Credit Strategy Highlights. Top Credit Stories. Market Overview. Daily Credit Briefing. 11 June 2010 Credit Research

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1 Credit Strategy Highlights After a weak start following the disappointing Beige Book report, European stocks extended their gains from Wednesday, with the recently more beaten periphery markets leading the way. The EuroStoxx50 was up by 2%, and the Spanish IBEX even added 3.8%, while the DAX and FTSE were lagging with increases of roughly 1% each. The reasoning behind the relief rally was fairly decent demand for the newly issued 3- year government bond from Spain, no bad surprises from yesterday's ECB press conference and a stronger euro (1.210 to the USD), after a potentially road blocking emergency effort to hinder Germany's participation in Europe's rescue plan was rejected by Germany's Federal Constitution Court. Credit markets also improved, with the itraxx Main off 4bp to 132bp and the itraxx Crossover tighter by 11bp, closing at 602bp. US equity markets were up 3% (S&P at 1,086), paving the way for friendly overnight trading in Asia, where the Nikkei increased by 1.7% and the Hang Seng added 1.4% (Continued on the next page) itraxx opening: Main 129/131 (-2.5) bp, XOver 590/596 (-6) bp, FINSEN 174/177bp (-1), FINSUB 257/262 (-1.8) bp, Sovx 138.3/ (--) bp Top Credit Stories Energy: Update on BP 3 High Yield: Kabel Deutschland releases sound 4Q and FY09/10 results3 Insurance: Update from KBC 4 Corporate Snapshots: Novartis (positive news from the FDA advisory board regarding oral MS drug), Portugal Telecom (releases statement regarding Telefonica's offer), Continental (FY10 revenue guidance increase) 6 Market Overview itraxx Page 7 Traders' Comment 7 Primary Market 8 Rating Actions 8 Recent Credit Research Publications #8 Credit drivers current 1D 1W 1M YTD EuroStoxx 2, DAX 6, VDAX [%] S&P 1, VIX [%] DJUBS Index Crude Oil Ft EUR-USD Source: Bloomberg itraxx Europe (Series 13), Thursday closing 5Y chg* 10Y chg* Europe Benchmark Financials Sen Financials Sub Crossover SovX WE Source: Bloomberg; *1m change ASW spreads by quality/sector current 1d 1w MTD YTD iboxx ALL iboxx AAA AA A BBB iboxx FIN ATO TEL UTI IGS PHG TAL OIG Hybrids Source: UniCredit Research, iboxx Yields in % current 1d 1w 1m YTD 2Y Bund Y Bund Y Bund Y TSY Y TSY Y TSY Source: Bloomberg; changes in bp Swap spreads current 1d 1w 1m YTD 5Y EUR Y EUR Source: Bloomberg Bloomberg UCCR Internet UniCredit Research page 1 See last pages for disclaimer.

2 Credit Strategy Highlights<BOOKMARK> No surprises from Trichet, but no answers either Sentiment improves on continued issuance Medium term growth risk Our view Today's data releases As expected, the ECB left the refi interest rate at the record low of 1% yesterday and there were few surprises at the press conference either, as Jean-Claude Trichet danced around the subject and would not elaborate on the Securities Market Program at all, evading questions on its duration, scope and, most importantly, on the sovereigns covered by the measures. He indicated that there is no immediate need to change the cost of borrowing soon and kept emphasizing that the bond purchases and other non-conventional policy measures were fully consistent with the ECB's mandate. Still, the euro was able to rise from its four-year low to the dollar during the press conference, gaining more than 1% to Confidence had already been lifted in the morning, when Spain successfully sold EUR 3.9bn of new 3-year bonds; almost reaching the top of the EUR 4bn announced maximum issuance. Market participants were apparently glad that there is no malfunctioning, and buyers of European periphery sovereigns - other than the ECB can still be found. The bid-to-cover ratio was 2.1x, which compares to demand of 1.8x in April, when the last 3-year note was auctioned, and an average of 1.88 bid-to-cover ratio for the year. Relative to the previous issue, the premium paid to attract market participants increased by 130bp, putting a 3.3% price on the debt, which is 270bp over Bunds or five times the price Germany pays on 3-year debt. Again, as with Portugal yesterday, the higher funding costs of the government will further depress growth, making it even harder to overcome the challenges on the job front, which ultimately limits the speed of relief in the Spanish housing market and improvement in its financial system. As regulators and policy makers in Europe are also pressing the most for the introduction of new rules for banks, the risk to growth has increased, potentially pushing the regional economy in or near recession over the coming years, and significantly elevating odds of a double-dip recession. The International Institute of Finance estimates that proposed banking regulation would cut global growth by 3.1% until 2015, which translates into reduced job growth of almost ten million, as banks would have to pass on increased costs of core capital and funding. While the economic impact also depends on the timing of the implementation, companies will be exposed to higher borrowing costs. Despite the short-term improvement in sentiment, we remain cautious on credits in the medium term. The tactical trading environment may have improved after negative news flow ebbed over the last couple of days, and investors seem to be feeling a sense of relief that it is calm and look forward to the kick-off of the World Cup in South Africa tonight. Still, the austerity measures are not credit supportive and do not warrant an overly excessive appetite for risk going forward, implying that the price of risk is most likely higher than many market participants remember from the previous decade. Negative news will resurface from time to time, as many issues take time to be worked out and will keep returning to the headlines: solvency, regulation, slower growth. Looking at relative valuations and identifying mispricing in credit classes is the name of the game, without taking too much risk. Today in Europe, consumer prices in France are due for release, along with industrial production in the UK, while in the US retail sales and consumer confidence from the University of Michigan are in the spotlight. Dr. Christian Weber, CFA (UniCredit Bank) christian.weber@unicreditgroup.de UniCredit Research page 2 See last pages for disclaimer.

