2018 Global High-Yield Bond Study

Transcription

1 2018 Global High-Yield Bond Study

2 Contents Overview and Methodology 3 Glossary 7 Categories of Analysis 10 High-Yield Bond Study Affi liate Suspension/ These materials are proprietary to Proskauer Rose LLP and may not be reproduced, transmitted or otherwise exploited in any media, in whole or in part, without the prior written authorization of Proskauer Rose LLP. Requests for permission may be addressed to: Frank Lopez, Co-Head of Global Capital Markets, Proskauer Rose LLP. This publication is a service to our clients and friends of the firm. This publication is not intended to be comprehensive nor to provide financial, investment, legal, tax or other professional advice or services. In addition, the sample population may not be an exact representation of the universe of deals because of limitations on the availability of deal information. This publication is not a substitute for professional advice or services, and it should not be acted on or relied upon or used as a basis for any investment or other decision or action that may affect you or your business. Before making any such decision you should consult a suitably qualified professional adviser. While reasonable effort has been made to ensure the accuracy of the information contained in this publication, this cannot be guaranteed and neither Proskauer Rose LLP nor any other related entity shall have any liability to any person or entity that relies on the information contained in this publication, including incidental or consequential damages arising from errors or omissions. Any such reliance is solely at the user s risk Proskauer Rose LLP. All rights reserved

3 Contacts Any questions regarding this study should be directed to: New York Los Angeles Andrew Bettwy Co-head, Finance Justin Breen Head, Leveraged Finance Philippa M. Bond Co-head, Global Capital Markets Stephen P. Gruberg Partner Daniel W. Hendrick Senior Counsel Frank J. Lopez Co-head, Global Capital Markets Mary Wills Bode Associate London São Paulo Maximilian P. Kirchner Partner Brooke L. Fischer Associate Brendan Leanos Associate Fabio A. Yamada Partner William A. Majeski Associate Jinyoung Joo Associate Javier Barrera Gazcon Associate Scott P. Thurman Associate Saulo Salles de Padua Associate

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5 and Methodology

6 Payments / Overview and Methodology Welcome to this seventh edition of Proskauer s Global High-Yield Bond Study, our analysis of market trends for high-yield bond offerings. Using analyses from our proprietary database of approximately 2,000 high-yield bond deals, our study covers deals closed globally between 2013 and 2017 that meet our selection criteria. We categorize deals by geography, deal size, industry, credit rating and whether they are backed by private equity sponsors. We hope you enjoy the 2018 Global High-Yield Study and welcome your feedback and questions. Please feel free to contact any of our attorneys listed inside the front cover. 4

7 Payments / Overview and Methodology General Our high-yield database includes approximately 2,000 high-yield deals closed globally from Our 2018 Study analyzes trends from Data is broken down by geography, deal size, industry, rating and whether sponsor-backed. Methodology Outliers that were three or more standard deviations away from the mean for any given data set were excluded from our calculations. In circumstances where less than 1% of reviewed transactions contained a specific term, such term was excluded from our calculations. Deals in the sample population with only a pledge of stock are not considered to be secured deals for purposes of this study. In addition, for purposes of identifying lien priorities, deals with super priority payment rights are not considered to have lien priority. Certain deals that were reviewed also included high-yield rated bonds with investment-grade or hybrid covenant packages. These deals have been excluded for purposes of our covenant analysis. Final and preliminary offering memorandums were included in the analysis. Allocation In geographic analysis, Canada is included in the U.S. data, Australia is included in the Asia data and issuers operating in the Caribbean are included in the Latin America data. In industry breakdown, deals in the sample population are categorized as follows: - Issuers in the power and mining industries are included in our Industrials category. - Service providers to the oil & gas industry are included in our Oil & Gas category. 5

8 Payments / Overview and Methodology Financial Metrics EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is based on the applicable issuer s trailing four quarters (or last 12 months, if applicable) of EBITDA disclosed in the relevant marketing materials. Total assets calculations are based upon the total assets of the applicable issuer as set forth in the most current balance sheet data disclosed in the relevant marketing materials. References to EBITDA include "Adjusted EBITDA" when the relevant marketing materials contained such presentations and Pro Forma EBITDA/Adjusted EBITDA when such metrics were presented. Ratings All ratings categories are based on credit ratings by Standard & Poor s. Calculations based solely on rating exclude deals that were not rated. The rating categories do not distinguish + or signs within a ratings category. 6

