena 6.125% 2017 (EUR), 14 January. Credit spread development Credit Spread (EUR)* 950 900 850 800 750 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0 • ASW Issue Currency 530 STENA 7% '24 (USD) 480 STENA 5Y CDS 430 Industrials B's STENA 7.9% '20 (EUR) STENA 5.9% '19 (EUR) 380 STENA 5.8% '24 (USD) 330 280 STENA 6.1% '17 (EUR) 230 180 Industrials BB's 130 80 30 1 2 3 4 5 6 7 8 Years to maturity** 9 10 11 12 * Spreads are swapped to indicated currency and prioritised in accordance with availability of Z-spread, discount margin ** Years to legal maturity or years to first-call date Note: Fair value curve(s) based on Danske Bank Markets' peer group of European issuers Source: Bloomberg, Danske Bank Markets -20 Jul-2015 Sep-2015 STENA EUR 6.125% 2017 COLLIN NOK 5.56% 2017 Source: Bloomberg, Danske Bank Markets Nov-2015 Jan-2016 DFDSDC NOK 4.6% 2016 TALLNK NOK 6.16% 2018 SSAB – BUY SSABAS 3.875 2019 (EUR) Published on 13 January 2016 Key arguments for the trade: • Fire sale following profit warning. The entire SSAB curve and especially the SSAB EUR 2019s took a harsh beating recently, trading down 13 full figures since the profit warning in early December. We believe low yearend market liquidity is partly to blame for the steep fall. • Credit watch negative but with limited rating downside. S&P has placed SSAB’s ‘BB-’ rating on CW negative but to our (positive) surprise the potential downgrade seems limited to one notch. Relative value (EUR), ask spreads • Attractive valuation. Despite tough steel market conditions, we believe the price reaction is overdone and we see the current level as a good entry point. The SSAB EUR 2019s (ASK Z+863bp) trade almost 300bp wider than the SSAB SEK 2019s and some 200bp wider than the ‘B’ rated EUR industrials curve, indicating attractive value, even in the case of a two-notch downgrade. • Trade Idea - Buy SSAB EUR 2019, 13 January. Credit spread development Credit Spread (EUR)* 1000 1000 900 OUTOK 6.6% '19 (EUR) Industrials B 800 700 SSABAS 4.6% '19 (SEK) 600 Industrials B+ 500 SSABAS 4.9% '17 (SEK) 400 Industrials BB- 300 ASW/DM in basis points SSABAS 3.9% '19 (EUR) 900 800 700 600 500 400 200 300 100 Years to maturity** 0 1 2 3 4 5 6 7 * Spreads are swapped to indicated currency and prioritised in accordance with availability of Z-spread, discount margin ** Years to legal maturity or years to first-call date Fair value curves based on a sample of European issuers Source: Bloomberg, Danske Bank Markets 8 SSABAS 3 7/8 04/10/19 SSABAS 0 04/03/18 SSABAS 4 5/8 02/25/19 Source: Bloomberg, Danske Bank Markets OUTOK 6 5/8 09/30/19 SSABAS 4 7/8 12/13/17 Recent trade ideas (high yield) Type Outright Trade Sell DONG Energy call 2023 Outright Buy Stena EUR2017 Attractive valuation 2017 bond. We remain underweight all other Stena bonds. Outright Buy SSAB EUR2019 The SSAB EUR2019 currently trades at very attractive levels compared with other outstanding SSAB bonds and compared with the current 'BB-' rating from S&P. Buy Norwegian Air Shuttle EUR2019 The Norwegian Air Shuttle EUR2019 currently trades at very attractive level compared with other outstanding NAS bonds and compared with our B+/NO shadow rating. Switch Buy Color Group NOK 2019, Sell Tallink NOK 2018 Color Group spread pickup is attractive versus Tallink. Outright Buy Color Group NOK 2019 Spread wide for the assessed rating. Switch Sell Stena 2020, Buy TDC hybrid Fundamentally, we see increased credit risk in Stena and Opened recommend investors switch into names with the same Outright Idea The long end of the DONG Energy hybrid curve is too tight. Opened Start spread Opened Start spread 18 Jan 2016 497 14 Jan 2016 467 Opened 13 Jan 2016 Start spread Opened 777 07 Dec 2015 Start spread 692 Opened Start spread 27 Oct 2015 105 Opened Start spread 27 Oct 2015 569 01 Oct 2015 or stronger credit profiles such as TDC (hybrid). Start spread Switch Outright Sell Stena 2020, Buy Volvo hybrid Fundamentally, we see increased credit risk in Stena and recommend investors switch into names with the same or stronger credit profiles such as Volvo (hybrid). Close of Trade Tallink NOK 2018 Bonds trade tight to 'BB-' curve and bonds no longer attractive. We take profit on trade initiated 27 February 2015 (TR: 3.9% / ann. TR 7.9%). Opened Start spread Opened Start spread -27 01 Oct 2015 6 08 Sep 2015 440 Source: Danske Bank Markets See the end of this document for a list of our coverage including shadow ratings and recommendations. 