Weekly Credit Update. Headlines. Market commentary. Primary market

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1 Investment Research General Market Conditions 30 August 2013 Weekly Credit Update Headlines Spreads move wider on uncertainty regarding a military attack in Syria. Slight sell-off in the long-end of the curve due to focus on new issuance. Primary market activity soars ahead of possible Fed tapering in September. Market commentary The week started out relatively muted, with credit spreads moving sideways owing to the UK bank holiday. However, fears of a military attack in Syria led by the Western Hemisphere triggered a widening of credit spreads early in the week. The synthetic indices widened by some 5bp for itraxx Europe and some 14bp for itraxx Crossover. In terms of cash bonds, there has been a bit of sell-off in order to free up liquidity for primary market issuance. The weakness was mainly at the long-end of the curve (especially for telecom and utilities) whereas the short-end has been holding up rather well with solid demand. In Scandinavia, the Swedish government called for higher capital requirements (CET1 ratio of 12% for Swedish SIFI banks) with counter-cyclical buffers from 2014 due to concerns about the size of the banking sector relative to GDP. On the corporate side, G4S demonstrated willingness to defend its IG rating with a rights issue and asset divestments. Primary market Last week, the primary market was successfully reopened after the summer with the Finnair bond issuance (with a significant oversubscription and strong performance in the secondary market on the break). Primary activity accelerated further this week with Tuesday being the busiest day for non-financial corporate issuance in almost two months. Borrowers are generally tapping the market ahead of the possibility of a Fed tapering in September. Activity was predominantly in the upper-ig senior segment, although Volkswagen also issued a EUR2.0bn hybrid bond with two tranches (NC5 and NC10), structured in the same fashion as the recent utility hybrid bond issues. However, primary deals generally traded flat to reoffer on the break due to the negative market sentiment. itraxx Europe (investment-grade) 250 bp Mar '10 Sep '10 Mar '11 Sep '11 Mar '12 Sep '12 Mar '13 Source: Bloomberg, Danske Bank Markets itraxx Crossover (high-yield) 1,200 bp 1, Mar '10 Sep '10 Mar '11 Sep '11 Mar '12 Sep '12 Mar '13 Source: Bloomberg, Danske Bank Markets Selected new issues during the week Name Rating Coupon Maturity Currency Size Spread * American Honda Fin. A1/A+ Fixed 6Y EUR 750m +35bp BMW Finance NV A2/A FRN 3Y EUR 500m +22bp BMW Finance NV A2/A Fixed 7Y EUR 750m +35bp Orange SA A3/BBB+ Fixed 5Y EUR 850m +60bp Orange SA A3/BBB+ Fixed Long 10Y EUR 650m +100bp Sanofi SA A1/AA Fixed 7Y EUR 1,000m +27bp TeliaSonera AB A3/A Fixed 20Y EUR 350m +85bp Volkswagen Finance Baa2/BBB Fixed Perp. NC5 EUR 1,250m +270bp + Volkswagen Finance Baa2/BBB Fixed Perp. NC10 EUR 750m +310bp + (*) Mid-swap for Fixed coupons, discount margin for Floating. ( + ) Spread to 1st call date. Notes: Ratings are Moody's and S&P. Source: Dealogic, Bloomberg, Danske Bank Markets Senior Analyst Asbjørn Purup Andersen (+45) apu@danskebank.com

2 EUR 5Y corporate benchmarks yields EUR investment grade spreads (ASW) ML EUR High yield index ML EUR HY cash indices Nordic banks 5Y CDS spreads 3M LIBOR-OIS spread 270 bp Danske Bank Nordea DNB SEB Handelsbanken Swedbank Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Source: Danske Bank Markets 2 30 August 2013

