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1 STANTON ASSET MANAGEMENT CORPORATE FIXED INCOME MARKET MONITOR Fourth Quarter 214

2 Canadian Corporate Bonds Fourth Quarter 214 Data as of December 31, 214 Market Data (Avg.) Size Performance Spread DuraIon Yield to 1 month 3 months YTD 1 year Worst $Billion % % % % bps Years % CANADIAN GOVERNMENT CANADIAN INVESTMENT GRADE CANADIAN AAA CANADIAN AA CANADIAN A CANADIAN BBB Annualized performance since January 21: 5.9% $14, $12, $1, HISTORICAL SPREAD bps Canadian Investment Grade AAA BBB ISSUANCE BY RATING (214 VERSUS 213) Amount issued ($B) $8, Jan- 1 Jan- 11 Jan- 12 Jan- 13 Jan Growth of $1, AAA AA A BB B High Yield Quarterly Recap: In Q4 214, Canadian investment grade bonds returned 1.7%. Canada 1 Year yields closed the quarter at 1.8% from 2.2% on December 31, 214. The best performing segment of the Canadian fixed income market for the quarter was Canadian Government, while the worst performing was Canadian Corporate AA. Canadian BBBs once again generated the best performance in 214. The asset class returned 8.8% compared to 7.5% for government bonds. All Canadian corporate Investment grade spreads widened during Q4. BBB spreads widened the most, by 19 bps. The Case for Current Spreads: Spreads are at the high end of the recent range. Spread widening has been driven by a sharp decline in Oil & Gas prices and shareholder driven ini^a^ves within Pipelines. Based on forward rates, the market does not expect government yields to rise meaningfully through 215, sugges^ng range bound corporate spread movements near current levels. Amongst the four major factors affec^ng spreads (macro economics, corporate fundamentals, technical supply/ demand forces and government yields), three show support for ^ghtening. However, corporate fundamentals s^ll suggest a bias for widening. In fact, the market believes current spreads reflect expecta^ons that non- financial corporate balance sheets could weaken, but remain supported by posi^ve GDP growth and access to low cost of capital. 215 Outlook: We expect spreads to narrow and remain within the recent performance range. The intensity and direc^on of interest moves, as well as the degree of credit events, are likely to be most influen^al for spreads during the year. In 215 we will con^nue to emphasize a risk/ reward approach favouring sectors with low event risk exposure, such as banks and real estate and undervalued credit stories. Some consumer discre^onary sub- sectors should benefit from depressed oil prices as savings from gasoline expenditures will boost disposable income for end consumers. Unlike government bonds, where yield will likely only be earned by extending dura^on, and therefore interest rate risk, yield in Canadian corporates will likely be available across the credit risk spectrum without this unneeded risk exposure. Source: Bloomberg, Bank of America Merrill Lynch, JP Morgan, Credit Suisse, RBC Capital Markets. Data as of December 31, 214. The informa^on contained in this report has been compiled by Stanton from sources believed to be reliable. No representa^ons or warranty, express or implied, are made by Stanton or any other person as to its accuracy, completeness or correctness. All comments, opinions and es^mates contained in this report cons^tute Stanton s judgment as of the date of this report and are subject to change without no^ce and are provided in good faith but without legal responsibility. This report is not an offer to sell or a solicita^on of an offer to buy any securi^es. This material is prepared for general circula^on to Investment Professionals and does not provide regard to the par^cular circumstances or needs of any specific person who may read it. Stanton, nor any other person, accepts any liability whatsoever for any direct or consequen^al loss arising from any use of this report or the informa^on contained herein. This report may not be reproduced, distributed or published by any recipient hereof for any purpose. 2