8 Best and worst performers (Nordic coverage universe) - High yield 1 month in local currencies YTD in local currencies Teekay Offshore Partners LP NOK 2016 -178 Teekay Offshore Partners LP NOK 2016 -177 Teekay Offshore Partners LP/Teekay… -63 Beerenberg Holdco II AS NOK 2018 -63 Beerenberg Holdco II AS NOK 2018 -63 Beerenberg Holdco II AS NOK 2018 -63 Beerenberg Holdco II AS NOK 2018 -27 Teekay Offshore Partners LP NOK 2017 -27 Teekay Offshore Partners LP NOK 2017 -27 Teekay Offshore Partners LP NOK 2017 -27 Teekay Offshore Partners LP NOK 2017 -6 Norwegian Air Shuttle ASA NOK 2018 -10 Norwegian Air Shuttle ASA EUR 2019 -5 Norwegian Air Shuttle ASA NOK 2017 -5 Norwegian Air Shuttle ASA NOK 2017 -2 Norwegian Air Shuttle ASA EUR 2019 -2 Meda AB SEK 2019 -1 Meda AB SEK 2019 -714 -1 Nokia OYJ EUR 2019 0 Meda AB SEK 2018 240 Teekay Offshore Partners LP NOK 2019 228 Teekay Offshore Partners LP NOK 2019 240 Teekay Offshore Partners LP NOK 2019 228 Teekay Offshore Partners LP NOK 2019 402 Seadrill Ltd USD 2020 282 J Lauritzen A/S NOK 2017 435 J Lauritzen A/S NOK 2017 384 Fred Olsen Energy ASA NOK 2019 473 Fred Olsen Energy ASA NOK 2019 387 Seadrill Ltd USD 2020 569 Seadrill Ltd SEK 2019 2000 1500 1000 500 0 -500 -1000 Seadrill Ltd NOK 2018 1,161 North Atlantic Drilling Ltd USD 2019 Change in local currencies (bp) North Atlantic Drilling Ltd NOK 2018 962 Seadrill Ltd USD 2017 1,760 North Atlantic Drilling Ltd USD 2019 717 North Atlantic Drilling Ltd NOK 2018 1,271 1,587 Seadrill Ltd SEK 2019 569 Seadrill Ltd NOK 2018 1,260 Seadrill Ltd USD 2017 1,595 2000 1500 1000 500 0 -500 Change in local currencies (bp) Source: Bloomberg, Danske Bank Markets (both charts) 9 Danske Bank Markets Nordic High-Yield Index • The start of 2016 has been a rough ride for the European high-yield credit markets. • iTraxx crossover has so far widened some 66bp YTD (+30bp over the past week) and currently trades around 378bp. • Since the start of the year, our Danske Bank Markets Nordic High-Yield Index has widened some 37bp (+17bp over the past week) following the same trend as the broader EUR market. We caution that the liquidity in the Nordic high-yield market is currently very thin. • Probably due to the current volatile market conditions, we are still waiting for the first primary Nordic high-yield transaction in 20 16. Key index statistics Date Yield ASW spread, bps # Bonds AVG credit rating Avg duration TR since start TR YTD TR MTD Danske Bank Markets Nordic High-Yield Index 105.0 104.5 104.0 103.5 103.0 102.5 102.0 101.5 101.0 100.5 100.0 Dec/2014 Mar/2015 Jun/2015 575 550 525 500 475 450 425 400 375 350 325 300 Sep/2015 Dec/2015 DBM Hedged EUR Nordic HY Index Value DBM Nordic HY Index, ASW-spread (bps). RHS Index sector breakdown Index start Index end Change 31/Dec/2014 15/Jan/2016 5.5% 430 553 123 107 BB 3.0 -0.1% -1.5% -1.5% Real estate 13% Utilities 7% Technology 2% Basic Materials 12% Communicat ions 8% Consumer, non-cycli. 10% Consumer, Cyclical 9% Industrial 19% Energy 14% Diversified 4% Source: Bloomberg, Danske Bank Markets [all tables and charts] 10 Recent Nordic high-yield issuance Selected new issues (High Yield) Date Issuer Coupon Ccy Volume Maturity S&P / Mdy / Fitch ASW/DM 15/12/2015 Bulk Industrier As NIBOR3M +700bps NOK 200 m Dec/18 / / 700 15/12/2015 Bong Ab 10% SEK 200 m Dec/18 / / 1024 11/12/2015 Barcode 121 Holding Ag 3.75% NOK 2 535 m Dec/24 / / 232 11/12/2015 B121 Holding As 5.75% NOK 390 m Dec/20 / / 444 10/12/2015 Stockmann Ab (Hybrid) 7.75% EUR 85 m PERP / / 717 09/12/2015 West Atlantic Ab 6.5% SEK 850 m Dec/19 / / 611 01/12/2015 Norwegian Air Shuttle As 7.25% EUR 125 m Dec/19 / / 700 19/11/2015 Ab Stena Metall Finans STIB3M +350bps SEK 1 000 m Nov/20 / / 350 17/11/2015 Jefast Holding Ab STIB3M +650bps SEK 200 m Jan/19 / / 650 13/11/2015 Vattenfall Ab (Hybrid) 6.1% USD 400 m Nov/78 BB+ / Baa2 / A- 406 0.125% EUR 340 m Nov/20 / / - STIB3M +250bps SEK 300 m Apr/18 BB- *- / / 250 29/10/2015 Marine Harvest Asa (Convertible) 26/10/2015 Ssab Ab 21/10/2015 Verisure Holding Ab STIB3M +725bps SEK 2 816 m Oct/23 CCC+ / Caa1e / 725 21/10/2015 Verisure Holding Ab EUR003M +725bps EUR 400 m Oct/23 CCC+ / Caa1e / 725 23/10/2015 Verisure Holding Ab 6% EUR 700 m Nov/22 B / B1 / 591 01/10/2015 Finnair Oyj (Hybrid) 7.875% EUR 200 m PERP / / 754 16/09/2015 Akelius Residential Ab 3.375% EUR 300 m Sep/20 BB+ / / 300 03/09/2015 Lock As 7% EUR 30 m Aug/21 B+ / B2 / 505 03/09/2015 Lock As 5.5% 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 Source: Bloomberg, Danske Bank Markets 11 Company news from the past week (high yield) Name J Lauritzen News J. Lauritzen (B/B-). Reports suggest J. Lauritzen has sold another Handysize vessel, to a Turkish buyer for USD7.5m. This is its fifth Handysize sale over the past month. The company continues to divest vessels at extremely low levels but, from a credit perspective, the vessels are burning cash and are likely to do so throughout 2016, so sales and repayment of debt/accumulating cash are something we regard as credit positive. It should ensure the company remains well in compliance with its minimum liquidity covenant of at least USD50m of cash. Implication Credit positive Stockman Stockmann (Danske Bank Markets: B+/NR). The December sales figure was roughly in line with our estimates, amounted to EUR173.7m, of which the continuing business (Stockmann and Lindex) accounted for EUR146m. Sales in the continuing business were up 1.6% y/y due to excellent Christmas sales in Lindex. Overall, the December sales figures are neutral from a credit perspective. In our view, the key thing to watch is how the turnaround progresses going into 2016. We maintain our ‘B+’ rating on the name. Credit neutral Stena Stena (UW). Last week, Stena Drilling confirmed that the idle Stena Carron drillship has been awarded a new drilling contract by Esso Exploration and Production Guyana Limited (Exxon Mobil). The contract is for a period of one year at USD235,000 per day plus a six-month option with