High Yield Highlights - week 40. Ineos seeks to placate critics of shale gas business. Abengoa announces final agreement on refinancing

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1 High Yield Highlights - week 4 Ineos - BUY Ineos seeks to placate critics of shale gas business We maintain our BUY recommendation of Ineos Ineos announced that 6% (4% for landowners + 2% for local communities) of the British shale gas revenues are shared to increase support and placate critics of the project. The shale gas method 'fracking' is accused of contaminating drinking water, destabilising the underground, etc. It affects a 127 square mile area, for which Ineos has bought the licence, around the Grangemouth refinery. Our BUY recommendation is still intact. Ineos - BUY Ineos buys a power plant Ineos acquires CHP plant from Fortum. We reiterate our BUY recommendation on both issues. Ineos acquires CHP plant (Combined Heat and Power plant) from Fortum at a price of GBP 54m. The CHP plant serves the Grangemouth refinery. It is part of GBP 3m large infrastructure project run by Ineos. The plant is gas-fired. Ineos expects to extract natural gas from the Scottish underground. The plant has a power capacity of 145 MW and a heat capacity of 257 MW. We reiterate our BUY recommendation for both issues. Abengoa - BUY Abengoa announces final agreement on refinancing Abengoa to refinance its EUR 1.4bn syndicated loan. We maintain our BUY recommendation On Wednesday, Abengoa announced the final agreement on refinancing of a EUR 1.4bn syndicated loan. The agreement has been negotiated for some time and Abengoa has previously indicated than an agreement was in the pipeline. The syndicate comprises 2 banks. The term of the loan was extended by about four years and interest was reduced by 1bp. Any future upgrade of Abengoa's rating will reduce the interest further. S&P S&P revises methodology on rating of hybrid bonds from banks The changes do not affect our recommendations As announced in early February this year, S&P has revised its methodology, causing the rating of 68% of the hybrid issues from European banks to be lowered by one notch while 2% have been lowered by two notches. With respect to the primary Danish issues, Danske Bank's Tier 1 issues have been lowered by 1-2 notches, Nordea's Tier 1 issues have been lowered by one notch and Nykredit's Tier 1 issues have been lowered by one notch. In addition, Nykredit's Tier 2 CoCo was upgraded by one notch to BBB. The changes do not affect our recommendations. Reseach team: Jens Houe Thomsen Bo Andersen Rasmus Justesen Disclaimer & Disclosure: Please see the last page jht@jyskebank.dk boandersen@jyskebank.dk rasmus.justesen@jyskebank.dk 1 of 11

2 Spread Developments Change Change Spread/Rate 1 Week 1 Month 3 Month Ytd Spread/Rate 1 Week 1 Month 3 Month Ytd EUR High Yield non. Fin (HEAD) 48 bp. 15 bp. 41 bp. 74 bp. 39 bp. US High Yield non. Fin (HNF) 453 bp. bp. 59 bp. 1 bp. 42 bp. EUR High Yield (HE) 397 bp. 14 bp. 43 bp. 73 bp. 41 bp. US High Yield (HA) 442 bp. 2 bp. 59 bp. 98 bp. 42 bp. itraxx Xover (Generic) 262 bp. -1 bp. 29 bp. 38 bp. -25 bp. CDX High Yield 347 bp. -9 bp. 35 bp. 55 bp. 34 bp. EUR Invest. Grade non. Fin. (EN) 92 bp. 2 bp. 2 bp. -3 bp. -14 bp. US Invest. Grade non. Fin. (CFX) 124 bp. 5 bp. 11 bp. 14 bp. -6 bp. EUR Invest. Grade (ER) 98 bp. 2 bp. 2 bp. -4 bp. -18 bp. US Invest. Grade (CA) 122 bp. 5 bp. 1 bp. 14 bp. -5 bp. itraxx Europe Invest. Grade 65 bp. 1 bp. 7 bp. 9 bp. -6 bp. CDX Invest. Grade 63 bp. -1 bp. 6 bp. 8 bp. bp. itraxx Sr Financial 63 bp. bp. 5 bp. 4 bp. -22 bp. US 1Y 2.43% -1 bp. 3 bp. -21 bp. -56 bp. itraxx Sub Financial 92 bp. -2 bp. 11 bp. 5 bp. -36 bp. German 1Y.9%. -7 bp. -5 bp. -39 bp. -14 bp. bp 2,5 2, 1,5 1, 5 EUR HY vs. US HY Spread development bp Difference (rhs) EUR HY (HEAD) US HY (HNF) bp EUR IG vs. US IG Spread development bp Difference (rhs) EUR HG (EN) US HG (CFX) Source: Bloomberg & Merrill Lynch & Jyske Bank 2 of 11