3 Global High Yield Bonds Fourth Quarter 214 Data as of December 31, 214 Market Data (Avg.) Size Performance Spread DuraIon Yield to 1 month 3 months YTD 1 year Worst $Billion % % % % bps Years % GLOBAL HIGH YIELD 2, US HIGH YIELD 1, CANADA HIGH YIELD EUROPE HIGH YIELD EMERGING MARKETS HIGH YIELD Annualized performance since January 21: 9.1% $2, $15, $1, ANNUAL HIGH YIELD NEW ISSUANCE $5, Growth of $1, $ Dec- 9 Jan- 1 Dec- 1 Jan- 11 Dec- 11 Jan- 12 Dec- 12 Jan- 13 Dec- 13 Jan- 14 Dec- 14 HIGH- YIELD MUTUAL FUND FLOWS Quarterly Recap: In Q4 214, global high yield bonds returned - 1.5%. US 1 Year yields closed the quarter at 2.2% from 2.5% on December 31, 214. Global high yield spreads widened across the full spectrum of credit quality, with CCC and lower rated bonds experiencing the greatest widening within the asset class. The best performing region for the quarter was Europe, while emerging markets was the worst performing segment. The best performing sector in 214 was U^li^es, while Energy was the worst performer, followed by Metals and Mining. Weak oil prices were the predominant factor weighing on high- yield sen^ment and produced $6.9 billion of withdrawals from high yield bond mutual funds in December, as fear and nega^vity surrounding the asset class intensified. This was the largest withdrawal since July 211. New Issue AcIvity: With risk appe^te and performance suffering, December was a light month for new issue ac^vity. Despite a slowdown, new issue volume for 214 reached $356 billion, a level s^ll above the last 5 year average of $334 billion. European non- $US and $US high yield issues led new issuance ac^vity for 214. Default Rates: In all of 214, 28 companies defaulted, affec^ng a total of $7.2 billion in bonds and ins^tu^onal loans. Notably, the record semng defaults of TXU Energy (totaling $36 billion) and Caesars Entertainment ($18.1 billion) accounted for 77% of the year s total default volume. Excluding these defaults, the overall high yield default rate is near record lows, registering the lowest total volume since 27. The market does not forecast a meaningful increase in defaults, but rather a rise from a historical booom. More specifically, JP Morgan forecasts a high- yield default rate of 2.% for both 215 and 216, which remains below the long term average of 3.8%. 215 Outlook: Aper the transi^onal year in 214 in the U.S., we expect a return to fundamentals in 215 for high yield credit investors as sector performance con^nues to diverge. In 215, we will con^nue to emphasize a risk/reward approach and favour credits supported by improving economic growth, avoid commodity- based sectors affected by lower energy and metal prices and emphasize those benefi^ng from low energy prices Source: Bloomberg, Bank of America Merrill Lynch, Barclays and Credit Suisse. Data as of December 31, 214. The informa^on contained in this report has been compiled by Stanton from sources believed to be reliable. No representa^ons or warranty, express or implied, are made by Stanton or any other person as to its accuracy, completeness or correctness. All comments, opinions and es^mates contained in this report cons^tute Stanton s judgment as of the date of this report and are subject to change without no^ce and are provided in good faith but without legal responsibility. This report is not an offer to sell or a solicita^on of an offer to buy any securi^es. This material is prepared for general circula^on to Investment Professionals and does not provide regard to the par^cular circumstances or needs of any specific person who may read it. Stanton, nor any other person, accepts any liability whatsoever for any direct or consequen^al loss arising from any use of this report or the informa^on contained herein. This report may not be reproduced, distributed or published by any recipient hereof for any purpose. 3

4 FloaIng Rate Senior Loans Fourth Quarter 214 Data as of December 31, 214 Market Data (Avg.) Size RaIng Yield DuraIon Spread VolaIlity (%) Performance (%) $ Billion % Years bps 1yr 3D YTD 1yr 2yr FLOATING RATE SENIOR LOAN INDEX 924 B+/BB- 4.9 < ** FLOATING RATE NOTE INDEX 2,* BB- 4.5 < SHORT DURATION HIGH YIELD BOND INDEX 513 BB Selected Index New Issues Size RaIng Yield DuraIon Spread Price Performance (%) $B % Years bps Since Issue BURGER KING Effec^ve 12/12/ B B/E AEROSPACE Effec^ve 11/19/ BB LEVEL 3 FINANCIAL Effec^ve 1/31/ BB Annualized performance since January 21: 6.2% $14, $12, $1, INSTITUTIONAL LOAN ISSUANCE Growth of $1, $8, Dec- 9 Jan- 1 Dec- 1 Jan- 11 Dec- 11 Jan- 12 Dec- 12 Jan- 13 Dec- 13 Jan- 14 LEVERAGED LOAN MUTUAL FUND FLOW Quarterly Recap: In Q4 214, the Credit Suisse Leveraged Loan Index returned -.4%. The return for the month ending December 31, 214 was - 1.1%. Discount margin to maturity widened to 527 bps from 495 bps at the end of Q3 with a current yield of 4.9%. During the same period, Canada 1- year yields decreased by.1% to 2.2% from 2.1%. For the full year 214 senior loans returned 2.1%, underperforming high yield bonds (+2.5%) and other asset classes such as equi^es (the S&P 5 returned +13.7%), municipals (9.3%), investment grade bonds (+7.8%) and emerging market bonds (+5.5%). Weak oil prices were a factor weighing on high- yield sen^ment and produced withdrawals of $5.5 billion from senior loan mutual funds in December as fear and nega^vity surrounding the asset class intensified. This was the largest withdrawal since July 211. New Issue AcIvity: With risk appe^te and performance suffering, December was a light month for new issue ac^vity. Despite a slowdown, 214 s ins^tu^onal loan volumes totaled $467 billion during the year. Default Rates: In all of 214, 28 companies defaulted, affec^ng a total of $7.2 billion in bonds and ins^tu^onal loans. Notably, the record semng defaults of TXU Energy (totaling $36 billion) and Caesars Entertainment ($18.1 billion) accounted for 77% of the year s total default volume. Excluding these defaults, the senior loan default rate is near record lows, registering the lowest total volume since 27. The market does not forecast a meaningful increase in defaults, but rather a rise from a historical booom. More specifically, JP Morgan forecasts a senior loan default rate of 2.% for both 215 and 216, which remains below the long term average of 3.5%. 215 Outlook: In 215, we will con^nue to emphasize a risk/reward approach. Because of 214 performance senior loans appear cheap, in both absolute and rela^ve terms, and their low vola^lity profile makes them a very aorac^ve asset class from a risk- adjusted standpoint. Also, if rates begin to rise, we expect flows to migrate back into the asset class *The size of the Floa^ng Rate Note Index is approximately $2.1 billion. Stanton es^mates that the universe of floa^ng rate notes available for investment is approximately $2 trillion. ** Discount Margin. Source: Bloomberg, Bank of America Merrill Lynch, Barclays and Credit Suisse. Data as of December 31, 214. The informa^on contained in this report has been compiled by Stanton from sources believed to be reliable. No representa^ons or warranty, express or implied, are made by Stanton or any other person as to its accuracy, completeness or correctness. All comments, opinions and es^mates contained in this report cons^tute Stanton s judgment as of the date of this report and are subject to change without no^ce and are provided in good faith but without legal responsibility. This report is not an offer to sell or a solicita^on of an offer to buy any securi^es. This material is prepared for general circula^on to Investment Professionals and does not provide regard to the par^cular circumstances or needs of any specific person who may read it. Stanton, nor any other person, accepts any liability whatsoever for any direct or consequen^al loss arising from any use of this report or the informa^on contained herein. This report may not be reproduced, distributed or published by any recipient hereof for any purpose. 4