further options to be agreed at the market rate. The unit has begun mobilisation to its location and commencement is planned for the end of January 2016. Simultaneously, the dayrate for Stena Forth, contracted by Hess, has been reduced to USD498,000 per day from USD563,000 per day for the remaining contract period until end-June 2017. All in all, the EBITDA in Stena Drilling’s cash flow will be net positively affected by up to some SEK200m by the contract changes overg the next year. Due to the limited positive cash flow impact for the group, this does not change our view with regard to Stena. We continue to see an increased risk of a negative fall in free cash flow in 2016 and 2017, while leverage may increase to more than 8x (measured as adjusted net/adjusted LTM EBITDA) over the next two years. Credit positive Source: Danske Bank Markets 12 Company news from the past week (high yield) Name SAS News SAS (B-/S) reported mixed traffic figures for December 2015. Traffic increased by 8% on the back of 13% y/y greater capacity (mainly long haul additions). This led the load factor to decline by 3pp to just 68%. The large capacity additions also led to a significant decline in average ticket prices (-9% y/y), explained partly by the greater stage length. However, SAS noted a reduction in bookings in November, which affected traffic negatively in December. Furthermore, SAS notes that market capacity has started to increase, which is likely to continue to put pressure on ticket prices. Overall, this is likely to put some margin pressure on SAS, although we expect lower fuel costs to offset this. Overall, SAS’s traffic figures were slightly disappointing. Implication Credit negative Norwegian Air Shuttle Norwegian Air Shuttle (Danske Bank Markets: BB-/NO). In terms of the read-across from SAS, as Norwegian Air Shuttle (NAS) has a significantly lower operating cost base than SAS, we do not believe the increased price pressure will translate into significant margin pressure on NAS, as SAS simply cannot lower prices much before it reaches breakeven in margin terms. If SAS breaks even, NAS will continue to have a healthy EBIT margin. In conclusion, we do not believe the poor traffic numbers from SAS should have any meaningful impact on NAS bonds. Credit neutral Stockmann Stockmann (Danske Bank Markets: B+). We now have a little more colour on the additional EUR20m tax bill from the Swedish and Finnish government. The decision relates to irregularities regarding transfer pricing and the bill is due to be split roughly evenly between the two governments. According to Stockmann, the decision is unfounded and an appeal has been made. The tax will be booked in the 2015 financial statements but Stockmann has applied to prolong the actual payment until a decision has been made. As such, we expect there to be a significant delay beyond Q4 before this will have a cash flow effect. The amount corresponds to around 0.1x in additional adjusted net debt to EBITDA, so overall this is neutral for the credit. The main thing to watch, in our view, is still the turnaround process, which we are fairly confident will begin to improve results in 2016. Credit negative Source: Danske Bank Markets 13 Scandi investment grade 14 Trade Idea – Buy DFDS NOK 2016 Published on 30 November 2015 Relative value (NOK), ask spreads BUY – DFDS 2016 Credit Spread (NOK)* ISIN: 225 Industrials BB's 200 175 NO0010643281 Currency NOK DBM shadow rating `BBB-` Type of instrument Senior unsecured 150 Coupon Type 125 DFDSDC (NR/NR) FRN '18 MAERSK (Baa1/BBB+) 6.3% '16 100 75 Industrials BBB's DFDSDC (NR/NR) FRN '16 FRN Coupon 3M NIBOR +350bp Maturity May 2, 2016 50 Cash price 101.10 (indicative, ask) 25 Callable Yes, in case of change of control event. 0 0 1 2 3 Years to maturity** * Spreads are swapped to indicated currency and prioritised in accordance with availability of Z-spread, discount margin ** Years to legal maturity or years to first-call date Source: Bloomberg, Danske Bank Markets Current YTM approx. 2.0% p.a. DM +86bp Source: Bloomberg, Danske Bank Markets We view DFDS’s credit profile on par with a ‘BBB-’ shadow rating (bond issue level). DFDS has indicated a willingness to increase leverage significantly if the right acquisition target shows up, possibly to a level of 4-5x net debt/EBITDA versus the current level of 0.9x. From both a relative value and absolute perspective, we believe DFDS FRN 2016 is an attractive alternative to money-market investments with similar placement horizon. In contrast to the two other outstanding DFDS bonds, we think the DFDS FRN 2016 is protected from adverse M&A event risk. As an alternative to DFDS FRN 2016, the slightly longer Maersk 6.25% 2016 in NOK seems to offer good value at current pricing. See also DFDS: Q3 15 - strong performance again but leverage set to rise, 19 November 2015. Recent trade ideas (investment grade) Type Outright Trade Buy DFDS NOK FRN 2016 Idea Outright Close of buy Neste EUR2022 We close our Buy Neste 22s trade recommendation. Switch Buy Securitas EUR 2021, Sell G4S EUR 2018 One notch higher rating and no risk of near-term M&A in Securitas make pickup attractive. Buy Securitas EUR 2021 Spread has widened too much post the Diebold