3 Energy<BOOKMARK>RK>B Event On June 10, credit spreads on BP (Aa2wn/AA-wn/AA-wn) continued to widen due to rising concerns about the final impact of the Gulf of Mexico oil spill on the group. The 5Y CDS widened by 110bp to levels of 460/490bp, despite a strong market (e.g. itraxx Main index fell by 4bp to 132bp); the weekly change was + 223bp. The share price closed at 366 pence, losing 6.6% within a day (intraday, the stock was even trading down to 345bp). This development was primarily triggered by: New estimates about the potential costs for BP which could add up to USD 40bn. So far, the group has just spent around USD 1.43bn. The US administration is continuing to put enormous pressure on BP. The last demand was for BP to pay the wages of oil workers in the Gulf region idled because the government ordered a stop of deep sea drilling for six months. In the meantime, this topic also is starting to influence the UK/US "special" relationship, as the UK government backed BP in the dispute. There is still huge uncertainty regarding the dividend. The next quarterly payment of USD 2.63 bn was declared on April 27, but it is still not clear whether it will be paid out on June 21. The next payment to be declared on July 27 is very likely to be postponed Expected development of credit profile/rating BP is the 65% owner of the well, and therefore primarily responsible for all clean-up operations. We are not sure whether the total costs will really add up to such an extravagant level, as outlined by some market participants, but a cash outflow in the magnitude of a singledigit amount appears more and more likely. However, this should be distributed over several years. Current ratings are not safe, but spreads are already trading in the HY area. Recommendation We keep our marketweight recommendation for the name. The BP EUR-denominated 2014 bond is trading at indicative prices of 97.5 (around 410 bp ASW), and we assume that these levels should discount most uncertainties. Christian Kleindienst (UniCredit Bank) christian.kleindienst@unicreditgroup.de High Yield<BOOKMARK> Event Yesterday, Kabel Deutschland Holding AG released sound FY09/10 results, ended 31 March 2010, in line with expectations. Revenues increased by 9.6% yoy to EUR 1,501.6mn and adjusted EBITDA grew by 15.5% yoy to EUR 659.1mn. The EBITDA margin increased from 41.6% to 43.9%. In addition, in 4Q FY09/10, revenues and EBITDA increased yoy by 10.3% and 20.5% to EUR 387.2mn and EUR 172.8mn, respectively. The company showed continued strong demand for its Internet and Phone products, where RGUs increased by 59,800 and 69,800 4Q FY09/10. Total blended monthly ARPU rose to EUR per subscriber, versus EUR per subscriber in 3Q FY09/10 and EUR per subscriber in 4Q FY08/09. Net debt as of March 31, 2010 decreased by EUR 154.2mn to EUR 2,865.8mn, implying a reported net debt to EBITDA ratio of 4.3x versus 5.3x on March 31, 2009 and 4.6x on December 31, Kabel Deutschland provided a promising outlook for FY10/11: Revenues should increase by 6.5%-7.0% and EBITDA is expected to be in the range of EUR mn, while capex is planned in the area of EUR mn. The lower end of the company's guidance is currently in line with FY10/11 analysts' consensus. Hence, the company's guidance offers some upside potential to current estimates and might leave some room for upside revision during the year. Growth will continue to stem from new services UniCredit Research page 3 See last pages for disclaimer.

4 which increased by 39% yoy in FY09/10, i.e. Internet and Phone subscriber growth and product innovations such as HDTV, VoD, super fast Internet (with download speeds of up to 100 Mbit/s) via the company's role-out of DOCSIS 3.0. Expected development of credit profile/rating Name recommendation The company expects to reduce its leverage further to below 4.0x by FYE10/11. Given recent press speculation about Kabel Deutschland's involvement in a further consolidation in the cable market, this target may disregard potential acquisitions. In particular, Kabel Deutschland was recently rumored to be interested in buying assets from PrimaCom AG, which missed a debt repayment deadline. PrimaCom has around 700,000 to 800,000 customers in the area where Kabel Deutschland operates. In 1Q10, PrimaCom's EBITDA was EUR 11.95mn. At the beginning of February, Kabel Deutschland received approval from its lenders for an acquisition basket of EUR 800mn and a potential increase of its covenant leverage test after major acquisitions (>EUR 400mn), which would be 0.50x wider (ongoing). Hence, Kabel Deutschland is prepared to take advantage of the consolidation in the German cable market via the acquisition of Level4 operators, such as PrimaCom or TeleColumbus. Assuming an EBITDA of around EUR 40-45mn of the assets mentioned above, the higher purchase price would be in the area of EUR mn, taking formerly paid acquisition multiples into consideration. However, in the meantime, these multiples declined to around 7-8x EV/EBITDA, in our opinion. Given that the acquisition basket was announced earlier, i.e., the risk of potential acquisitions for targets in the German cable market has already been flagged, this should not surprise investors and should be largely discounted in credit spreads. During yesterday's conference call, Kabel Deutschland's CFO stated that a potential acquisition is likely to delay the above-mentioned deleveraging target of below 4.0x only by six months, taking the potentially acquired EBITDA and synergies into consideration. Moreover, the "optimal leverage" for the company is currently seen at x, according to the CFO. This seems to leave room for cash distributions in the future. However, KD's CFO stated that it is currently intended to decide about a potential cash distribution no earlier than in October In our opinion, this would leave enough time to reduce the company's leverage to 3.5x or even lower due to the company's EBITDA growth and FCF generation capability. Liquidity does not appear to be a topic (in the absence of acquisitions), given cash on hand of EUR 271.3mn and an undrawn RCF of EUR 325mn with no significant debt repayments before FYE We keep our hold recommendation for the KABEGR 10.75% 7/14 bond, which still trades close to its call price. We also remain neutral on the company's 5Y CDS. Stephan Haber, CFA (UniCredit Bank) stephan.haber@unicreditgroup.de Insurance<BOOKMARK> Event KBC Groep NV (A1n/A-s/As) recently provided an investors' update. KBC says: (i) It aims to be a high-performing European regional player with a more focused range of activities/markets and a reduced risk profile. Activities with low strategic fit will be divested or run down. Capital is to be re-allocated to boost the sustainable organic growth potential of core businesses while also reimbursing State capital; (ii) KBC will build on sustainable foundations in Belgium. The strategy is based on relationship bancassurance via a dense network. Complementary sales channels are being divested to generate repayment capacity for State capital securities. The market is delivering an attractive return, while being a low risk business; (iii) KBC is resuming the convergence play in Eastern Europe. It is committed to five core markets where it has a strong foothold. Strategy fundamentals remain unchanged and based on a refined business model. A minority share in CSOB is scheduled to be floated, UniCredit Research page 4 See last pages for disclaimer.

5 unlocking a significant amount of capital and creating an opportunity to strengthen the link to the local market; (iv) KBC is reshaping the "other" activities. KBC has divested private banking outside home markets, there was a major reduction of scope and risk profile of international commercial banking operations (targeted RWA 53%), as well as a determined run-down of Market Activities (mainly KBC FP). All remaining merchant banking activities have a strategic fit with home markets. In order to limit execution risk, KBC says it has opted for a "no-nonsense" approach, i.e. sale of activities that can be monetized at "fair valuation" (avoiding distressed prices) notwithstanding difficult market conditions, e.g., (i) Divestment of complementary distribution channel in Belgium and the pure play private banking activities of KBL EPB; and (ii) Due to the difficult local economic environment, no strategic decision for Irish banking operations has been made. Within the EU plan, KBC has the flexibility to postpone divestments to avoid selling at distressed prices. As of mid-2010, KBC says: Stream 1: It has completed the sale of KBL EPB; Stream 2: It is well advanced in the preparation of the IPO process of the Czech bank; Stream 3: It has designed the standalone strategy for the Belgian assets and prepared the launch of the divestment process; Stream 4: It is running down the international merchant banking loan portfolio and further exploring some opportunities to sell sub-portfolio assets; Stream 5: It is continuing to wind-down "legacy" trading positions and has made clear progress in the sales process of other non-core capital market activities. KBC had previously announced risk weighted assets reduction of EUR 39bn in the period (-25%). From EUR 155.3bn at end 4Q08, RWA is now down to EUR 138.0bn at the end of 1Q10 (pro forma). This is mainly through the reduction of capital market activities and international corporate lending; including the sale of KBL EPB, RWA fell by EUR 17bn (44% of target). For possible new banking capital adequacy requirements in the future, KBC actual core Tier-1 capital as of 31 March 2010 of EUR 13.6bn will be reduced by EUR 0.4bn to EUR 13.2bn. KBC's assumptions are: (i) No watering down of December 2009 Basel committee proposals; (ii) Stable RWA given low visibility on impact; and (iii) Grandfathering clause applies to State core capital securities (uncertain and subject to regulator s approval). Various upcoming regulatory capital changes will negatively impact RWA (largely market RWA). For example, a doubling of market RWA (EUR 12bn) would lead to a negative impact of ca. EUR 1bn. However, these activities are being run down. KBC says that, at first sight, the impact from the new Basel 3 proposals seems to be manageable as long as the grandfathering clause applies temporarily to the State Core Tier-1 securities (however, there are still several uncertainties ). The listing of a minority stake of CSOB could negatively affect the capital treatment of the transaction. Impact KBC's results reflect the underlying earnings resiliency of the group, and improving operating environment. It was burdened by its CDO problems, but the credit relief solution from the Belgian State has largely eliminated this. Government support has been clearly demonstrated. We are marketweight on the name. Exposure by way of selling CDS looks interesting, with KBC's 5Y CDS trading at +145/155bp (indicative levels only). Luis Maglanoc, CFA (UniCredit Bank) luis.maglanoc@unicreditgroup.de UniCredit Research page 5 See last pages for disclaimer.