3 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow rating Danske Bank Markets S&P Moody's Fitch Company Rating Outlook Rating Outlook Rating Outlook Rating Outlook Akelius Fastigheter Ab BB STABLE Ambu A/S BBB- STABLE Ap Moeller - Maersk A/S A- STABLE Arla Foods Amba BBB STABLE Atlas Copco Ab A STABLE A2 STABLE Avinor As A- STABLE Carlsberg Breweries A/S Baa2 STABLE BBB STABLE Color Group As BB- STABLE Danske Bank A/S A- POS Baa1 STABLE A STABLE Dfds A/S BB+ STABLE Dnb Bank Asa A+ STABLE A1 STABLE Dong Energy A/S BBB+ NEG Baa1 STABLE BBB+ NEG Electrolux Ab BBB+ STABLE Wr WD Elisa Oyj BBB STABLE Baa2 STABLE Fingrid Oyj AA- STABLE A1 STABLE A+ STABLE Fortum Oyj A- NEG A2 NEG A- NEG Fred Olsen Energy Asa BB+ STABLE G4S Plc BBB- NEG Getinge Ab BBB STABLE Holmen Ab BBB STABLE Wr Husqvarna Ab BBB- POS Hypo (Suomen Hypoteekkiyhdistys) A- STABLE Investor Ab AA- STABLE A1 STABLE Iss A/S BB- POS B1 POS Jernhusen Ab A- STABLE J Lauritzen A/S B STABLE Jyske Bank A/S A- STABLE Baa1 STABLE Kesko Oyj BBB STABLE Meda Ab BB STABLE Metso Oyj BBB STABLE Baa Mjolby-Svartadalen Energi Ab BBB+ WATCH Ncc Ab BBB- STABLE Neste Oil Oyj BBB- STABLE Nokia Oyj BB- NEG Ba3 NEG BB- NEG Nordea Bank Ab AA- NEG Aa3 STABLE AA- STABLE Nykredit Bank A/S A+ STABLE Baa2U NEG A STABLE Outokumpu Oyj BB STABLE Pohjola Bank Plc AA- NEG Aa3 STABLE A+ Postnord Ab BBB+ STABLE Prosafe Se BB STABLE Sampo Baa2 Sandvik Ab BBB+ STABLE Sbab Bank Ab A NEG A2 STABLE Scania Ab A- POS Securitas Ab BBB STABLE Wr Sff Ab BBB STABLE Skandinaviska Enskilda Banken Ab A+ NEG A1 STABLE A+ STABLE Skanska Ab BBB+ STABLE Skf Ab A- NEG A3 STABLE Sparebank 1 Nord Norge A2 STABLE A STABLE Sparebank 1 Sr Bank Asa A2 STABLE A- STABLE Statkraft Sf A- STABLE Aaa STABLE Statnett Sf A+ STABLE Wr STABLE Statoil Asa AA- STABLE Aa2 STABLE Stena Ab BB STABLE B2 STABLE Stockmann Oyj Abp BB RANGE STABLE Stora Enso Oyj BB NEG Ba2 NEG BB- STABLE Swedbank Ab A+ NEG A1 STABLE A+ STABLE Swedish Match Ab BBB STABLE Baa2 STABLE Svenska Cellulosa Ab BBB+ POS Baa1 STABLE Svensk Fastighetsfinansiering Ab BBB STABLE Svenska Handelsbanken Ab AA- NEG Aa3 STABLE AA- STABLE Sydbank A/S Baa1 STABLE Tallink Group As BB STABLE Talvivaara Mining Co Plc CCC POS Tdc A/S BBB POS Baa2 STABLE BBB STABLE Tele2 Ab BBB POS Telefonaktiebolaget Lm Ericsson BBB+ NEG A3 NEG BBB+ NEG Telenor Asa A- STABLE A3 STABLE Teliasonera Ab A- STABLE A3 STABLE A- STABLE Teollisuuden Voima Oyj BBB STABLE Wr BBB STABLE Upm-Kymmene Oyj BB STABLE Ba1 STABLE BB STABLE Vasakronan Ab BBB+ STABLE Vattenfall Ab A- STABLE A2 NEG Vestas Wind Systems A/S BB STABLE Volvo Ab BBB STABLE Baa2 STABLE BBB STABLE Volvofinans Bank Ab Baa2 STABLE Yit Oyj BB+ Stable Source: Danske Bank Markets, Bloomberg 3 30 August 2013