acquisition. Outright Buy Vestas 2022 (revisited). The Vestas EUR 2.75% 2022 trades cheap to a EUR corporate BBB curve. Outright Buy Nykredit AT1 (perpetual) Nykredit has issued an AT1 with a 7.125% trigger. This hybrid trade ais ttractive to Nordic peers. Outright 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. Sector spread Switch from Securitas 2018 to ISS Global A/S 2020 We recommend buying the ISS Global A/S 2020, as we believe valuation is attractive compared with ISS Global A/S’ BBB-/Positive Outlook from S&P as the bond is currently trading close to the ‘BBB-’ curve. Short FRN trades attractive both on RV and absolute basis. Opened Start spread Opened Start spread Outright Opened Start spread Opened Start spread Opened Start spread Opened Start spread 30 Nov 2015 86 16 Nov 2015 161 09 Nov 2015 16 09 Nov 2015 92 24 Aug 2015 270 10 Aug 2015 511 Opened 10 Aug 2015 Start spread Opened 361 03 Jun 2015 Start spread 32 Source: Danske Bank Markets See the end of this presentation for a list of our coverage including shadow ratings and recommendations 16 Best and worst performers (Nordic coverage universe) - Investment grade 1 week in local currencies Fortum Varme Holding samagt med… -10 Statkraft AS NOK 2025 -4 Fortum Varme Holding samagt med… -8 Fortum Varme Holding samagt med… -4 Swedish Match AB SEK 2020 -8 Swedish Match AB SEK 2020 -5 -3 Vattenfall AB EUR 2024 -7 Fortum Varme Holding samagt med… -3 Fingrid OYJ EUR 2024 -6 Skandinaviska Enskilda Banken AB EUR… -3 Svenska Cellulosa AB SCA EUR 2023 -4 Vattenfall AB EUR 2024 -3 Telenor ASA EUR 2022 -4 TeliaSonera AB EUR 2022 -3 TeliaSonera AB EUR 2027 -4 Svenska Handelsbanken AB EUR 2021 -3 Telenor ASA EUR 2024 -4 Svenska Handelsbanken AB EUR 2022 -3 Svenska Handelsbanken AB EUR 2022 -4 Teollisuuden Voima Oyj EUR 2025 Telefonaktiebolaget LM Ericsson EUR… 5 Swedbank AB EUR 2017 Sampo Oyj EUR 2017 11 Statoil ASA EUR 2025 12 Svenska Handelsbanken AB EUR 2017 6 DONG Energy A/S EUR 2016 12 Telefonaktiebolaget LM Ericsson EUR… 6 Svenska Handelsbanken AB EUR 2017 13 Sampo Oyj EUR 2017 6 Telenor ASA EUR 2017 13 TeliaSonera AB EUR 2017 6 7 10 11 TeliaSonera AB EUR 2017 5 5 15 1 month in local currencies Pohjola Bank Oyj EUR 2017 15 Telenor ASA EUR 2017 Statoil ASA EUR 2025 15 DONG Energy A/S EUR 2016 10 Svenska Cellulosa AB SCA EUR 2016 10 Neste Oyj EUR 2016 5 0 -5 -10 Change in local currencies (bp) Svenska Cellulosa AB SCA EUR 2016 22 Neste Oyj EUR 2016 31 40 30 20 10 0 -10 -20 Change in local currencies (bp) Source: Bloomberg, Danske Bank Markets (both charts) 17 Selected new investment-grade issues Date Issuer Coupon Ccy Volume Maturity S&P / Mdy / Fitch ASW/DM 15/01/2016 Sparebanken Telemark NIBOR3M +135bps NOK 200 m Jan/21 / / 135 13/01/2016 Pohjola Bank Plc 0.875% EUR 500 m Jun/21 AA- / Aa3e / WD 65 12/01/2016 Jaren Sparebank NIBOR3M +150bps NOK 200 m Jul/20 / / 150 13/01/2016 Caisse Centrale Desjardn EUR003M +30bps EUR 1 000 m Jan/18 A+ / Aa2 / AA- 30 13/01/2016 Vasakronan Ab 1.68% SEK 500 m Jan/21 / / 115 13/01/2016 Klp Banken As NIBOR3M +114bps NOK 300 m Jan/19 / / A-e 114 13/01/2016 Rikshem Ab STIB3M +110bps SEK 1 000 m Jan/20 A- / / 110 13/01/2016 Lyse As NIBOR3M +140bps NOK 300 m Jan/21 / / 140 12/01/2016 Rabobank Nederland EUR003M +17bps EUR 2 000 m Jan/17 A+ / Aa2e / F1+ 17 12/01/2016 Daimler Canada Finance 1.875% NOK 500 m Jan/21 / A3e / A-e 77 11/01/2016 Banco Bilbao Vizcaya Arg 1% EUR 1 000 m Jan/21 BBB+ / Baa1 / A-e 85 11/01/2016 Bpce Sa 0.625% EUR 1 000 m Apr/20 A / A2e / A 55 11/01/2016 Abn Amro Bank Nv 2.875% EUR 1 000 m Jan/28 BBB- / Baa3 / A- 245 11/01/2016 Banque Fed Cred Mutuel 1.625% EUR 1 250 m Jan/26 A / Aa3 / A+e 80 Source: Bloomberg, Danske Bank Markets 18 Company news from the past week (investment grade) Name News Implication Norwegian banks Norwegian banks. On Monday, the Norwegian Finance Department commented on the Norwegian FSA's proposal for how to handle Pillar 2 requirements in Norway. The Finance Department suggests that Pillar 2 requirements will be made publicly available if possible in the future (as in Denmark for a while and since Q3 15 in Sweden) and that they are made a formal/hard requirement. However, despite being a hard requirement, the Finance department suggests the Pillar 2 requirement is not effecting the MDA level (as seen in Sweden and so far in Denmark). In conclusion, disclosure of Pillar 2 requirements was expected and follows other countries. That the Pillar 2 requirement will not affect the MDA level is positive, as it reduces the risk of skipping a coupon on the AT1s. All in all, we view this as a small positive for Norwegian AT1s. This said, we see that DNB's AT1 call 20' (USD) has widened a significant 95bp over the past month, which we think is due to the letter from the Norwegian FSA at the beginning of January asking banks to reconsider their loan losses due to the oil plunge. This fits well with our general negative stand on the Norwegian banks and the Norwegian economy. Credit positive Citycon Citycon. Late on Friday, Moody’s upgraded Citycon’s rating from Baa2 to Baa1, reflecting the improved business risk profile following the Sektor acquisition. The rating institute highlights the greater geographical diversification as well as