Loan & Bond Yields and Volume

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1 Issue No. 442 The Piper Jaffray is published weekly and provides a summary and analysis of debt capital markets activity. To subscribe/unsubscribe, visit Loan & Bond Yields and Volume LEVERAGED LOAN & HY YIELDS BY RATING LEVERAGED LOAN & HY YIELD SPREAD 24.0% Caa2 (High Yield) B2 (High Yield) Ba2 (High Yield) B (Lev. Loans) BB (Lev. Loans) 220 bps 200 bps B2/B Ba2/BB 180 bps 160 bps 17.0% 140 bps 120 bps 100 bps 80 bps 10.0% 60 bps 40 bps 20 bps 0 bps 3.0% -20 bps LEVERAGED LOAN & HY VOLUME MIDDLE MARKET LOAN VOLUME $600 $500 Leveraged Loans High-Yield Bonds $50 $40 $ In Billions $400 $300 $30 $20 $200 $100 $10 $0 $ Dec-15 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Dec-15 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 $ In Billions Debt Capital Markets Contacts Len Sheer GLOBAL HEAD OF DEBT CAPITAL MARKETS Tel: len.l.sheer@pjc.com James Chiarelli CO-HEAD OF DEBT CAPITAL MARKETS Tel: james.d.chiarelli@pjc.com Amrit Agrawal HEAD OF DEBT PRIVATE PLACEMENTS Tel: amrit.a.agrawal@pjc.com Bob Lauria PRINCIPAL Tel: robert.j.lauria@pjc.com Source: AdvantageData, S&P LCD Investment Banking Monthly Newsletter DEBT CAPITAL MARKETS UPDATE 1 February

2 Market Commentary The high-yield market priced 10 bonds last week, bringing weekly and year-to-date issuance to approximately $4.7 billion and $211.5 billion, respectively. The leveraged loan market launched 29 transactions last week, bringing weekly and year-to-date launches to approximately $25.0 billion and $466.2 billion, respectively. For B2/B rated issues, yields for the secondary leveraged loan market decreased 5 bps, ending the week at 5.72%, while yields for the secondary high-yield bond market decreased 3 bps, ending the week at 6.72%. The yield spread between B2/B rated high-yield bonds and leveraged loans finished the week at 100 bps. Last week, loan and high-yield funds saw $ million in inflows and $0.3 billion in inflows, respectively. Year-to-date, loan funds have seen $212.5 million in inflows, while high-yield funds have seen $4.8 billion in inflows. Leveraged loans and high yield bonds include new money issues rated Ba1/BB+ or lower; leveraged loan volume only represents launched transactions Source: AdvantageData, Piper Jaffray, S&P LCD New High Yield Bond Issues Lead Company (New Issues) Moody s S&P Industry ($MM) Maturity Coupon Yield Price Bookrunner Security Sponsor Purpose Steel Dynamics Ba2 BB+ Metals & Mining $ /15/26 5.0% 5.0% BOA Unsecured Not Sponsored Refinancing Tesoro Ba3 BB+ Oil & Gas $ /15/25 5.3% 5.3% RBC Unsecured Not Sponsored Refinancing Moly-Cop B2 B Metals & Mining $ /15/23 7.4% 7.4% MS Secured American Industrial LBO HudBay Minerals B3 B Metals & Mining $ /15/25 7.6% 7.6% Barclays Unsecured Not Sponsored Refinancing HudBay Minerals B3 B Metals & Mining $ /15/23 7.3% 7.3% Barclays Unsecured Not Sponsored Refinancing Advance Pierre Foods B3 B- Food & Beverage $ /15/24 5.5% 5.5% Barclays Unsecured Oaktree Capital Refinancing Alta Mesa Caa1 B- Oil & Gas $ /15/24 7.9% 7.9% Wells Fargo Unsecured Not Sponsored Refinancing Transocean