6 Corporate Snapshots<BOOKMARK> Company (Analyst) MRKGR, NOVART (RS) Portugal Telecom (PORTEL) (SH) Comment This morning, Novartis (Aa2n/AA-s/AAs) stated that the FDA advisory committee unanimously recommended the approval of Gilenia (FTY720) which is used for oral treatment of relapsing Multiple Sclerosis, as study data showed that Gilenia worked better than the most commonly prescribed MS drug Avonex. Usually, the FDA follows the recommendation of the FDA advisory committee. In case of an approval by the FDA, Gilenia would likely become a further blockbuster, and sales estimates range between USD 1bn and 2.1bn (2014). Currently, up to 2.5 million people worldwide are suffer from Multiple Sclerosis. At the same time, the news is a further hit for Merck KGaA (A-wn/BBB+s/---) as it is a neck-on-neck race between Novartis and the German drugmaker (respective MS drug is cladribine), both seeking the approval by the FDA. However, as the final decision by the FDA has still to be taken, we keep our underweight recommendation on Novartis and our overweight recommendation on Merck KGaA. Yesterday evening, Portugal Telecom released an information statement regarding Telefonica's offer for the acquisition of Portugal Telecom's 50% interest in Brasilcel for a cash consideration of EUR 6.5bn. The General Meeting to decide on Telefonica's offer is expected to take place on 30 June The decision on the offer will be taken by a simple majority of shares present at the General Meeting. PT's management continues to believe that the offer does not reflect the strategic value of Vivo for Telefonica, i.e. Telefonica's offer is not supported by PT's management. Moreover, given this statement, uncertainty remains about how PT would use the proceeds if the above-mentioned offer is accepted and successfully completed, as the company gave no clear guidance for the use of these potential disposal proceeds. If such proceeds were used mainly for debt reduction, this would be clearly credit positive. If these proceeds are used mainly for shareholder remuneration, this would be clearly credit negative. If these proceeds are used for acquisitions, such as a new asset in Brazil, such as Tele Norte Leste Participacoes SA (OI), the credit impact would depend on the asset quality and the purchase price, etc. Hence, our neutral recommendation on the company's CDS best reflects this uncertainty. If the offer is not successful, we will likely change our recommendation on PORTEL bonds back to underweight, as our recommendation change to marketweight was mainly based on the potentially positive impact from the disposal proceeds, which exceed the company's amount of net debt. Company (Analyst) CONGR (SK) Comment Continental AG (B1n/Bs/B+s) again raised its sales-growth forecast for FY10 to "more than 10%" after business through May was stronger than the company had expected. Already with its 1Q10 results, it increased its guidance from ">5%" to "5-10%". The increase in Conti s forecast was previously reported by Boersen-Zeitung, which cited CEO Degenhart. According to Bloomberg, Conti intends to expand tire production in Brazil and Mexico after demand from carmakers and replacement-tire customers increased in South America and North America as its plant in Camacari, Brazil, is completely maxed out and a factory in San Luis Potosi, Mexico, is also running near capacity. Based on 1Q10 results and its 2010 guidance, which obviously includes some caution in regard to 2H10 (1Q10 revenues were +39.4% yoy), Conti's credit metrics will improve in FY10 vs. FY09 and the potential for positive rating actions increased. Over the last four weeks, the FY10 consensus expectation for sales improved by EUR 176mn to EUR 22,231mn and for EBITDA by EUR 75mn to EUR 3,039mn. In line with single-b HY markets, Conti's CDS spread curve widened by around 200bp over the last month. We continue to have a hold recommendation on the name, but recommend to sell protection in 1Y CDS at around 350bp given Conti's strong short-term liquidity situation, the prospects for a potential HY bond issuance, and the protection by bank loan covenants even in a merger scenario with Schaeffler. Analysts: RS=Rocco Schilling, SH=Stephan Haber, SK=Sven Kreitmair Source: UniCredit Research UniCredit Research page 6 See last pages for disclaimer.

7 itraxx Page ITRAXX INDEX LEVELS (YESTERDAY S CLOSING) Series 13 Europe Indices 5Y Mid Price Daily Change Europe Indices 10Y Mid Price Daily Change Europe Europe HiVol HiVol X-Over X-Over Europe Subsectors 5Y Mid Price Daily Change Europe Subsectors 10Y Mid Price Daily Change FIN sen 5Y FIN sen 10Y FIN sub 5Y FIN sub 10Y Europe Indices 3Y Mid Price Daily Change Europe Indices 7Y Mid Price Daily Change Europe 3Y Europe 7Y HiVol 3Y HiVol 7Y Source: Bloomberg, UniCredit Research IRAXX INTRADAY AS OF JUNE 10, itraxx Europe Series 13 Version 1 5Y Bund Future (RS) :30 AM 9:30 AM 11:30 AM 1:30 PM 3:30 PM 5:30 PM 7:30 PM itraxx Europe Crossover Series 13 Version 1 5Y Dax Future (RS) :30 AM 9:30 AM 11:30 AM 1:30 PM 3:30 PM 5:30 PM 7:30 PM Source: Bloomberg, UniCredit Research Trader s Comment TMT It was a very volatile day: we opened wider due to US equities and we closed tighter due to US equities as well, peripheral names having an impressive daily volatility (40bp on average). Liquidity is just drying up even on single name CDS now. Utilities/Energy CDS spreads closed significantly tighter on better stock market performance. Low betas were around -7bp, while high betas were -15 to-25bp. Only name underperforming was BP, closing +70bp wider. Cash spreads remain wide and were hardly changed on still very low liquidity. UniCredit Research page 7