scale and reduced tenant concentration. Moody’s also sees the divestment of non-core assets as positive. For us, the upgrades are fairly unexpected despite the strong operational performance, as we thought that Moody’s should wait a bit more to see the full effect of the Sektor integration. Following the news on Friday, with the CEO pointing at a higher number of divestments of non-core assets over the next two years and increased focus on Sweden, we argue that the operational part of the business will continue to improve. Credit positive Atlas Copco Atlas Copco (UW) has added a EUR300m (c. SEK2.8bn) provision following a ruling by the government of Belgium. The provision covers potential liabilities from 2010-15 and would increase the company’s effective tax rate by around 3.5pp. According to Atlas, payment of the tax is likely to take place in Q2 16. Using the current LTM EBITDA, the payment would represent an increase in adjusted net debt to adjusted EBITDA of c.0.2x. Overall, this is negative for the credit, as the increased tax rate represents a larger cash outflow going forward. To mitigate this, Atlas could consider moving certain functions (such as warehousing) out of Belgium. Credit negative Source: Danske Bank Markets 19 Company news from the past week (investment grade) Name Elenia News The ultimate shareholder of Elenia’s (MW) mother company Lakeside Network Inv. (LNI) has announced that it plans to undertake a strategic review of its ownership in LNI. To recap, LNI did a leveraged acquisition of Vattenfall’s Finnish distribution grid several years ago, forming the company Elenia. According to Reuters, the strategic review means the investors in LNI are lining up Elenia for sale. This could potentially be good news for Elenia’s bonds, as the complex ownership structure for Elenia has potential to be simplified. This said, we do not expect meaningful deleveraging following a sale. However, Elenia’s spread is elevated due to a premium for structure risk. This could be changed going forward. Officially, though, the details of this strategic review are very scarce, so only mildly credit positive given what we know now. Implication Credit positive Ericsson Ericsson (MW). Fitch has affirmed its 'BBB+' rating with a stable outlook. The agency highlighted Ericsson's strong market position and record as well as its long-term approach to R&D. On the negative side, Fitch highlights the increasing competitive pressure from large players such as Huawei and Nokia-Alcatel Lucent. Overall, this news is neutral from a credit perspective, in our view. Credit neutral Vattenfall Vattenfall (MW) has flagged that the current weak Swedish power prices, coupled with the high nuclear tax (EUR8/MWh) and with high safety capex requirements, make all Vattenfall's reactors unprofitable. Subsequently, Vattenfall has threatened that it could be necessary to close its Swedish nuclear fleet. Consequently, some of the right wing parties in Sweden are expressing willingness to reduce the nuclear tax. We think there is a chance this could happen but also stress that it is not something that the current left-green coalition favours currently. This is slightly positive for Vattenfall. Credit positive Energy On Wednesday, S&P reduced its future oil and gas price assumptions. It sees Brent at USD40/bl in 2016, USD45/bl in 2017 and USD50/bl in 2018 and beyond. Previously, the assumption was USD55/bl in 2016, USD65/bl in 2017 and USD70/bl in 2018 and beyond. S&P is currently reviewing all its companies under coverage with oil and gas exposure and states that this could lead to downgrades of some companies. S&P expects this overhaul to be finalised within a month. The reason for the revision is the usual suspects: lower futures prices and lower marginal production costs (especially in the US), sluggish demand growth and continued high output despite lower spot prices (and more coming from Iran). In the Nordic region, we see Statoil (UW) (AA-/NO) as a clear candidate for a downgrade on the back of this. DONG Energy’s (MW) (BBB+/S) rating will also be weighed up but, given the current strong metrics for the rating, we do not expect DONG to be downgraded. Credit negative Source: Danske Bank Markets 20 Company news from the past week (investment grade) Name Ericsson TeliaSonera Statoil News Ericsson and Huawei have agreed to extend the global patent licence agreement between the two companies. The agreement includes a cross-licence that covers patents relating to both companies' wireless standard-essential patents (including the GSM, UMTS and LTE cellular standards). Under the agreement, both companies are able to access and implement the other company's standard essential patents and technologies globally. As part of the renewed agreement, Huawei will make ongoing royalty payments based on actual sales to Ericsson from 2016 onward. Further details of the agreement are confidential as of yet. FY 2015 revenue projections for Ericsson remain at the previously communicated level. TeliaSonera will report Eurasia as discontinued operations in its FY 2015 report, with the results affected by impairment charges. As previously announced, TeliaSonera has initiated a process of reducing its