9 Payments / Glossary 6% IPO Proceeds: A basket permitting restricted payments of up to 6% (or more) of the proceeds received from an IPO. 103% Redemption: The ability of the issuer to call up to 1 of notes per year at 103% of par during the non-call period. Cash Flow-Based: With respect to the restricted payments builder basket, a restricted payments test based on EBITDA minus a multiple of interest expense. : The bondholders change of control put right is only triggered if, after giving effect to the transaction, both a change of control and an additional negative event occurs (such as a failure by the issuer to meet a specified leverage ratio test or a reduction in the rating of the notes). Contribution Indebtedness: A basket permitting debt in an amount equal to 10 (or more) of the amount of proceeds received from equity issuances or cash contributions to equity capital. : Certain covenants are permanently removed upon the issuer s achievement of investment-grade ratings. Suspension: Certain covenants are suspended upon the issuer s achievement of investment-grade ratings, but reinstated if the issuer s ratings are subsequently downgraded to non-investment-grade. Designated Non-Cash Consideration: For purposes of satisfying the cash consideration test for asset sales, the ability to treat a certain amount of non-cash consideration as if it were cash. EBITDA: Earnings before interest, taxes, depreciation and amortization. Equity Claw: The ability of the issuer to call a certain percentage of bonds with the proceeds of certain equity issuances during the noncall period. 7

10 Payments / Glossary Excluded Contributions: A basket permitting restricted payments equal to the amount of proceeds received from equity issuances or cash contributions to equity capital that are designated by the issuer as excluded contributions and are not subject to the conditions required to utilize the restricted payments builder basket, including being within the applicable debt incurrence ratio. FCCR (Fixed Charge Coverage Ratio): Generally EBITDA divided by fixed charges. Leverage Ratio: Generally debt divided by EBITDA. Net Income-Based: With respect to the restricted payments builder basket, a restricted payments test based on 5 of consolidated net income. Ratio Condition: With respect to mergers and consolidations, whether the issuer must meet the debt incurrence ratio test on a pro forma basis, or if such ratio must only improve or be no worse on a pro forma basis. Secured Leverage Grower: A basket permitting unlimited liens on debt subject to a pro forma secured leverage test. Unlimited Leverage-Based Payments: A basket permitting unlimited restricted payments subject to a pro forma leverage test. 8

11 Payments / 2017 Global High-Yield Market % of Deal Count 53% 47% 46% 42% 39% '13 '14 '15 '16 ' % 33% 34% '13 '14 '15 '16 '17 13% 19% 16% 19% 2 '13 '14 '15 '16 '17 4% 4% 4% 6% 7% '13 '14 '15 '16 '17 Source: Prospect News (all countries, all currencies) 9

12 Payments / Categories of Analysis Geography - U.S./Canada - Europe, Middle East and Africa (EMEA) - Asia - Latin America Size of Deal - Small: $0 $200 million - Medium: $201 $499 million - Large: $500 million+ Industry - Consumer - Financial Services - Health Care - Real Estate/Gaming - Industrials - Oil & Gas - Technology, Media and Telecommunications (TMT) Ratings - BB - B - CCC Sponsor vs. Non-Sponsor 10

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14 Payments / 103% Redemption % of Deals Global % 25% 2 Global % of Deals with 103% Redemption 35% from 16 15% 1 = 1 89% With 103% Redemption Without 103% Redemption 5% 12

15 Payments / 103% Redemption % of Deals with 103% Redemption Geography Deal Size % 35% % 25% % 15% 1 1 5% 5% U.S. EMEA Asia Latin America Small Medium Large Indicates no reviewed deals contained term 13

16 Payments / 103% Redemption % of Deals with 103% Redemption 4 Industry 35% 3 25% 2 15% 1 5% Consumer Financial Services Health Care Real Estate/Gaming Industrials Oil & Gas TMT Indicates no reviewed deals contained term 14

17 Payments / 103% Redemption % of Deals with 103% Redemption Ratings 3 25% 2 15% = 13% 1 5% = 8.4% = 5.9% BB B CCC Indicates no reviewed deals contained term 15

18 Payments / 103% Redemption % of Deals with 103% Redemption Sponsor Non-Sponsor 33% from % 25% 2 = 19% 2 15% 15% 1 1 5% 5% = 5.7% 16

19 Payments / 103% Redemption % of Secured Deals with 103% Redemption Global 2017 Global % of Secured Deals with 103% Redemption 77% 23% With 103% Redemption Without 103% Redemption 4 35% 3 25% 2 15% 1 5% 4 35% 3 25% 2 15% 1 5% = 25% Global % of Unsecured Deals with 103% Redemption 17

20 Payments / 103% Redemption % of Secured Deals with 103% Redemption Geography % of Secured Deals with 103% Redemption 31% from % 3 25% 2 15% 1 5% U.S. EMEA 18

21 Payments / Equity Claw % of Deals Global Global % of Deals Permitting Greater Than 35% % from 13 57% 43% Permits up to 35% Permits greater than 35% 19

22 Payments / Equity Claw % of Deals Permitting Greater than 35% Geography Deal Size % from from % from U.S. EMEA Asia Latin America Small Medium Large Indicates no reviewed deals contained term 20