8 Primary Market<BOOKMARK> Pipeline SEB AB (Aaa/-/-) planned EUR 1bn 5Y covered bond, due June Spread set earlier at MS+45bp. List London, denoms 50k+1k. Swedish legislation. Today's business. Bookrunner: BayernLB, Commerzbank, CS, RBS, SEB MB. Priced Erste Abwicklungsanstalt (-/-/-) EUR 500mn, due 17 June 2013, coupon 1.50%. Price of , spread MS+1bp / 3.5% OBL Apr bp. Pay date June 17, listing Dusseldorf, denom 100k. Bookrunner: WestLB. West Immob (-/AAA/-) EUR 500mn mortgage Pfandbriefe, due 18 June 2012, coupon 1.375%. Reoffer , spread MS+17bp / BKO 06/ bp. List Frankfurt, denoms 1k+1k. Settle 18 June Bookrunner: BayernLB, Citi, Commerzbank, UniCredit, WestLB. KA Finanz (Aaa/AAA/AAA)e EUR 1bn, due 17 June 2013, coupon 1.75%. Reoffer , spread MS+25bp / OBL bp. Settle 16 June List Vienna, denoms 1k+1k, 0% R/W in Austria. Guaranteed by the Republic of Austria. Bookrunner: Barclays, BAML, Erste, GS. Rabobank Nederland(Aaa/AAA/-) EUR 1bn 3Y senior unsecured FRN, due 17 June 2013, coupon 3ME+45bp. Spread is set at 3ME+50bp. Settle 17 June List Amsterdam. Denoms 1k/1k. Today's business. Final book EUR 1.15bn, 120 accounts involved. Bookrunner: BNPP,CS, Rabo International. Book stats RBS (Aaa/-/AAA) Final book EUR 1.9bn with around 100 accounts involved. Geography: GER 24%, FRA 19%, UK 13%, NED 9%, US 8%, FIN 6%, SWE 5%, Switzerland 4%, AUT 3%, others 9%. Investors: fund managers 42%, banks 34%, insurance 9%, central banks 7%, pension funds 6%, other 2%. EUR 1.25bn, due 18 June 2013, coupon 2.75%. Price , spread MS+125bp / Obl+218.4bp. Settle 18 June List London. Bookrunner: Barclays, Danske Bank, RBS, SocGen, UniCredit. Source: Bond Radar, Bloomberg Rating Actions SUMMARY OF RECENT RATING ACTIONS Issuer Agency Action From To Alliance Bank JSC S&P upgrade D B- Republic of Estonia S&P upgrade A- A Source: Bloomberg, UniCredit Research Recent Credit Research Publications Date Title Sector/Region Analyst 10/06/10» Banks, Chemicals, Energy, Telecommunications» Covered Bond & Agency Monitor - English Version Agencies & Subsovereigns, Covered Bonds» Sector Flash RAS - EU Commission on Regulating Banks, Financials Financial Services 09/06/10» Energy, Financials, Telecommunications Ernst, Gisdakis, Haber, Kleindienst, Maglanoc, Schilling, Schlachter, Tzschentke, Weber Dyckmans, Hillenbrand, Rudolf Maglanoc Arndt, Brunne, Ernst, Gisdakis, Haber, Kleindienst» Evening Credit Roundup - State bonds and sex appeal??? Brunne, Ernst, Gisdakis, Kolek, Weber» Credit View - State of Hessen Agencies & Subsovereigns Dyckmans» Credit Flash -European Financial Stability Facility Agencies & Subsovereigns Dyckmans» Credit Flash - EIB revises 2010 funding to EUR 70bn Agencies & Subsovereigns Dyckmans» Credit Flash (HY) - A.T.U: 1Q10 results (HOLD ATUGRP 14 Automobiles & Parts Kreitmair bond)» Sector Report - Get registered! Banks, Covered Bonds, Financials Dyckmans, Hillenbrand, Plenk, Rudolf, Tehrani Monfared, Tzschentke» Sector Flash RAS - EC on IFRS Convergence with Third Banks, Financials Maglanoc Country GAAPs» Credit View - Nord/LB Banks, Financials Plenk» Sector Flash RAS - Survey on Basel III and Risk Management Banks, Financials Maglanoc Source: UniCredit Research UniCredit Research page 8

9 Disclaimer Our recommendations are based on information obtained from, or are based upon public information sources that we consider to be reliable but for the completeness and accuracy of which we assume no liability. All estimates and opinions included in the report represent the independent judgment of the analysts as of the date of the issue. We reserve the right to modify the views expressed herein at any time without notice. Moreover, we reserve the right not to update this information or to discontinue it altogether without notice. 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Neither UniCredit Bank AG, UniCredit Bank AG London Branch, UniCredit CAIB AG, UniCredit Bank AG Milan Branch, UniCredit CAIB Securities UK Ltd., UniCredit Securities, UniCredit Menkul Değerler A.Ş., Zagrebačka banka, UniCredit Bulbank nor any of their respective directors, officers or employees nor any other person accepts any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection therewith. This analysis is being distributed by electronic and ordinary mail to professional investors, who are expected to make their own investment decisions without undue reliance on this publication, and may not be redistributed, reproduced or published in whole or in part for any purpose. Responsibility for the content of this publication lies with: a) UniCredit Bank AG, Am Tucherpark 16, Munich, Germany, (also responsible for the distribution pursuant to 34b WpHG). The company belongs to UCI Group. Regulatory authority: BaFin Bundesanstalt für Finanzdienstleistungsaufsicht, Lurgiallee 12, Frankfurt, Germany. b) UniCredit Bank AG London Branch, Moor House, 120 London Wall, London EC2Y 5ET, United Kingdom. Regulatory authority: BaFin Bundesanstalt für Finanzdienstleistungsaufsicht, Lurgiallee 12, Frankfurt, Germany and subject to limited regulation by the Financial Services Authority (FSA), 25 The North Colonnade, Canary Wharf, London E14 5HS, United Kingdom. Details about the extent of our regulation by the Financial Services Authority are available from us on request. c) UniCredit Bank AG Milan Branch, Via Tommaso Grossi, 10, Milan, Italy, duly authorized by the Bank of Italy to provide investment services. Regulatory authority: Bank of Italy, Via Nazionale 91, Roma, Italy and Bundesanstalt für Finanzdienstleistungsaufsicht, Lurgiallee 12, Frankfurt, Germany. The UniCredit CAIB Group, consisting of d) UniCredit CAIB AG, Julius-Tandler-Platz 3, 1090 Vienna, Austria Regulatory authority: Finanzmarktaufsichtsbehörde (FMA), Praterstrasse 23, 1020 Vienna, Austria e) UniCredit CAIB Securities UK Ltd., Moor House, 120 London Wall, London EC2Y 5ET, United Kingdom Regulatory authority: Financial Services Authority (FSA), 25 The North Colonnade, Canary Wharf, London E14 5HS, United Kingdom f) UniCredit Securities, Boulevard Ring Office Building, 17/1 Chistoprudni Boulevard, Moscow , Russia Regulatory authority: Federal Service on Financial Markets, 9 Leninsky prospekt, Moscow , Russia g) UniCredit Menkul Değerler A.