presence and over time fully leaving Region Eurasia. This process is progressing, so it will report Region Eurasia as held for sale and discontinued operations in its FY 2015 report. As a result, operating income in Q4 15 will be affected by a non-cash impairment charge of SEK5.3bn related to the operations in Uzbekistan. Further, it will also record a non-cash impairment charge of SEK1.9bn related to the operations in Denmark. Impairments are negative but, given that they are non-cash, the impact from a credit perspective is limited (Telia’s Q3 15 equity was SEK109bn). We find it positive that Telia is exiting a volatile region, which should improve the business risk profile. Statoil (UW) has acquired 11.9% of Lundin Petroleum for a total consideration of SEK4.6bn (NOK4.4bn). This gives Statoil additional stakes in the Edvard Grieg and Johan Sverdrup Norwegian oil fields. The latter has an estimated plateau production potential of more than 550boe/d and an estimated break-even price slightly higher than USD36/bl (current price is USD30.4/bl). Currently Statoil owns 40.0% of Johan Sverdrup and Lundin owns 22.6%. Statoil’s acquisition takes its stake in Johan Sverdrup to 42.7%. After Q3 15, Statoil’s net debt stood at NOK103bn, making the impact of the acquisition minor in terms of leverage impact. Overall, this acquisition is a testament to Statoil’s continued focus on the Norwegian continental shelf and a belief in a longer term recovery of the oilprice. Recently, Statoil’s CEO has mentioned that Statoil, for now, plans to hang on to its relatively large dividend payments, despite this leading it to weaker leverage. Overall, the acquisition announcement is credit neutral in itself but the continued bullish signal from Statoil (M&A and shareholder friendliness is a concern from a credit perspective, which is only partly mitigated by capex reductions). We continue to believe that Statoil’s Aa2 S/AA- NO ratings will be downgraded in H1 16. This, coupled with tight pricing, leads us to maintain our Underweight recommendation. Implication Credit neutral Credit negative Credit neutral Source: Danske Bank Markets 21 Credit indicators Credit Indicators 22 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] 23 Chart pack: relative value iTraxx vs iBoxx EUR CDS spreads – Nordic banks Source: Bloomberg, Macrobond Financial, Danske Bank Markets [all charts] Euro vs US CDS indices - IG (Markit) Source: Macrobond Financial, Danske Bank Markets [all charts] Euro vs US HY bond indices (Merrill Lynch) 24 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] 25 Chart pack: high-yield funds flow High-yield Europe ETF fund flow High yield US ETF fund flow Cumulative ETF-flow MEUR Cumulative ETF-flow MEUR 2,500 2,000 1,500 1,000 500 0 Dec-2014 Mar-2015 Jun-2015 High Yield - Europe - Fixed Income Sep-2015 Dec-2015 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 -1,000 Dec-2014 Mar-2015 Jun-2015 Sep-2015 Dec-2015 High Yield - North America - Fixed Income Source: Bloomberg, Danske Bank Markets [all charts] 26 Chart pack: fund flows Europe, net sales US, net sales Sweden, net sales Norway, net sales Source: Macrobond Financial, Danske Bank Markets [all charts] 27 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] 28 Coverage universe, credit ratings and recommendations 29 Our coverage and shadow ratings 1 of 6 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 Castellum Ab Cermaq Asa Citycon Oyj Color Group As Com Hem Holding Ab Corem Property Group Ab Danfoss A/S Danske Bank A/S Deep Sea Supply Plc Destia Group Oy Dfds A/S Dlg Finance As Dna Ltd Dnb Bank Asa Dof Asa Dof Subsea As Dolphin Group As Dong Energy A/S Danske Bank S&P Moody's Fitch Analyst(s) Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating Outlook BBStable M. Rosendal / J. Magnussen BBB- Stable E. Hjalmarsson / L. Landeman BBB- Stable J. Magnussen / M. Rosendal BBB+ Stable Baa1 Pos B. Børsting/J. Magnussen BBB Stable M. Rosendal / B. Børsting A Stable A2 Stable A Stable M. Rosendal / E. Hjalmarsson AAStable A1 Stable G. Bergin / L. Landeman BBB+ Stable L. Holm / K. Jensen BBB Stable L. Holm / K. Jensen B Stable Ø. Mossige BBB- Stable M. Rosendal / L. Landeman BB+ Stable Ø. Mossige BBB- Stable M. Rosendal / E. Hjalmarsson Baa2 Neg BBB Stable B. Børsting / M. Rosendal BBB- Stable L. Landeman / P. Ahmarinejad BB Stable K. Bakken BBB Stable Baa1 Stable E. Hjalmarsson / L. Landeman BBStable B+ N. Ripa / B. Børsting BBPos M. Rosendal / J. Magnussen BBStable B+ E. Hjalmarsson / L. Landeman BBB Stable J. Magnussen / B. Børsting A Stable A2 Stable A Stable BNeg I. Båtvik / Ø. Mossige BBStable B+ M. Rosendal / E. Hjalmarsson BBB- Stable N. Ripa / B. Børsting BBStable M. Rosendal / B. Børsting BBB- Stable M. Rosendal / J. Magnussen A+ Neg Aa3 Stable L. Holm / K. Jensen B+ Neg I. Båtvik/Ø. Mossige B+ Neg I. Båtvik/Ø. Mossige I. Båtvik BBB+ Stable Baa1 Stable BBB+ Stable J. Magnussen / L. Landeman Recomm. OVERWEIGHT MARKETWEIGHT UNDERWEIGHT MARKETWEIGHT MARKETWEIGHT OVERWEIGHT UNDERWEIGHT MARKETWEIGHT Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 30 Our coverage and shadow ratings 2 of 6 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings Danske Bank S&P Moody's Fitch