Ltd. NR BB+ Oil & Gas $ /1/24 6.3% 6.5% 98.5 Piper Jaffray Secured Not Sponsored Refinancing Lead Company (Tapped Issues) Moody s S&P Industry ($MM) Maturity Coupon Yield Price Bookrunner Security Sponsor Purpose Allegiant Travel B1 BB+ Transportation $ /15/19 5.5% 4.9% GS Unsecured Not Sponsored Corp Purpose Cogent Communications B1 B+ Telecom $ /1/22 5.4% 5.3% Barclays Secured Not Sponsored Dividend Recap New Leveraged Loan Launches (1) Company (<$500M) Moody s S&P Industry ($MM) Floor Spread OID Leverage Arranger Sponsor Purpose TPF II (TLB) B1 BB Utilities $ % L NA MS ArcLight Capital Partners Dividend Recap Casa Systems (TLB) B1 BB- Telecom $ % L NA JPM Summit Partners Dividend Recap Quikrete (TLB) B1 BB- Building Materials $ % L NA Wells Fargo Not Sponsored Acquisition First Amer. Pmt. Systems (RC) B1 B+ Services $ % L NA GS Not Sponsored Corp Purpose First Amer. Pmt. Systems (2ND) Caa1 CCC+ Services $ % L NA GS Not Sponsored Corp Purpose Vestcom International (RC) B2 B Services $40.0 TBD TBD TBD 6.8x Antares Charlesbank LBO Vestcom International (TLB) B2 B Services $ % L x Antares Charlesbank LBO Q Holding Company (TLB) B3 B Chemicals $ % L NA RBC 3i Acquisition RE/MAX (TLB) NR BB+ Real Estate $ % L x JPM Weston Presidio Capital Refinancing ContextMedia (RC) NR NR Healthcare $ % TBD TBD NA JPM M/C Partners Acquisition ContextMedia (TLB) NR NR Healthcare $ % L NA JPM M/C Partners Acquisition Koninklijke TenCate (TLB) NR NR Chemicals $ % L x ABN AMRO Gilde Investments Refinancing Mister Car Wash (TLB) NR NR Retail $180.0 TBD TBD TBD NA Jefferies Leonard Green Dividend Recap Rouse's Enterprises (RC) NR NR Retail $235.0 TBD L TBD 2.5x Capital One Not Sponsored Refinancing Syncsort (RC) NR NR Computers $ % TBD TBD NA CS Clearlake Capital Acquisition Syncsort (TLB) NR NR Computers $ % L NA CS Clearlake Capital Acquisition Syncsort (2ND) NR NR Computers $ % L NA CS Clearlake Capital Acquisition WirePath Home Systems (RC) NR NR Computers $ % L NA Antares General Atlantic Partners Dividend Recap (1) MINNEAPOLIS Split-rated issues with an BOSTON investment grade CHICAGO rating from either LONDON rating agency LOS are ANGELES not included/shown NEW YORK SAN FRANCISCO ZURICH Bold transactions denote Piper Jaffray arrangements and/or advisory assignments DEBT CAPITAL MARKETS UPDATE 2 Source: Piper Jaffray, S&P LCD

3 New Leveraged Loan Launches (1) (Cont.) Company (>$500M) Moody s S&P Industry ($MM) Floor Spread OID Leverage Arranger Sponsor Purpose American Airlines Group (TLB) Ba1 BB+ Transportation $1, % L NA Citigroup Not Sponsored Refinancing Zebra Technologies (TLB) Ba2 BB+ Computers $1, % L NA MS Not Sponsored Refinancing Albertsons (TLB) Ba2 BB Retail $3, % L NA CS Cerberus Refinancing Albertsons (TLB) Ba2 BB Retail $1, % L NA CS Cerberus Refinancing Albertsons (TLB) Ba2 BB Retail $1, % L NA CS Cerberus Refinancing MKS Instruments (TLB) Ba2 BB Computers $ % L TBD NA Barclays Not Sponsored Refinancing Catalent (TLB) Ba3 BB Healthcare $1, % L x MS Blackstone Group Refinancing Lightstone Generation (RC) Ba3 BB- Utilities $250.0 TBD TBD TBD NA Deutsche Bank Blackstone Group LBO Lightstone Generation (TLB) Ba3 