Ş., Büyükdere Cad. No. 195, Büyükdere Plaza Kat. 5, Levent, Istanbul, Turkey Regulatory authority: Sermaye Piyasası Kurulu Capital Markets Board of Turkey, Eskişehir Yolu 8.Km No:156, Ankara, Turkey h) Zagrebačka banka, Paromlinska 2, HR Zagreb, Croatia Regulatory authority: Croatian Agency for Supervision of Financial Services, Miramarska 24B, Zagreb, Croatia i) UniCredit Bulbank, Sveta Nedelya Sq. 7, BG-1000 Sofia, Bulgaria Regulatory authority: Financial Supervision Commission (FSC), 33 Shar Planina str.,1303 Sofia, Bulgaria This report may contain excerpts sourced from UniCredit Bank Russia, UniCredit Tiriac Bank, Bank Pekao or Yapi Kredi all members of the UniCredit group. If so, the pieces and the contents have not been materially altered. POTENTIAL CONFLICTS OF INTERESTS Key 1a: UniCredit Bank AG, UniCredit Bank AG London Branch, UniCredit CAIB AG, UniCredit Bank AG Milan Branch, UniCredit CAIB Securities UK Ltd., UniCredit Securities, UniCredit Menkul Değerler A.Ş., Zagrebačka banka and UniCredit Bulbank and/or a company affiliated with it (pursuant to relevant domestic law) owns at least 2 % of the capital stock of the company. Key 1b: The analyzed company owns at least 2% of the capital stock of UniCredit Bank AG, UniCredit Bank AG London Branch, UniCredit CAIB AG, UniCredit Bank AG Milan Branch, UniCredit CAIB Securities UK Ltd., UniCredit Securities, UniCredit Menkul Değerler A.Ş., Zagrebačka banka and UniCredit Bulbank and/or a company affiliated with it (pursuant to relevant domestic law). Key 2: UniCredit Bank AG, UniCredit Bank AG London Branch, UniCredit CAIB AG, UniCredit Bank AG Milan Branch and UniCredit CAIB Securities UK Ltd., UniCredit Securities, UniCredit Menkul Değerler A.Ş., Zagrebačka banka and UniCredit Bulbank and/or a company affiliated with it (pursuant to relevant domestic law) belonged to a syndicate that has acquired securities or any related derivatives of the analyzed company within the twelve months preceding publication, in connection with any publicly disclosed offer of securities of the analyzed company, or in any related derivatives. Key 3: UniCredit Bank AG, UniCredit Bank AG London Branch, UniCredit CAIB AG, UniCredit Bank AG Milan Branch and UniCredit CAIB Securities UK Ltd., UniCredit Securities, UniCredit Menkul Değerler A.Ş., Zagrebačka banka and UniCredit Bulbank and/or a company affiliated (pursuant to relevant domestic law) administers the securities issued by the analyzed company on the stock exchange or on the market by quoting bid and ask prices (i.e. acts as a market maker or liquidity provider in the securities of the analyzed company or in any related derivatives) Key 4: The analyzed company and UniCredit Bank AG, UniCredit Bank AG London Branch, UniCredit CAIB AG, UniCredit Bank AG Milan Branch and UniCredit CAIB Securities UK Ltd., UniCredit Securities, UniCredit Menkul Değerler A.Ş., Zagrebačka banka and UniCredit Bulbank and/or a company affiliated (pursuant to relevant domestic law) concluded an agreement on services in connection with investment banking transactions in the last 12 months, in return for which the Bank received a consideration or promise of consideration. Key 5: The analyzed company and UniCredit Bank AG, UniCredit Bank AG London Branch, UniCredit CAIB AG, UniCredit Bank AG Milan Branch and UniCredit CAIB Securities UK Ltd., UniCredit Securities, UniCredit Menkul Değerler A.Ş., Zagrebačka banka and UniCredit Bulbank and/or a company affiliated (pursuant to relevant domestic law) have concluded an agreement on the preparation of analyses. Key 6a: Employees of UniCredit Bank AG Milan Branch and/or members of the Board of Directors of UniCredit (pursuant to relevant domestic law) are members of the Board of Directors of the Issuer. Members of the Board of Directors of the Issuer hold office in the Board of Directors of UniCredit (pursuant to relevant domestic law). Key 6b: The analyst is on the supervisory/management board of the company they cover. Key 7: UniCredit Bank AG Milan Branch and/or other Italian banks belonging to the UniCredit Group (pursuant to relevant domestic law) extended significant amounts of credit facilities to the Issuer. UniCredit Research page 9

10 RECOMMENDATIONS, RATINGS AND EVALUATION METHODOLOGY Company Date Rec. Company Date Rec. Company Date Rec. CONGR 12/01/2010 Hold MRKGR 18/03/2010 Overweight NOVART 22/10/2009 Underweight CONGR 12/08/2009 Buy MRKGR 01/03/2010 Underweight PORTEL 02/06/2010 Marketweight Overview of our ratings You will find the history of rating regarding recommendation changes as well as an overview of the breakdown in absolute and relative terms of our investment ratings on our websites and under the heading Disclaimer. Note on the bases of evaluation for interest-bearing securities: Our investment ratings are in principle judgments relative to an index as a benchmark. Issuer level: Marketweight: We recommend having the same portfolio exposure in the name as the respective reference index (the iboxx index universe for high-grade names and the ML EUR HY index for sub-investment grade names). Overweight: We recommend having a higher portfolio exposure in the name as the respective reference index (the iboxx index universe for high-grade names and the ML EUR HY index for sub-investment grade names). Underweight: We recommend having a lower portfolio exposure in the name as the respective reference index (the iboxx index