Analyst(s) Company Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating Outlook Dsv A/S BBB Stable B. Børsting / M. Rosendal Eg Holding B Stable J. Magnussen / N. Ripa Eidesvik Offshore Asa B Neg I. Båtvik / Ø. Mossige Eika Boligkreditt As AStable L. Holm / K. Jensen Eika Gruppen As BBB Stable L. Holm / K. Jensen Eksportfinans Asa BBBPos Ba3 Stable L. Holm / K. Jensen Electrolux Ab BBB+ Stable Wr WD B. Børsting / M. Rosendal Elenia Oy BBB J. Magnussen / L. Landeman Elisa Oyj BBB+ Stable Baa2 Stable M. Rosendal / J. Magnussen Entra Eiendom As AStable O. Heldal / L. Landeman Farstad Shipping Asa B Stable BI. Båtvik / Ø. Mossige Fastpartner Ab BB Stable BBL. Landeman / E. Hjalmarsson Fingrid Oyj A+ Pos A1 Stable A+ Stable J. Magnussen / L. Landeman Finnair Oyj BB Stable B. Børsting / M. Rosendal Fortum Oyj BBB+ Stable Baa1 Stable BBB+ Stable J. Magnussen / L. Landeman Fortum Varme Holding Samagt Med Stockholms Stad Ab BBB+ Stable J. Magnussen / L. Landeman Fred Olsen Energy Asa BBStable B+ S. Stormyr / B.K. Røed G4S Plc BBBStable B. Børsting / M. Rosendal Getinge Ab BB+ Neg L. Landeman / E. Hjalmarsson Golar Lng Partners Lp BB Stable BBB.K. Røed / J. Meyer Golden Close Maritime Corp Ltd BS. Stormyr / B.K. Røed Havila Shipping Asa CCC+ Neg I. Båtvik / Ø. Mossige Heimstaden Ab BB Stable BBL. Landeman / E. Hjalmarsson Hemso Fastighets Ab AStable E. Hjalmarsson / L. Landeman Hexagon Ab BBBStable E. Hjalmarsson / L. Landeman Hkscan Oyj BB Stable B. Børsting / M. Rosendal Hoegh Lng Holdings Ltd BBStable B+ B.K. Røed / J. Meyer Hoist Kredit Ab BBStable B+ G. Bergin / L. Landeman Husqvarna Ab BBBPos E. Hjalmarsson / L. Landeman Ica Gruppen Ab BBB Stable G. Bergin / L. Landeman Ikano Bank Ab BBB Stable L. Holm / K. Jensen Investor Ab AAStable Aa3 Stable B. Børsting / M. Rosendal Iss A/S BBBPos B. Børsting / M. Rosendal Recomm. MARKETWEIGHT MARKETWEIGHT MARKETWEIGHT MARKETWEIGHT UNDERWEIGHT MARKETWEIGHT OVERWEIGHT OVERWEIGHT Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 31 Our coverage and shadow ratings 3 of 6 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings Company J Lauritzen A/S Jefast Holding Ab Jernhusen Ab Jyske Bank A/S Kemira Oyj Kesko Oyj Klaveness Ship Holding As Klovern Ab Lantmannen Ek For Loomis Ab Luossavaara-Kiirunavaara Ab Meda Ab Metsa Board Oyj Metso Oyj 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 Rig Udw Inc Ocean Yield Asa Odfjell Se Olav Thon Eiendomsselskap Asa Olympic Ship As Orava Residential Reit Plc Danske Bank S&P Moody's Fitch Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating Outlook B Stable BB Stable B AStable AStable Baa1U Stable BBBStable Wr BBB Stable BBStable B+ BB+ Stable BB BBBStable BBBStable BBB Stable BBStable BB Stable Ba2 Stable BBB Stable Baa2 Stable BBBStable BBBStable BBBStable BB+ Pos Ba2 Stable BB Pos BBB+ Stable BBBStable AANeg Aa3 Stable AAStable B+ Neg B BBNeg B+ BBBStable A Neg Baa3U Stable A Stable B+ Stable B+ BStable Ca Neg BB BBB+ Stable B BBB+ Stable B+ Stable B B+ Stable B+ Analyst(s) Recomm. B.K. Røed / J. Meyer E. Hjalmarsson / L. Landeman E. Hjalmarsson / L. Landeman L. Holm / K. Jensen OVERWEIGHT M. Rosendal / L. Landeman OVERWEIGHT M. Rosendal / E. Hjalmarsson B.K. Røed / J. Meyer E. Hjalmarsson / L. Landeman G. Bergin / L. Landeman B. Børsting / M. Rosendal L. Landeman / E. Hjalmarsson L. Landeman / E. Hjalmarsson M. Rosendal / E. Hjalmarsson OVERWEIGHT M. Rosendal / L. Landeman MARKETWEIGHT E. Hjalmarsson / L. Landeman J. Magnussen / L. Landeman MARKETWEIGHT E. Hjalmarsson / L. Landeman M. Rosendal / J. Magnussen MARKETWEIGHT J. Magnussen / M. Rosendal L. Holm / K. Jensen L. Holm / K. Jensen UNDERWEIGHT S. Stormyr / B.K. Røed B. Børsting / M. Rosendal O. Heldal / L. Landeman L. Holm / K. Jensen OVERWEIGHT J. Magnussen / L. Landeman S. Stormyr / B.K. Røed Ø. Mossige B.K. Røed / J. Meyer O. Heldal / L. Landeman I. Båtvik/Ø. Mossige M. Rosendal / L. Landeman Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 32 Our coverage and shadow ratings 4 of 6 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings Danske Bank S&P Moody's Fitch Analyst(s) Company Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating Outlook Orkla Asa BBB+ Pos O. Heldal / L. Landeman Outokumpu Oyj BNeg M. Rosendal / E. Hjalmarsson Pacific Drilling Sa BNeg Caa2 Neg S. Stormyr / B.K. Røed Petroleum Geo-Services Asa B+ Neg B1 Neg I. Båtvik Pohjola Bank Oyj AANeg Aa3 Stable WD L. Holm / K. Jensen Posten Norge As AStable G. Bergin / L. Landeman Postnord Ab BBB+ Stable G. Bergin / L. Landeman Prosafe Se BB Stable BBS. Stormyr / B.K. Røed Ramirent Oyj BB+ Stable B. Børsting / M. Rosendal Rem Offshore Asa BNeg I. Båtvik / Ø. Mossige Saab Ab BBB+ Stable Wr E. Hjalmarsson / L. Landeman Sandnes Sparebank BBB+ Stable L. Holm / K. Jensen Sandvik Ab BBB Neg M. Rosendal / E. Hjalmarsson Sas Ab BStable Wr Stable B. Børsting / M. Rosendal Sbab Bank Ab A Neg A2 Stable L. Holm / K. Jensen Scania Ab BBB+ Neg M. Rosendal / B. Børsting Schibsted Asa BBB Stable O. Heldal / L. Landeman Seadrill Ltd BBStable B+ S. Stormyr / B.K. Røed Securitas Ab BBB Stable Wr B. Børsting / M. Rosendal Ship Finance International Ltd BB Stable BBWr B.K. Røed / J. Meyer Siem Offshore Inc BNeg I. Båtvik / Ø. Mossige Skandinaviska Enskilda Banken