4 Fixed Income Credit Research Thomas Hovard Head of Credit Research (+45) Louis Landeman TMT (+46) llan@danskebank.com Åse Haagensen High Yield (+47) ha@danskebank.com Henrik Arnt Financials, EUR Strategy (+45) heand@danskebank.com Jakob Magnussen Utilities, Energy (+45) jakja@danskebank.com Brian Børsting Industrials (+45) brbr@danskebank.com Asbjørn Purup Andersen Portfolio Strategy (+45) apu@danskebank.com Gabriel Bergin Industrials, SEK Strategy (+46) gabe@danskebank.com Kasper FromLarsen High Yield, Industrials (+45) kasla@danskebank.com Bjørn Kristian Røed Shipping (Equity & Credit) (+47) bred@danskebank.com Mads Rosendal Industrials, Pulp & Paper (+45) madro@danskebank.com Nils Henrik Aspeli Real Estate (+47) nas@danskebank.com Wiveca Swarting Real Estate, Construction (+46) wsw@danskebank.com Find the latest Credit Research Danske Bank Markets: Bloomberg: DRCR<GO> 4 30 August 2013

5 Disclosures This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S ( Danske Bank ). The author of this research report is Asbjørn Purup Andersen, Senior Analyst. Analyst certification Each research analyst responsible for the content of this research report certifies that the views expressed in this research report accurately reflect the research analyst s personal view about the financial instruments and issuers covered by the research report. Each responsible research analyst further certifies that no part of the compensation of the research analyst was, is or will be, directly or indirectly, related to the specific recommendations expressed in the research report. Regulation Danske Bank is authorised and subject to regulation by the Danish Financial Supervisory Authority and is subject to the rules and regulation of the relevant regulators in all other jurisdictions where it conducts business. Danske Bank is subject to limited regulation by the Financial Conduct Authority and the Prudential Regulation Authority (UK). Details on the extent of the regulation by the Financial Conduct Authority and the Prudential Regulation Authority are available from Danske Bank on request. The research reports of Danske Bank are prepared in accordance with the Danish Society of Financial Analysts rules of ethics and the recommendations of the Danish Securities Dealers Association. Conflicts of interest Danske Bank has established procedures to prevent conflicts of interest and to ensure the provision of highquality research based on research objectivity and independence. These procedures are documented in Danske Bank s research policies. Employees within Danske Bank s Research Departments have been instructed that any request that might impair the objectivity and independence of research shall be referred to Research Management and the Compliance Department. Danske Bank s Research Departments are organised independently from and do not report to other business areas within Danske Bank. Research analysts are remunerated in part based on the overall profitability of Danske Bank, which includes investment banking revenues, but do not receive bonuses or other remuneration linked to specific corporate finance or debt capital transactions. Danske Bank, its affiliates and subsidiaries are engaged in commercial banking, securities underwriting, dealing, trading, brokerage, investment management, investment banking, custody and other financial services activities, may be a lender to the companies mentioned in this publication and have whatever rights are available to a creditor under applicable law and the applicable loan and credit agreements. At any time, Danske Bank, its affiliates and subsidiaries may have credit or other information regarding the companies mentioned in this publication that is not available to or may not be used by the personnel responsible for the preparation of this report, which might affect the analysis and opinions expressed in this research report. See for further disclosures and information. General disclaimer This research has been prepared by Danske Bank Markets (a division of Danske Bank A/S). It is provided for informational purposes only. It does not constitute or form part of, and shall under no circumstances be considered as, an offer to sell or a solicitation of an offer to purchase or sell any relevant financial instruments (i.e. financial instruments mentioned herein or other financial instruments of any issuer mentioned herein and/or options, warrants, rights or other interests with respect to any such financial instruments) ( Relevant Financial Instruments ). The research report has been prepared independently and solely on the basis of publicly available information that Danske Bank considers to be reliable. While reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and Danske Bank, its affiliates and subsidiaries accept no liability whatsoever for any direct or consequential loss, including without limitation any loss of profits, arising from reliance on this research report. The opinions expressed herein are the opinions of the research analysts responsible for the research report and reflect their judgement as of the date hereof. These opinions are subject to change, and Danske Bank does not undertake to notify any recipient of this research report of any such change nor of any other changes related to the information provided in this research report. This research report is not intended for retail customers in the United Kingdom or the United States. This research report is protected by copyright and is intended solely for the designated addressee. It may not be reproduced or distributed, in whole or in part, by any recipient for any purpose without Danske Bank s prior written consent August 2013

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