BB- Utilities $1, % L NA Deutsche Bank Blackstone Group LBO Advance Pierre Foods (TLB) B1 B+ Food & Beverage $ % L NA MS Oaktree Refinancing GTT Communications (RC) B1 B+ Telecom $75.0 TBD TBD TBD 4.5x Key Bank Not Sponsored Acquisition GTT Communications (TLB) B1 B+ Telecom $ % L x Key Bank Not Sponsored Acquisition Nord Anglia Education (TLB) B1 B Not for Profit $ % L NA GS Baring Private Equity Refinancing Radiate (RC) B1 B Cable $150.0 TBD TBD TBD 6.5x CS Texas Pacific Group LBO Radiate (TLB) B1 B Cable $1, % L x CS Texas Pacific Group LBO Wilsonart International (TLB) B2 B+ Chemicals $1, % L NA DB CD&R Dividend Recap Aptean (RC) B2 B Computers $70.0 TBD L TBD NA MS Vista Equity Partners Dividend Recap Aptean (TLB) B2 B Computers $ % L NA MS Vista Equity Partners Dividend Recap Aptean (2ND) Caa2 CCC+ Computers $ % L NA MS Vista Equity Partners Dividend Recap BWAY (TLB) B2 B- Metals & Mining $1, % L NA BOA Not Sponsored Refinancing Zodiac Pool Solutions (RC) NR NR Entertainment $130.0 TBD TBD TBD NA CS Rhone Capital LBO Zodiac Pool Solutions (TLB) B3 B Entertainment $ % L NA CS Rhone Capital LBO Zodiac Pool Solutions (2ND) Caa2 CCC+ Entertainment $ % L NA CS Rhone Capital LBO Masergy Communications (RC) B2 B Computers $50.0 TBD TBD TBD NA Jefferies Berkshire Partners LBO Masergy Communications (TLB) B2 B Computers $ % L NA Jefferies Berkshire Partners LBO Masergy Communications (2ND) Caa2 CCC+ Computers $ % L NA Antares Berkshire Partners LBO Oberthur Technologies (TLB) NR B- Computers $557.9 TBD L x GS Advent International Acquisition (1) MINNEAPOLIS Split-rated issues with an BOSTON investment grade CHICAGO rating from either LONDON rating agency LOS are ANGELES not included/shown NEW YORK SAN FRANCISCO ZURICH Bold transactions denote Piper Jaffray arrangements and/or advisory assignments DEBT CAPITAL MARKETS UPDATE 3 Source: Piper Jaffray, S&P LCD

4 New Investment Grade Bond Issues Company Moody s S&P Industry ($MM) Maturity Spread Coupon Yield Issue Type National Australia Bank Aaa NR Services & Leasing $1, /7/ % 2.4% Covered Bonds Wells Fargo Aa2 AA- Services & Leasing $2, /6/ % 2.2% Bank Guaranteed Wells Fargo Aa2 AA- Services & Leasing $1, /6/ FRN FRN Bank Guaranteed FRN Wells Fargo Aa2 AA- Services & Leasing $ /28/ % 1.8% Bank Guaranteed Wells Fargo Aa2 AA- Services & Leasing $ /28/ FRN FRN Bank Guaranteed FRN Ameron Illinois A1 A Utilities $ /15/ % 4.0% First Mortgage BPCE SA A2 A Services & Leasing $1, /2/ % 2.8% Bank Guaranteed BPCE SA A2 A Services & Leasing $ /2/ % 3.5% Bank Guaranteed Allstate A3 A- Insurance $ /15/ % 4.2% Senior Notes Allstate A3 A- Insurance $ /15/ % 3.3% Senior Notes Arch Capital Group A3 A- Insurance $ /15/ % 4.0% Senior Notes Arch Capital Group A3 A- Insurance $ /15/ % 5.0% Senior Notes JP Morgan Chase A3 A- Services & Leasing $1, /15/ % 3.0% Senior Notes JP Morgan Chase A3 A- Services & Leasing $ /15/ FRN FRN FRN Wells Fargo A3 A- Services & Leasing $2, /7/ % 4.8% Sub Notes Pacific Gas & Electric A3 BBB+ Utilities $ /1/ % 4.1% Senior Notes Pacific Gas & Electric A3 BBB+ Utilities $ /30/ FRN FRN FRN Xcel Energy A3 BBB+ Utilities $ /1/ % 3.4% Senior Notes Xcel Energy A3 