Ab A+ Stable Aa3 Stable A+ Pos L. Holm / K. Jensen Skanska Ab BBB+ Stable E. Hjalmarsson / L. Landeman Skf Ab BBB Neg Baa1 Neg M. Rosendal / E. Hjalmarsson Sognekraft As BBB Stable BBB J. Magnussen / L. Landeman Solstad Offshore Asa BBStable B+ I. Båtvik / Ø. Mossige Spar Nord Bank A/S BBB+ Stable L. Holm / K. Jensen Sparebank 1 Boligkreditt As AStable L. Holm / K. Jensen Sparebank 1 Nord Norge A1 Stable A Stable L. Holm / K. Jensen Sparebank 1 Smn A1 Stable AStable L. Holm / K. Jensen Sparebank 1 Sr-Bank Asa A1 Stable AStable L. Holm / K. Jensen Sponda Oyj BBBStable E. Hjalmarsson / L. Landeman Recomm. MARKETWEIGHT MARKETWEIGHT MARKETWEIGHT UNDERWEIGHT MARKETWEIGHT OVERWEIGHT UNDERWEIGHT UNDERWEIGHT MARKETWEIGHT UNDERWEIGHT Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 33 Our coverage and shadow ratings 5 of 6 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings Company 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 Svensk Fastighetsfinansiering Ab Svenska Cellulosa Ab Sca Svenska Handelsbanken Ab Swedavia Ab Swedbank Ab Swedish Match Ab 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 Danske Bank S&P Moody's Fitch Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating Outlook BBBB Stable AStable Aaa Stable A+ Stable Wr Stable AANeg Aa2 Stable BBB+ Stable BB Stable B2 Stable B+ Stable BB+ Stable BB BB Stable Ba2 Stable WD BBB+ Stable BBB+ Neg Nr Stable BBB+ Stable Baa1 Stable BBBStable BBBBBB Neg BBB Stable AStable Baa1 Stable AANeg Aa2 Stable AAStable AStable AANeg Aa3 Stable A+ Pos BBB Stable Baa2 Stable Baa1 Stable BB Stable BBBBBStable Baa3 Stable BBBStable BB+ Stable BB BB Stable BBBBStable B+ BBB Stable BBB+ Stable Baa1 Stable BBB+ Stable A Stable A3 Stable AStable A3 Neg AStable BBBNeg Wr BBB Stable BBB+ Stable Analyst(s) Recomm. M. Rosendal / L. Landeman J. Magnussen / L. Landeman J. Magnussen / L. Landeman J. Magnussen / L. Landeman J. Magnussen / L. Landeman O. Heldal / L. Landeman N. Ripa / B. Børsting M. Rosendal / L. Landeman B.K. Røed / J. Meyer M. Rosendal / L. Landeman L. Holm / K. Jensen L. Holm / K. Jensen J. Magnussen / L. Landeman L. Holm / K. Jensen Louis Landeman M. Rosendal / B. Børsting L. Holm / K. Jensen G. Bergin / L. Landeman L. Holm / K. Jensen B. Børsting / M. Rosendal L. Holm / K. Jensen N. Ripa / J. Magnussen M. Rosendal / J. Magnussen L. Landeman / E. Hjalmarsson Ø. Mossige Ø. Mossige M. Rosendal / J. Magnussen M. Rosendal / J. Magnussen M. Rosendal / J. Magnussen M. Rosendal / J. Magnussen J. Magnussen / L. Landeman O. Heldal / L. Landeman UNDERWEIGHT OVERWEIGHT MARKETWEIGHT UNDERWEIGHT UNDERWEIGHT MARKETWEIGHT OVERWEIGHT MARKETWEIGHT MARKETWEIGHT MARKETWEIGHT MARKETWEIGHT MARKETWEIGHT MARKETWEIGHT MARKETWEIGHT UNDERWEIGHT OVERWEIGHT Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 34 Our coverage and shadow ratings 6 of 6 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings Company Tine Sa Upm-Kymmene Oyj Vasakronan Ab Vattenfall Ab Vestas Wind Systems A/S Victoria Park Ab Volvo Ab Wihlborgs Fastigheter Ab Wilh Wilhelmsen Asa Danske Bank S&P Moody's Fitch Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating Outlook BBB+ Stable BB+ Stable Ba1 Stable WD AStable BBB+ Neg A3 Neg ANeg BBBBBStable B+ BBB Stable Baa2 Stable BBB Stable BB+ Stable BB BB+ Stable Analyst(s) Recomm. O. Heldal / L. Landeman M. Rosendal / L. Landeman MARKET WEIGHT E. Hjalmarsson / L. Landeman J. Magnussen / L. Landeman MARKETWEIGHT N. Ripa / J. Magnussen OVERWEIGHT L. Landeman / E. Hjalmarsson M. Rosendal / B. Børsting MARKETWEIGHT L. Landeman / E. Hjalmarsson B.K. Røed / J. Meyer Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 35 Fixed Income Credit Research team Thomas Hovard, Chief Analyst Head of Credit Research +45 45 12 85 05 [email protected] Louis Landeman, Senior Analyst TMT, Industrials +46 8 568 80524 [email protected] Mads Rosendal, Analyst Industrials, Pulp & Paper +45 45 14 88 79 [email protected] Jakob Magnussen, Senior Analyst Utilities, Energy +45 45 12 85 03 [email protected] Knut-Ivar Bakken, Senior Analyst Fish Farming +47 85 40 70 74 [email protected] Katrine Jensen, Analyst Financials +45 45 12 80 56 [email protected] Brian Børsting, Senior Analyst Industrials +45 45 12 85 19 [email protected] Lars Holm, Senior Analyst Financials +45 45 12 80 41 [email protected] Gabriel Bergin, Analyst Strategy, Industrials +46 8 568 80602 [email protected] Niklas Ripa, Senior Analyst High Yield, Industrials +45 45 12 80 47 [email protected] Bjørn Kristian Røed, Senior Analyst Shipping +47 85 40 70 72 [email protected] Iver Christian Båtvik, Analyst Shipping +47 95 97 74 45 [email protected] Ola Heldal, Senior Analyst TMT +47 85 40 84 33 [email protected] Sondre Dale Stormyr, Senior Analyst Offshore Rigs +47 85 40 70 70 [email protected] Henrik René Andresen, Senior Analyst Credit Portfolios +45 45 13 33 27 [email protected] Øyvind Mossige, Senior Analyst Oil Services +47 85 40 54 91 [email protected] Emil Hjalmarsson, Analyst Real Estate, Construction +46 8 568 80634 [email protected] Haseeb Syed High Yield, Norway +47 85 40 54 19 [email protected] 36 Disclosures This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S ('Danske Bank'). 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