universe for high-grade names and the ML EUR HY index for sub-investment grade names). Instrument level: Core hold: We recommend holding the respective instrument for investors who already have exposure. Sell: We recommend selling the respective instrument for investors who already have exposure. Buy: We recommend buying the respective instrument for investors who already have exposure. Trading recommendations for fixed-interest securities mostly focus on the credit spread (yield difference between the fixed-interest security and the relevant government bond or swap rate) and on the rating views and methodologies of recognized agencies (S&P, Moody s, Fitch). Depending on the type of investor, investment ratings may refer to a short period or to a 6 to 9-month horizon. The prices used in the analysis are the closing prices of the appropriate local trading system or the closing prices on the relevant local stock exchanges. In the case of unlisted stocks, the average market prices based on various major broker sources (OTC market) are used. Coverage Policy A list of the companies covered by UniCredit Bank AG, UniCredit Bank AG London Branch, UniCredit CAIB AG, UniCredit CAIB Securities UK Ltd., UniCredit Bank AG Milan Branch, UniCredit Securities, UniCredit Menkul Değerler A.Ş., Zagrebačka banka and UniCredit Bulbank is available upon request. Frequency of reports and updates It is intended that each of these companies be covered at least once a year, in the event of key operations and/or changes in the recommendation. Companies for which UniCredit Bank AG Milan Branch acts as Sponsor or Specialist must be covered in accordance with the regulations of the competent market authority. SIGNIFICANT FINANCIAL INTEREST: UniCredit Bank AG, UniCredit Bank AG London Branch, UniCredit CAIB AG, UniCredit Bank AG Milan Branch, UniCredit CAIB Securities UK Ltd., UniCredit Securities, UniCredit Menkul Değerler A.Ş., Zagrebačka banka and UniCredit Bulbank and/or a company affiliated (pursuant to relevant national German, Italian, Austrian, UK and Russian law) with them regularly trade shares of the analyzed company. UniCredit Bank AG, UniCredit Bank AG London Branch, UniCredit CAIB AG, UniCredit Bank AG Milan Branch, UniCredit CAIB Securities UK Ltd, UniCredit Securities, UniCredit Menkul Değerler A.Ş., Zagrebačka banka and UniCredit Bulbank may hold significant open derivative positions on the stocks of the company which are not delta-neutral. Analyses may refer to one or several companies and to the securities issued by them. In some cases, the analyzed issuers have actively supplied information for this analysis. ANALYST DECLARATION The author s remuneration has not been, and will not be, geared to the recommendations or views expressed in this study, neither directly nor indirectly. ORGANIZATIONAL AND ADMINISTRATIVE ARRANGEMENTS TO AVOID AND PREVENT CONFLICTS OF INTEREST To prevent or remedy conflicts of interest, UniCredit Bank AG, UniCredit Bank AG London Branch, UniCredit CAIB AG, UniCredit CAIB Securities UK Ltd., UniCredit Bank AG Milan Branch, UniCredit Securities, UniCredit Menkul Değerler A.Ş., Zagrebačka banka and UniCredit Bulbank have established the organizational arrangements required from a legal and supervisory aspect, adherence to which is monitored by its compliance department. Conflicts of interest arising are managed by legal and physical and non-physical barriers (collectively referred to as Chinese Walls ) designed to restrict the flow of information between one area/department of UniCredit Bank AG, UniCredit Bank AG London Branch, UniCredit CAIB AG, UniCredit CAIB Securities UK Ltd., UniCredit Bank AG Milan Branch, UniCredit Securities, UniCredit Menkul Değerler A.Ş., Zagrebačka banka and UniCredit Bulbank and another. In particular, Investment Banking units, including corporate finance, capital market activities, financial advisory and other capital raising activities, are segregated by physical and non-physical boundaries from Markets Units, as well as the research department. In the case of equities execution by UniCredit Bank AG Milan Branch, other than as a matter of client facilitation or delta hedging of OTC and listed derivative positions, there is no proprietary trading. Disclosure of publicly available conflicts of interest and other material interests is made in the research. Analysts are supervised and managed on a day-to-day basis by line managers who do not have responsibility for Investment Banking activities, including corporate finance activities, or other activities other than the sale of securities to clients. ADDITIONAL REQUIRED DISCLOSURES UNDER THE LAWS AND REGULATIONS OF JURISDICTIONS INDICATED Notice to Austrian investors This document does not constitute or form part of any offer for sale or subscription of or solicitation of any offer to buy or subscribe for any securities and neither this document nor any part of it shall form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment whatsoever. This document is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on to any other person or published, in whole or part, for any purpose. Notice to Czech investors This report is intended for clients of UniCredit Bank AG, UniCredit Bank AG London Branch, UniCredit CAIB AG, UniCredit CAIB Securities UK Ltd., UniCredit Bank AG Milan Branch, UniCredit Securities, UniCredit Menkul Değerler A.