3 High Yield Bond Outperformers and Underperformers - Spread to Worst 1 Week Outperformers 1 Month Outperformers Issue Rating Price STW Change Issue Rating Price STW Change CASINO GUICHARD PERRACHO 4.87% 219 BB CONVATEC HEALTHCARE 1.875% 218 B ENEL SPA 5% 22 BB CAMPOFRIO FOOD SA 8.25% 216 BB CAMPOFRIO FOOD SA 8.25% 216 BB SPIE BONDCO 3 SCA 11% 219 CCC ONO FINANCE II PLC % 219 BB ACCOR SA 4.125% 22 BB EDCON HOLDINGS PTY LTD % 219 CCC , ENEL SPA 5% 22 BB SGL CARBON SE 4.875% 221 BB TELEFONICA EUROPE BV 5% 22 BB SCHAEFFLER FINANCE BV 3.5% 222 BB CASINO GUICHARD PERRACHO 4.87% 219 BB SUNRISE COMMUNICATIONS I 7% 217 BB RPG BYTY SRO 6.75% 22 BB MONITCHEM HOLDCO 2 S.A % 222 CCC COGNOR INTL FINANCE 7.5% 22 CCC , PICARD BONDCO 9% 218 B ALCATEL-LUCENT 8.5% 216 B EDCON PTY LTD 9.5% 218 B , SCHAEFFLER FINANCE BV 3.5% 222 BB KION FINANCE SA 6.75% 22 BB PEUGEOT SA 6.875% 216 B Week Underperformers 1 Month Underperformers Issue Rating Price STW Change Issue Rating Price STW Change NEW WORLD RESOURCES NV 7.875% 221 D 3. 43,193 2,565 NEW WORLD RESOURCES NV 7.875% 221 D 3. 43,193 24,352 NORSKE SKOGINDUSTRIER 11.75% 216 CCC , EDCON HOLDINGS PTY LTD % 219 CCC ,176 1,63 ALBA GROUP PLC & CO KG 8% 218 CCC1 8. 1, NORSKE SKOGINDUSTRIER 7% 217 CCC ,42 1,67 INFOR US INC 1% 219 CCC NORSKE SKOGINDUSTRIER 11.75% 216 CCC , NORSKE SKOGINDUSTRIER 7% 217 CCC ,42 59 GEO TRAVEL FINANCE 1.375% 219 CCC1 8. 1, HEMA BONDCO II BV 8.5% 219 B , ALBA GROUP PLC & CO KG 8% 218 CCC1 8. 1, HEMA BONDCO I BV 6.25% 219 B EN GERMANY HOLDINGS BV 1.75% 215 CCC , EN GERMANY HOLDINGS BV 1.75% 215 CCC , HEMA BONDCO II BV 8.5% 219 B , KERLING PLC 1.625% 217 CCC R&R PIK PLC 9.25% 218 CCC XELLA HOLDCO FINANCE 9.125% 218 B INFOR US INC 1% 219 CCC TAKKO LUX 2 SCA 9.875% 219 B , NEW WORLD RESOURCES NV 7.875% 218 CCC , HEIDELBERGCEMENT FIN LUX 2.25% 219 BB EUROPCAR GROUPE SA 9.375% 218 CCC Source: Merrill Lynch & Jyske Bank 3 of 11