23 Payments / Equity Claw % of Deals Permitting Greater than 35% Industry Consumer Financial Services Health Care Real Estate/Gaming Industrials Oil & Gas TMT Indicates no reviewed deals contained term 21

24 Payments / Equity Claw % of Deals Permitting Greater than 35% Ratings 8 95% from = = 32% = 41% 2 1 BB B CCC 22

25 Payments / Equity Claw % of Deals Permitting Greater than 35% Sponsor Non-Sponsor

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28 Payments / % of Deals Global Global % of Deals With Change of 28% % 1 With Without

29 Payments / % of Deals with Geography Deal Size U.S. EMEA Asia Latin America Small Medium Large

30 Payments / % of Deals with Industry Consumer Financial Services Health Care Real Estate/Gaming Industrials Oil & Gas TMT

31 Payments / % of Deals with 10 Ratings from BB B CCC

32 Payments / % of Deals with Sponsor Non-Sponsor

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34 Payments / Ratio % of Deals Global 2017 Global 13% (FCCR) = 78% 11% % 2 1 FCCR Leverage Both 32

35 Payments / Ratio Geographic Breakdown U.S. EMEA (FCCR) = 82% FCCR Leverage (FCCR) = 72% Asia Both Latin America (FCCR) = 75% (FCCR) = 5 33

36 Payments / Ratio Deal Size Breakdown Small Medium Large (FCCR) = 72% (FCCR) = (FCCR) = 77% FCCR Leverage Both 34

37 Payments / Ratio Industry Breakdown Consumer (FCCR) = 86% Financial Services (FCCR) = 72% Health Care (FCCR) = 94% Real Estate/Gaming (FCCR) = 83% Industrials Oil & Gas TMT (FCCR) = 85% (FCCR) = 94% (FCCR) = 29% FCCR Leverage Both 35

38 Payments / Ratio Ratings Breakdown BB B CCC (FCCR) = 79% (FCCR) = 76% (FCCR) = 84% FCCR Leverage Both 36

39 Payments / Ratio Sponsor Breakdown Sponsor Non-Sponsor (FCCR) = (FCCR) = 77% FCCR Leverage Both 37

40 Payments / Ratio % of Deals Global 2017 Global (FCCR of 2x) = 79% FCCR of 2x FCCR of >2x 38

41 Payments / Ratio Geographic Breakdown U.S. EMEA (FCCR of 2x) = 85% FCCR of 2x (FCCR of 2x) = 75% Asia FCCR of >2x Latin America (FCCR of 2x) = 37% (FCCR of 2x) = 6 39

42 Payments / Ratio Deal Size Breakdown Small Medium Large (FCCR of 2x) = 73% (FCCR of 2x) = 79% (FCCR of 2x) = FCCR of 2x FCCR of >2x 40

43 Payments / Ratio Industry Breakdown Consumer (FCCR of 2x) = 87% Financial Services (FCCR of 2x) = 72% Health Care (FCCR of 2x) = 95% Real Estate/Gaming Industrials Oil & Gas TMT (FCCR of 2x) = (FCCR of 2x) = 86% (FCCR of 2x) = 51% (FCCR of 2x) = 75% FCCR of 2x FCCR of >2x 41

44 Payments / Ratio Ratings Breakdown BB B CCC (FCCR of 2x) 8 = 76% 7 (FCCR of 2x) = 78% (FCCR of 2x) = 87% FCCR of 2x FCCR of >2x 42

45 Payments / Ratio Sponsor Breakdown Sponsor Non-Sponsor (FCCR of 2x) = 87% (FCCR of 2x) = 74% FCCR of 2x FCCR of >2x 43

46 Payments / Senior Credit Facilities Basket Global Analysis 45 % of Issuer's EBITDA 6 % of Issuer's Assets % 5 45% = 242% 35% 3 25% = 29% % 1 5% 44

47 Payments / Senior Credit Facilities Basket Geographic Breakdown 45 % of Issuer's EBITDA 6 % of Issuer's Assets = 295% = 156% 55% 5 45% 4 35% 3 25% = 36% = 19% % 1 5% U.S. EMEA Asia Latin America U.S. EMEA Asia Latin America 45

48 Payments / Senior Credit Facilities Basket Deal Size Breakdown 45 % of Issuer's EBITDA 6 % of Issuer's Assets % 5 45% % 3 25% % 1 5% Small Medium Large Small Medium Large 46

49 Payments / Senior Credit Facilities Basket Industry Breakdown 45 % of Issuer's EBITDA 6 % of Issuer's Assets % 5 45% % 3 25% % 1 5% 47

50 Payments / Senior Credit Facilities Basket Ratings Breakdown % of Issuer's EBITDA % of Issuer's Assets % 5 45% % 3 25% % 1 5% BB B CCC BB B CCC 48