5 ASSET CLASS CHARACTERISTICS Credit asset classes are unique in that they provide investors with aorac^ve yield coupled with reduced vola^lity and low correla^on to tradi^onal fixed income. Canadian investment grade corporate bonds, global short dura^on high yield bonds and floa^ng rate senior loans are a ~USD 1.9 billion ins^tu^onal asset class with a long history of stable returns. 1 Since 29, these three asset classes have generated posi^ve returns on an annual basis, which is not the case for the tradi^onal fixed income asset class. As a result of these posi^ve features, ins^tu^onal investors seeking added yield and diversifica^on have increased their alloca^on to these asset classes. Canadian Corporate Bonds Global High Yield Bonds FloaIng Rate Senior Loans Average Credit RaIng A B+ B+/BB- Maturity 8-1 years 8-1 years 5-7 years Market Size $Billion Approx. $4 Approx. $1,5 Approx. $75 # of Issues 825 3, INVESTMENT PROCESS Top- Down Analysis Corporate Fixed Income Strategies Fourth Quarter 214 SecuriIes with Best PotenIal Risk- Adjusted Return Poreolio ConstrucIon Poreolio Monitoring The firm s investment process combines both top- down and booom- up analysis. Our approach focuses on alloca^on decisions based on top- down assessment of macroeconomic condi^ons and asset class valua^on, and on fundamental booom- up research and selec^on of securi^es in order to add value within defined levels of portolio risk. INVESTMENT TEAM Bodom- Up Analysis Over 25 years of global investment experience, including on Wall Street in M&A, capital markets and private equity, and in Canada in managing portolios invested in Canadian and global equity and debt securi^es. Connor O Brien, MBA President and CIO Previously with Lehman Brothers and Par- Four Investment Management in New York, a firm managing total assets of over $3 billion in non- investment grade debt. Adam Smalley, CPA, MBA Senior Portolio Manager Fixed Income ABOUT STANTON Stanton Asset Management is an independent investment management firm that offers fixed income and equity investment strategies with over $9 million of assets under management. Stanton is registered with and regulated by the AMF and the OSC. Stanton s team is comprised of over fourteen professionals responsible for investment and risk management, compliance, opera^ons, legal, client servicing and finance. The investment team brings extensive experience across asset classes in Canadian and global markets including investment grade bonds, high yield bonds, floa^ng rate debt, conver^ble bonds and equi^es. Stanton is the portolio advisor of O'Leary Funds and also manages portolios for private, family office, corporate and ins^tu^onal clients. Contact InformaIon Connor O Brien, T: (514) Rocio Gueto, T: (514) Sherbrooke Street West # 17, Montreal (QC), H3A 2R7. www. stantonasset.com 1. Source: The BofA Merrill Lynch and Credit Suisse Index Data: Floa^ng Rate Senior Loan Index : Credit Suisse Leveraged Loan Index; Floa^ng Rate Note Index : Barclays U.S. HY FRN Index. Short Dura^on High Yield Bonds : The BofA Merrill Lynch - 3 Year Dura^on BB- B Global Non- Financial High Yield Constrained Index 5

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