4 High Yield Bond Outperformers and Underperformers - Price 1 Week Outperformers 1 Month Outperformers Issue Rating STW Price Change Issue Rating STW Price Change SGL CARBON SE 4.875% 221 BB GIE PSA TRESORERIE 6% 233 B TEREOS FINANCE GROUPE I 4.25% 22 BB COGNOR INTL FINANCE 7.5% 22 CCC2 1, FINANCIERE GAILLON 8 SAS 7% 219 B RPG BYTY SRO 6.75% 22 BB EDCON PTY LTD 9.5% 218 B3 1, OTE PLC 3.5% 22 BB ALBAIN BIDCO NORWAY 6.75% 22 B MPT OPER PARTNERSP/FINL 5.75% 22 BB EDCON HOLDINGS PTY LTD % 219 CCC2 4, LAFARGE SA 4.75% 22 BB HEIDELBERGCEMENT FIN LUX 2.25% 219 BB SPIE BONDCO 3 SCA 11% 219 CCC FRESENIUS FINANCE BV 2.375% 219 BB SSAB AB 3.875% 219 BB PHOENIX PIB DUTCH FINANC 3.625% 221 BB PHOENIX PIB DUTCH FINANC 3.625% 221 BB FRESENIUS FINANCE BV 2.875% 22 BB LAFARGE SA 4.75% 22 BB BARRY CALLEBAUT SVCS NV 5.625% 221 BB FRESENIUS FINANCE BV 2.375% 219 BB STORA ENSO OYJ 5% 218 BB FRESENIUS FINANCE BV 4% 224 BB Week Underperformers 1 Month Underperformers Issue Rating STW Price Change Issue Rating STW Price Change HEMA BONDCO II BV 8.5% 219 B3 1, EDCON HOLDINGS PTY LTD % 219 CCC2 4, ALBA GROUP PLC & CO KG 8% 218 CCC1 1, HEMA BONDCO II BV 8.5% 219 B3 1, HEMA BONDCO I BV 6.25% 219 B GEO TRAVEL FINANCE 1.375% 219 CCC1 1, NORSKE SKOGINDUSTRIER 11.75% 216 CCC3 2, ALBA GROUP PLC & CO KG 8% 218 CCC1 1, NORSKE SKOGINDUSTRIER 7% 217 CCC3 3, NORSKE SKOGINDUSTRIER 7% 217 CCC3 3, TAKKO LUX 2 SCA 9.875% 219 B3 1, HEMA BONDCO I BV 6.25% 219 B CGG SA 5.875% 22 B NORSKE SKOGINDUSTRIER 11.75% 216 CCC3 2, GCS HOLDCO FINANCE I SA 6.5% 218 B TAKKO LUX 2 SCA 9.875% 219 B3 1, TRIONISTA TOPCO GMBH 6.875% 221 CCC GEO DEBT FINANCE SCA 7.5% 218 B3 1, INFOR US INC 1% 219 CCC SELECTA GROUP BV 6.5% 22 B SGD GROUP 5.625% 219 B CGG SA 5.875% 22 B PPC FINANCE PLC 4.75% 217 B BOARDRIDERS SA 8.875% 217 B3 1, Source: Merrill Lynch & Jyske Bank 4 of 11

5 Issuance - EUR Source: Merrill Lynch & Jyske Bank 5 of 11

6 European Issuance - EUR, USD & GBP Source: Merrill Lynch & Jyske Bank 6 of 11

7 Spread vs. GDP US GDP Growth & High Yield Spread bp. % -1 2,1-8 1, , High Yield Spread (HA) US GDP YoY (rhs, inverted) Bloomberg consensus EUR High Yield Spread vs. GDP Growth bp. % -6 2,1-4 1,6-2 1, High Yield Spread (HEAD) Euro GDP YoY (rhs, inverted) bp. 2, 1,5 GDP Growth & High Yield (since 25) y = e -.92x R² =.381 bp. 2,5 2, High Yield vs. GDP Growth next Quarter (since 25) y = 633.4e -.18x R² = , 1,5 1, % 8 % 6 % 4 % 2 % % 2 % 4 % 6 % 8 % US GDP YoY Q3'14E GDP Growth Q2'14 GDP Growth 6 % 4 % 2 % % 2 % 4 % 6 % Euro GDP YoY Q3'14E GDP growth Q2'14 GDP Growth Source: Bloomberg, Merrill Lynch & Jyske Bank 7 of 11