51 Payments / Senior Credit Facilities Basket Sponsor Breakdown % of Issuer's EBITDA Sponsor 6 55% 5 45% 4 = 28 35% 3 25% 2 15% 1 5% Non-Sponsor = 222% 6 55% 5 45% 4 35% 3 25% 2 15% 1 5% % of Issuer's Assets = 32% = 28% 49

52 Payments / Contribution Indebtedness % of Deals Global Global % of Deals with Basket % % 4 3 = 39% 2 1 With Basket Without Basket 50

53 Payments / Contribution Indebtedness % of Deals with Basket Geography Deal Size = 39% = 35% = 45% U.S. EMEA Asia Latin America Small Medium Large Indicates no reviewed deals contained term 51

54 Payments / Contribution Indebtedness % of Deals with Basket 10 Industry Consumer Financial Services Health Care Real Estate/Gaming Industrials Oil & Gas TMT 52

55 Payments / Contribution Indebtedness % of Deals with Basket 10 Ratings = 62% = 27% = 4 1 BB B CCC 53

56 Payments / Contribution Indebtedness % of Deals with Basket Sponsor Non-Sponsor = 71% = 23% 54

57 Payments / Purchase Money/Capital Lease Basket Global Analysis % of Issuer's EBITDA % of Issuer's Assets 45% 7% 4 6% 35% 3 5% 25% 2 = 25% 4% 3% = 3. 15% 2% 1 5% 1% 55

58 Payments / Purchase Money/Capital Lease Basket Geographic Breakdown 5 % of Issuer's EBITDA 1 % of Issuer's Assets 45% 9% 4 8% 35% 3 = 27% = 21% 7% 6% 25% 2 15% 5% 4% 3% = 3.2% = 2.5% 1 2% 5% 1% U.S. EMEA Asia Latin America U.S. EMEA Asia Latin America 56

59 Payments / Purchase Money/Capital Lease Basket Deal Size Breakdown % of Issuer's EBITDA % of Issuer's Assets 5 7% 45% 4 6% 35% 3 25% 2 = 27% = 26% = 25% 5% 4% 3% = 2.8% = 3. = 2.9% 15% 2% 1 5% 1% Small Medium Large Small Medium Large 57

60 Payments / Purchase Money/Capital Lease Basket Industry Breakdown 5 % of Issuer's EBITDA 7% % of Issuer's Assets 45% 4 6% 35% 5% 3 4% 25% 2 3% 15% 2% 1 5% 1% 58

61 Payments / Purchase Money/Capital Lease Basket Ratings Breakdown 45% % of Issuer's EBITDA 7% % of Issuer's Assets 4 6% 35% 3 25% 2 = 25% = 25% = 26% 5% 4% 3% = 3.1% = 2.9% = 3. 15% 2% 1 5% 1% BB B CCC BB B CCC 59

62 Payments / Purchase Money/Capital Lease Basket Sponsor Breakdown 45% 4 35% 3 25% 2 15% 1 5% % of Issuer's EBITDA = 26% Sponsor 7% 6% 5% 4% 3% 2% 1% % of Issuer's Assets = 2.9% Non-Sponsor 45% 4 35% 3 25% 2 15% 1 5% = 25% 7% 6% 5% 4% 3% 2% 1% = 3. 60

63 Payments / General Basket Global Analysis 5 % of Issuer's EBITDA 6% % of Issuer's Assets 45% 4 35% = 33% 5% 4% = 3.9% 3 25% 3% 2 15% 2% 1 1% 5% 61

64 Payments / General Basket Geographic Breakdown 5 % of Issuer's EBITDA 6% % of Issuer's Assets 45% 4 = 36% 5% 35% 3 = 29% 4% 25% 3% 2 15% 2% 1 1% 5% U.S. EMEA Asia Latin America U.S. EMEA Asia Latin America 62

65 Payments / General Basket Deal Size Breakdown 5 % of Issuer's EBITDA 6% % of Issuer's Assets 45% 4 35% = 28% = 34% = 33% 5% 4% = 4.1% = 3.5% = 3.7% 3 25% 3% 2 15% 2% 1 1% 5% Small Medium Large Small Medium Large 63

66 Payments / General Basket Industry Breakdown 5 % of Issuer's EBITDA 6% % of Issuer's Assets 45% 4 5% 35% 4% 3 25% 3% 2 15% 2% 1 1% 5% 64

67 Payments / General Basket Ratings Breakdown 5 % of Issuer's EBITDA 7% % of Issuer's Assets 45% 4 35% = 31% = 33% = 35% 6% 5% = 3.8% = 3.9% = 4.1% 3 4% 25% 2 3% 15% 2% 1 5% 1% BB B CCC BB B CCC 65

68 Payments / General Basket Sponsor Breakdown 5 45% 4 35% 3 25% 2 15% 1 5% % of Issuer's EBITDA = 35% Sponsor 6% 5% 4% 3% 2% 1% % of Issuer's Assets = 4.3% Non-Sponsor 5 6% 45% 4 35% 3 = 31% 5% 4% = 3.7% 25% 3% 2 15% 2% 1 5% 1% 66