BBB+ Utilities $ /15/ % 2.6% Senior Notes Analog Devices A3 BBB Computers $ /5/ % 3.6% Senior Notes Analog Devices A3 BBB Computers $ /5/ % 3.2% Senior Notes Analog Devices A3 BBB Computers $ /5/ % 2.6% Senior Notes Analog Devices A3 BBB Computers $ /5/ % 4.6% Senior Notes Citigroup Baa1 BBB+ Services & Leasing $2, /8/ % 2.9% Senior Notes Citigroup Baa1 BBB+ Services & Leasing $ /8/ FRN FRN FRN Potash Corp. of Saskatchewan Baa1 BBB+ Chemicals $ /15/ % 4.0% Senior Notes SunTrust Banks Baa1 BBB+ Services & Leasing $1, /27/ % 2.7% Senior Notes Northrop Grumman Baa2 BBB Aerospace $ /1/ % 3.2% Senior Notes Time Warner Baa2 BBB Cable $1, /15/ % 3.8% Senior Notes Avnet Baa3 BBB- Computers $ /1/ % 3.8% Senior Notes L-3 Communications Baa3 BBB- Telecom $ /15/ % 3.9% Senior Notes Constellation Brands Ba1 BBB- Food & Beverage $ /6/ % 3.7% Senior Notes Source: MINNEAPOLIS Piper Jaffray, S&P LCD BOSTON CHICAGO LONDON LOS ANGELES NEW YORK SAN FRANCISCO ZURICH DEBT CAPITAL MARKETS UPDATE 4

5 Total Debt Volume Previous Week 2016 YTD 2015 YTD YOY Change Bond Issues $MM # $MM # $MM # $MM # Investment Grade $26, $1,171,165 1,262 $1,128,690 1, % (7.3%) High-Yield $4, $211, $261, (19.1%) (18.8%) Total Bonds $30, $1,382,761 1,591 $1,390,155 1,767 (0.5%) (10.0%) Leveraged Previous Week 2016 YTD 2015 YTD YOY Change Loan Issues $MM # $MM # $MM # $MM # Total Leveraged Loans $25, $466, $421, % (0.9%) Benchmark Yields Benchmark Current Previous Week (bps) Previous Year (bps) 2 yr UST 1.14% 1.12% % yr UST 1.90% 1.83% % yr UST 2.45% 2.36% % yr UST 3.10% 3.01% % 3.0 3M LIBOR 0.95% 0.94% % 49.4 Piper Jaffray Companies (NYSE: PJC) is a leading investment bank and asset management firm. Securities brokerage and investment banking services are offered in the U.S. through Piper Jaffray & Co., member SIPC and FINRA; in Europe through Piper Jaffray Ltd. and Simmons & Company International Limited, authorized and regulated by the U.K. Financial Conduct Authority; and in Hong Kong through Piper Jaffray Hong Kong Limited, authorized and regulated by the Securities and Futures Commission. Asset management products and services are offered through five separate investment advisory affiliates U.S. Securities and Exchange Commission (SEC) registered Advisory Research, Inc.; Piper Jaffray Investment Management LLC, PJC Capital Partners LLC and Piper Jaffray & Co.; and Guernseybased Parallel General Partners Limited, authorized and regulated by the Guernsey Financial Services Commission. Information contained in this publication is based on data obtained from sources we deem to be reliable, however, it is not guaranteed as to accuracy and does not purport to be complete. Nothing contained in this publication is intended to be a recommendation of a specific security or company nor is any of the information contained herein intended to constitute an analysis of any company or security reasonably sufficient to form the basis for any investment decision. Since Member SIPC and NYSE 2016 Piper Jaffray & Co. piperjaffray.com Source: MINNEAPOLIS Piper Jaffray, S&P LCD BOSTON CHICAGO LONDON LOS ANGELES NEW YORK SAN FRANCISCO ZURICH DEBT CAPITAL MARKETS UPDATE 5