8 Rating Drift Source: Moodys & Jyske Bank 8 of 11

9 Disclaimer & Disclosure Jyske Bank s corporate bond recommendations current breakdown Jyske Bank is supervised by the Danish Financial Supervisory Authority. The research report is based on information which Jyske Bank finds reliable, but Jyske Bank does not assume any responsibility for the correctness of the material nor any liability for transactions made on the basis of the information or the estimates of the report. The estimates and recommendations of the research report may be changed without notice. The report is for the personal use of Jyske Bank's customers and may not be copied. This report is an investment research report. Conflicts of interest Jyske Bank has prepared procedures to prevent and preclude conflicts of interest thus ensuring that research reports are being prepared in an objective manner. These procedures have been incorporated in the business procedures covering the research activities of Jyske Markets, a business unit of Jyske Bank. Jyske Bank's corporate-bond analysts may not hold positions in the instruments for which they prepare research reports. If an analyst takes over for the responsible analyst in connection with illness, business travels, etc. this analyst cannot trade in the relevant corporate bond on the day of publication of the research report and the following day. Jyske Bank may, however, hold positions, have interests in or business relations with the companies that are analysed. The research report has not been presented to the company prior to its release. Analysts receive no payment from persons interested in individual research reports. Read more about Jyske bank's policy on conflicts of interest at Jyske Bank's corporate bond recommendations - current breakdown Breakdown of recomendations, corporate bonds (number) STRONG BUY BUY HOLD SELL 9 of 11

10 Financial models Jyske Bank models the expected development of the analysed company s income statement and balance sheet. A number of key figures for the company is calculated on the basis of these models, and the key figures are compared with those of comparable companies and the company s past performance. From this we infer the spread at which the bonds will trade for the period ahead. The recommendation and the price target are moreover adjusted for the expected news flow and the market sentiment based on knowledge of the industry and company-specific circumstances. Jyske Bank s recommendations take into account the expected development in the corporate-bond market, the various sectors and company-specific circumstances. Risk Investment in this corporate bond is associated with risk. The risk can be measured directly via the spread at which the bond trades relative to a risk free investment with the same maturity. The spread reflects the probability of default, the recovery rate, and the liquidity of the corporate bond. Movements in the credit market, the sector and/or news flows, etc. regarding the company may affect the price of the bond. See the front page of the research report for our view of the risk associated with the corporate bond. The risk on the corporate bond is stated as Very Low, Low, Medium, High or Very High and is relative to the high-yield market for corporate bonds. The risk factors stated and/or calculations of sensitivities in the research report are not to be considered all-encompassing. If the corporate bond is denominated in a currency other than the investor s base currency, the investor accepts an FX risk. Update of the research report The planned update of the report will be prepared immediately upon the release of the company s financial statements. In addition, there may be prepared research reports on special themes specifically for the company or research reports where the company is part of the special theme. These research reports are published on an ad-hoc basis. See the front page for the initial date of publication of the report. The prices stated are the latest prices quoted by Jyske Bank before the publication of the research report, unless otherwise stated. Recommendation concepts Our recommendations are based on market developments and an assessment of the expected return within the next twelve months. A BUY recommendation or a Strong BUY recommendation is based on expectations that investment in the bond will generate a return above that of the general corporate-bond market. On the other hand, a SELL recommendation implies that we expect investment in the bond to generate a return below that of the general corporate-bond market. Since our recommendations are relative and risk-adjusted, it is possible to compare our recommendations across sectors and risk categories. In addition, the potential is stated in absolute terms via our return target. 1 of 11

11 Contacts for Institutional Customers Ulrik Øllegaard Bøg Hansen Head of Corporate Bonds Sales, Vice President Nicolaj Brask Christiansen Senior Sales Manager, Corporate Bonds Sales René Søndergaard Vinther Sales Manager, Corporate Bonds Sales of 11