69 Payments /

70 Payments General Build-Up % of Deals Global 2017 Global 7% (Net Income- Based) = 88% % Net Income-Based Cash Flow-Based 68

71 Payments General Build-Up Geographic Breakdown U.S. EMEA Asia (Net Income- Based) = 84% Net Income-Based Cash Flow-Based Latin America (Net Income- Based) = 96% (Net Income- Based) = 88% (Net Income- Based) = 77% 69

72 Payments General Build-Up Deal Size Breakdown Small Medium Large (Net Income- Based) = 91% (Net Income- Based) = 87% (Net Income- Based) = 87% Net Income-Based Cash Flow-Based 70

73 Payments General Build-Up Industry Breakdown Consumer (Net Income- Based) = 96% Financial Services (Net Income- Based) = 97% Health Care (Net Income- Based) = 98% Real Estate/Gaming 10 9 (Net 8 Income- 7 Based) = 84% Industrials (Net Income- Based) = 98% Oil & Gas 10 9 (Net 8 Income- 7 Based) 6 = 84% TMT (Net Income- Based) = 53% Net Income-Based Cash Flow-Based 71

74 Payments General Build-Up Ratings Breakdown BB B CCC (Net Income- Based) = 86% (Net Income- Based) = 87% (Net Income- Based) = 97% Net Income-Based Cash Flow-Based 72

75 Payments General Build-Up Sponsor Breakdown Sponsor Non-Sponsor (Net Income- Based) = 94% (Net Income- Based) = 84% Net Income-Based Cash Flow-Based 73

76 Excluded Contributions % of Deals Global Global % of Deals with Basket % 43% 5 4 = With Basket Without Basket 74

77 Excluded Contributions % of Deals with Basket Geography Deal Size = 69% = 48% U.S. EMEA Asia Latin America Small Medium Large Indicates no reviewed deals contained term 75

78 Excluded Contributions % of Deals with Basket 10 Industry Consumer Financial Services Health Care Real Estate/Gaming Industrials Oil & Gas TMT 76

79 Excluded Contributions % of Deals with Basket Ratings % from = 66% = 42% = BB B CCC 77

80 Excluded Contributions % of Deals with Basket Sponsor Non-Sponsor 10 9 = 81% = 33% 78

81 6% IPO Proceeds % of Deals Global Global % of Deals with Basket % 55% 5 4 = 43% With Basket Without Basket 79

82 6% IPO Proceeds % of Deals with Basket Geography Deal Size U.S. EMEA Asia Latin America Small Medium Large Indicates no reviewed deals contained term 80

83 6% IPO Proceeds % of Deals with Basket Industry Consumer Financial Services Health Care Real Estate/Gaming Industrials Oil & Gas TMT 81

84 6% IPO Proceeds % of Deals with Basket Ratings = 61% = 29% = 47% 1 BB B CCC 82

85 6% IPO Proceeds % of Deals with Basket Sponsor Non-Sponsor = 79% = 24% 83

86 Payments General Basket % of Issuer's EBITDA Global Geography % 35% % 2 = 22% 25% 2 = 23% = 2 15% 15% 1 1 5% 5% U.S. EMEA Asia Latin America 84

87 Payments General Basket % of Issuer's EBITDA Deal Size Industry % 35% 3 25% 2 = 22% = 22% = 21% 3 25% 2 15% 15% 1 1 5% 5% Small Medium Large 85

88 Payments General Basket % of Issuer's EBITDA 4 Ratings 35% 3 25% = 22% = 21% = 22% 2 15% 1 5% BB B CCC 86

89 Payments General Basket % of Issuer's EBITDA Sponsor Non-Sponsor % 35% 3 25% = 23% 3 25% = 21% % 15% 1 1 5% 5% 87

90 Permitted General Basket Global Analysis 5 % of Issuer's EBITDA 1 % of Issuer's Assets 45% 9% 4 8% 35% 3 = 29% 7% 6% 25% 2 15% 5% 4% 3% = 3.4% 1 2% 5% 1% 88

91 Permitted General Basket Geographic Breakdown 5 % of Issuer's EBITDA 1 % of Issuer's Assets 45% 9% 4 35% 3 25% 2 15% 1 = 32% 6% = 23% 5% = 3.8% 4% = 2.8% 3% 8% 7% 2% 5% 1% U.S. EMEA Asia Latin America U.S. EMEA Asia Latin America 89

92 Permitted General Basket Deal Size Breakdown 5 % of Issuer's EBITDA 1 % of Issuer's Assets 45% 9% 4 8% 35% 3 = 25% = 3 = 28% 7% 6% 25% 2 5% 4% = 3.2% = 3.5% = 3.3% 15% 3% 1 2% 5% 1% Small Medium Large Small Medium Large 90

93 Permitted General Basket Industry Breakdown 5 % of Issuer's EBITDA 1 % of Issuer's Assets 45% 9% 4 8% 35% 7% 3 6% 25% 5% 2 4% 15% 3% 1 2% 5% 1% 91

94 Permitted General Basket Ratings Breakdown 5 % of Issuer's EBITDA 1 % of Issuer's Assets 45% 9% 4 35% 3 = 3 = 27% = 32% 8% 7% 6% 25% 2 5% 4% = 3.6% = 3.3% = 3.6% 15% 3% 1 2% 5% 1% BB B CCC BB B CCC 92

95 Permitted General Basket Sponsor Breakdown % of Issuer's EBITDA Sponsor % of Issuer's Assets 5 45% 4 35% 3 25% 2 15% 1 5% 5 45% 4 35% 3 25% 2 15% 1 5% = 3 5% 4% 3% 2% 1% Non-Sponsor = 28% 7% 6% 5% 4% 3% 2% 1% = 3.6% = 3.3% 93

96 Unlimited Leverage-Based Payments % of Deals Global 2017 Global % of Deals with Basket 8 19% from % 49% With Basket Without Basket

97 Unlimited Leverage-Based Payments % of Deals with Basket Geography Deal Size U.S. EMEA Asia Latin America Small Medium Large Indicates no reviewed deals contained term 95

98 Unlimited Leverage-Based Payments % of Deals with Basket 10 Industry Consumer Financial Services Health Care Real Estate/Gaming Industrials Oil & Gas TMT

99 Unlimited Leverage-Based Payments % of Deals with Basket 8 Ratings 225% from BB B CCC

100 Unlimited Leverage-Based Payments % of Deals with Basket Sponsor Non-Sponsor % from % from

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102 Secured Leverage Grower % of Deals Global Global % of Deals with Basket % = 39% 31% With Basket Without Basket 100

103 Secured Leverage Grower % of Deals with Basket Geography Deal Size U.S. EMEA Asia Latin America Small Medium Large Indicates no reviewed deals contained term 101

104 Secured Leverage Grower % of Deals with Basket 10 Industry Consumer Financial Services Health Care Real Estate/Gaming Industrials Oil & Gas TMT

105 Secured Leverage Grower % of Deals with Basket 10 Ratings from = 31% = 41% = 49% BB B CCC 103

106 Secured Leverage Grower % of Deals with Basket Sponsor Non-Sponsor = 53% = 31%

107 General Permitted Lien Basket % of Total Assets Global Geography 4% 4% 3% = 2.5% 3% = 2.7% = 2.2% 2% 2% 1% 1% U.S. EMEA Asia Latin America 105

108 General Permitted Lien Basket % of Total Assets Deal Size Industry 4% 4% 3% 3% 2% 2% 1% 1% Small Medium Large 106

109 General Permitted Lien Basket % of Total Assets 4% Ratings 3% = 2.6% = 2.4% = 2.7% 2% 1% BB B CCC 107

110 General Permitted Lien Basket % of Total Assets Sponsor Non-Sponsor 4% 4% 3% = 2.6% 3% = 2.4% 2% 2% 1% 1% 108

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112 Fairness Opinion Requirement % of Deals Global Global % of Deals with Fairness Opinion Requirement (with requirement) = 47% 52% 48% With Requirement Without Requirement 110

113 Fairness Opinion Requirement % of Deals with Fairness Opinion Requirement Geography Deal Size U.S. EMEA Asia Latin America Small Medium Large 111

114 Fairness Opinion Requirement % of Deals with Fairness Opinion Requirement 10 Industry Consumer Financial Services Health Care Real Estate/Gaming Industrials Oil & Gas TMT 112

115 Fairness Opinion Requirement % of Deals with Fairness Opinion Requirement 10 Ratings = 45% = 52% = BB B CCC 113

116 Fairness Opinion Requirement % of Deals with Fairness Opinion Requirement Sponsor Non-Sponsor = 53% = 34%

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118 Reinvestment Period % of Deals Global 2017 Global 1% ( Days) = 83% % <360 Days Days >365 Days 116

119 Reinvestment Period Geographic Breakdown U.S. EMEA ( Days) = 78% <360 Days Days ( Days) = 9 Asia >360 Days Latin America ( Days) = 94% ( Days) = 87% 117

120 Reinvestment Period Deal Size Breakdown Small Medium Large ( Days) = 85% ( Days) = 87% ( Days) = 77% <360 Days Days >365 Days 118

121 Reinvestment Period Industry Breakdown Consumer Financial Services Health Care ( Days) = 81% ( Days) = 74% ( Days) = 63% Real Estate/Gaming Industrials Oil & Gas TMT ( Days) = ( Days) = 85% ( Days) = 96% ( Days) = 76% <360 Days Days >365 Days 119

122 Reinvestment Period Ratings Breakdown BB B CCC ( Days) = 88% ( Days) = 85% ( Days) = <360 Days Days >365 Days 120

123 Reinvestment Period Sponsor Breakdown Sponsor Non-Sponsor ( Days) = ( Days) = <360 Days Days >365 Days 121

124 Designated Non-Cash Consideration % of Deals Global 2017 Global % of Deals with Carve-out 10 71% = % With Carve-out Without Carve-out 122

125 Designated Non-Cash Consideration % of Deals with Carve-out Geography Deal Size = 65% = 66% = 78% U.S. EMEA Asia Latin America ---- Small Medium Large Indicates no reviewed deals contained term 123

126 Designated Non-Cash Consideration % of Deals with Carve-out 10 Industry Consumer Financial Services Health Care Real Estate/Gaming Industrials Oil & Gas TMT 124

127 Designated Non-Cash Consideration % of Deals with Carve-out Ratings = 68% = 7 = 81% BB B CCC 125

128 Designated Non-Cash Consideration % of Deals with Carve-out Sponsor Non-Sponsor 10 9 = 88% = 61%

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130 Ratio Condition % of Deals Global % 73% Must Meet Ratio Test Ratio No Worse or Improves Global % of Deals Ratio No Worse or Improves (Ratio No Worse or Improves) = 83% (Must Meet Ratio) = 17% 23% from 16 % of Deals Must Meet Ratio Test 462% from

131 Ratio Condition Geographic Breakdown U.S. EMEA (Must Meet Ratio) = 15% Must Meet Ratio Test (Must Meet Ratio) = 16% Asia Ratio No Worse or Improves Latin America (Must Meet Ratio) = 44% (Must Meet Ratio) = 17% 129

132 Ratio Condition Deal Size Breakdown Small Medium Large (Must Meet Ratio) = 21% (Must Meet Ratio) = 17% (Must Meet Ratio) = 14% Must Meet Ratio Test Ratio No Worse or Improves 130

133 Ratio Condition Industry Breakdown Consumer Financial Services Health Care (Must Meet Ratio) = 15% (Must Meet Ratio) = 18% (Must Meet Ratio) = 17% Real Estate/Gaming Industrials Oil & Gas TMT (Must 5 Meet 4 Ratio) 3 = 23% (Must 5 Meet 4 Ratio) 3 = 15% (Must 3 Meet 2 Ratio) 1 = 13% (Must Meet Ratio) = 22% Must Meet Ratio Test Ratio No Worse or Improves 131

134 Ratio Condition Ratings Breakdown BB B CCC (Must Meet Ratio) = 19% (Must Meet Ratio) = 15% (Must Meet Ratio) = 16% Must Meet Ratio Test Ratio No Worse or Improves 132

135 Ratio Condition Sponsor Breakdown Sponsor Non-Sponsor (Must Meet Ratio) = 11% (Must Meet Ratio) = 2 Must Meet Ratio Test Ratio No Worse or Improves 133

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138 % of Deals U.S. Private-for-Life: 91% from (Private-for- Life) = 59% Private-for-Life Registered 136

139 Geographic Breakdown EMEA (Private-for-Life) = 96% Private-for-Life Registered Asia (Private-for-Life) = 99% Latin America (Private-for-Life) = 9 137

140 U.S. Deal Size Breakdown Small Medium Large (Private-for-Life) = 48% (Private-for-Life) = 61% (Private-for-Life) = 57% Private-for-Life Registered 138

141 U.S. Industry Breakdown Consumer Financial Services Health Care (Privatefor-Life) = 61% (Privatefor-Life) = 65% (Privatefor-Life) = 56% Real Estate/Gaming Industrials Oil & Gas TMT (Privatefor-Life) 5 6 = 56% (Privatefor-Life) 5 6 = (Privatefor-Life) 3 4 = 36% 2 1 (Privatefor-Life) = 65% Private-for-Life Registered 139

142 U.S. Ratings Breakdown BB B CCC 10 Private-for-Life: 205% from 13 Private-for-Life: 95% from (Privatefor-Life) = 43% (Privatefor-Life) = 62% (Privatefor-Life) = 75% Private-for-Life Registered 140

143 U.S. Sponsor Breakdown Sponsor Non-Sponsor (Privatefor-Life) = 78% (Privatefor-Life) = 49% Private-for-Life Registered 141

144

145

146 % of Deals Global 2017 Global % % 12% 1 Suspension Neither 144

147 Geographic Breakdown U.S. EMEA Suspension Asia Neither Latin America

148 Deal Size Breakdown Small Medium Large Suspension Neither 146

149 Industry Breakdown Consumer Financial Services Health Care Real Estate/Gaming Industrials Oil & Gas TMT Suspension Neither 147

150 Ratings Breakdown BB B CCC Suspension Neither 148

151 Sponsor Breakdown Sponsor Non-Sponsor Suspension Neither 149

152

153

154 Secured vs. Unsecured % of Deals Global Global % of Secured Deals = 35% 2 1 Secured Unsecured 152

155 Secured vs. Unsecured % of Secured Deals Geography Deal Size = 61% = 24% U.S. EMEA Asia Latin America Small Medium Large 153

156 Secured vs. Unsecured % of Secured Deals Industry Consumer Financial Services Health Care Real Estate/Gaming Industrials Oil & Gas TMT 154

157 Secured vs. Unsecured % of Secured Deals 10 Ratings = 44% = 26% = 22% 1 BB B CCC 155

158 Priority of Package % of Secured Deals Global 2017 Global % (First Lien) = 61% 12% 65% First Lien Second Lien Split Lien 156

159 Priority of Package Geographic Breakdown U.S. EMEA (First Lien) = 39% First Lien Second Lien (First Lien) = 84% Asia Split Lien Latin America (First Lien) = 84% (First Lien) = 8 157

160 Priority of Package Deal Size Breakdown Small Medium Large (First Lien) = 61% (First Lien) = 59% (First Lien) = 64% First Lien Second Lien Split Lien 158

161 Priority of Package Industry Breakdown Consumer Financial Services Health Care (First Lien) 6 = 58% (First Lien) 6 = 66% (First Lien) = 43% Real Estate/Gaming Industrials Oil & Gas TMT (First 6 Lien) 5 = 63% (First Lien) 4 = 49% (First 7 Lien) 6 = 69% (First Lien) = 76% First Lien Second Lien Split Lien 159

162 Priority of Package Ratings Breakdown BB B CCC (First Lien) 7 = 74% 6 (First Lien) 5 = 59% (First Lien) = 32% First Lien Second Lien Split Lien 160

163 Priority of Package Sponsor Breakdown 10 Sponsor 10 Non-Sponsor (First Lien) = (First Lien) = 61% First Lien Second Lien Split Lien 161

164 Voting Requirement to Release All or Substantially All % of Deals Global 2017 Global 1 8% % 39% Majority 66 2/3% 75% 90 95%

165 Voting Requirement to Release All or Substantially All Geographic Breakdown U.S. EMEA Majority 66 2/3% 75% 90 95%

166 Voting Requirement to Release All or Substantially All Rating Breakdown BB B CCC Majority 66 2/3% 75% 90 95%

167 Voting Requirement to Release All or Substantially All Sponsor Breakdown Sponsor Non-Sponsor Majority 66 2/3% 75% 90 95%

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170 Required Percentage to Accelerate % of Deals Global 2017 Global 5 % of Deals with Noteholders Holding 3 of Notes or Greater Required to Accelerate 26% 4 166% from = 18% 74% 1 25%

171 Required Percentage to Accelerate % of Deals with Noteholders Holding at least 3 of Notes Required to Accelerate Geography Deal Size % from U.S. EMEA Asia Latin America Small Medium Large Indicates no reviewed deals contained term 169

172 Required Percentage to Accelerate % of Deals with Noteholders Holding at least 3 of Notes Required to Accelerate 10 Industry Consumer Financial Services Health Care Real Estate/Gaming Industrials Oil & Gas TMT Indicates no reviewed deals contained term 170

173 Required Percentage to Accelerate % of Deals with Noteholders Holding at least 3 of Notes Required to Accelerate 10 Ratings = 12% = 17% = 37% BB B CCC 171

174 Required Percentage to Accelerate % of Deals with Noteholders Holding at least 3 of Notes Required to Accelerate Sponsor Non-Sponsor % from = = 6.8% 172

175 Cross-Acceleration Threshold % of Total Assets Global Geography 4% 4% 3% 3% 2% = 1.8% 2% 1% 1% U.S. EMEA Asia Latin America 173

176 Cross-Acceleration Threshold % of Total Assets Deal Size Industry 4% 4% 3% 3% 2% 2% 1% 1% Small Medium Large 174

177 Cross-Acceleration Threshold % of Total Assets 4% Ratings 3% 2% = 1.5% = 1.8% = 2. 1% BB B CCC 175

178 Cross-Acceleration Threshold % of Total Assets Sponsor Non-Sponsor 4% 4% 3% = 2.2% 3% 2% 2% = 1.6% 1% 1% 176

179 Thank you A very special thanks to the following Capital Markets & Leveraged Finance Analysts and Staff for their contributions to the 2018 Global High-Yield Bond Study: Analysts Anthony McIntyre James Duong Marcello Padula Staff Bruce Davies, Hillary Ledford, Norman Rivera and Jennifer Talbott 177

180 Proskauer.com Beijing Boca Raton Boston Chicago Hong Kong London Los Angeles New Orleans New York Newark Paris São Paulo Washington, D.C.