Ş., Zagrebačka banka or UniCredit Bulbank in the Czech Republic and may not be used or relied upon by any other person for any purpose. Notice to Italian investors This document is not for distribution to retail clients as defined in article 26, paragraph 1(e) of Regulation n approved by CONSOB on October 29, In the case of a short note, we invite the investors to read the related company report that can be found on UniCredit Research website Notice to Russian investors As far as we are aware, not all of the financial instruments referred to in this analysis have been registered under the federal law of the Russian Federation On the Securities Market dated April 22, 1996, as amended, and are not being offered, sold, delivered or advertised in the Russian Federation. Notice to Turkish investors Investment information, comments and recommendations stated herein are not within the scope of investment advisory activities. Investment advisory services are provided in accordance with a contract of engagement on investment advisory services concluded with brokerage houses, portfolio management companies, non-deposit banks and the clients. Comments and recommendations stated herein rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not suit your financial status, risk and return preferences. For this reason, to make an investment decision by relying solely on the information stated here may not result in consequences that meet your expectations. UniCredit Research page 10

11 Notice to Investors in Japan This document does not constitute or form part of any offer for sale or subscription for or solicitation of any offer to buy or subscribe for any securities and neither this document nor any part of it shall form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment whatsoever. Notice to UK investors This communication is directed only at clients of UniCredit Bank AG, UniCredit Bank AG London Branch, UniCredit CAIB AG, UniCredit CAIB Securities UK Ltd., UniCredit Bank AG Milan Branch, UniCredit Securities, UniCredit Menkul Değerler A.Ş., Zagrebačka banka and UniCredit Bulbank who (i) have professional experience in matters relating to investments or (ii) are persons falling within Article 49(2)(a) to (d) ( high net worth companies, unincorporated associations, etc. ) of the United Kingdom Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or (iii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as relevant persons ). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons. Notice to U.S. investors This report is being furnished to U.S. recipients in reliance on Rule 15a-6 ("Rule 15a-6") under the U.S. Securities Exchange Act of 1934, as amended. Each U.S. recipient of this report represents and agrees, by virtue of its acceptance thereof, that it is such a "major U.S. institutional investor" (as such term is defined in Rule 15a-6) and that it understands the risks involved in executing transactions in such securities. Any U.S. recipient of this report that wishes to discuss or receive additional information regarding any security or issuer mentioned herein, or engage in any transaction to purchase or sell or solicit or offer the purchase or sale of such securities, should contact a registered representative of UniCredit Capital Markets, Inc. ( UCI Capital Markets ). Any transaction by U.S. persons (other than a registered U.S. broker-dealer or bank acting in a broker-dealer capacity) must be effected with or through UCI Capital Markets. The securities referred to in this report may not be registered under the U.S. Securities Act of 1933, as amended, and the issuer of such securities may not be subject to U.S. reporting and/or other requirements. Available information regarding the issuers of such securities may be limited, and such issuers may not be subject to the same auditing and reporting standards as U.S. issuers. The information contained in this report is intended solely for certain "major U.S. institutional investors" and may not be used or relied upon by any other person for any purpose. Such information is provided for informational purposes only and does not constitute a solicitation to buy or an offer to sell any securities under the Securities Act of 1933, as amended, or under any other U.S. federal or state securities laws, rules or regulations. The investment opportunities discussed in this report may be unsuitable for certain investors depending on their specific investment objectives, risk tolerance and financial position. In jurisdictions where UCI Capital Markets is not registered or licensed to trade in securities, commodities or other financial products, transactions may be executed only in accordance with applicable law and legislation, which may vary from jurisdiction to jurisdiction and which may require that a transaction be made in accordance with applicable exemptions from registration or licensing requirements. The information in this publication is based on carefully selected sources believed to be reliable, but UCI Capital Markets does not make any representation with respect to its completeness or accuracy. All opinions expressed herein reflect the author s judgment at the original time of publication, without regard to the date on which you may receive such information, and are subject to change without notice. UCI Capital Markets may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. These publications reflect the different assumptions, views and analytical methods of the analysts who prepared them. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is provided in relation to future performance. UCI Capital Markets and any company affiliated with it may, with respect to any securities discussed herein: (a) take a long or short position and buy or sell such securities; (b) act as investment and/or commercial bankers for issuers of such securities; (c) act as market makers for such securities; (d) serve on the board of any issuer of such securities; and (e) act as paid consultant or advisor to any issuer. The information contained herein may include forward-looking statements within the meaning of U.S. federal securities laws that are subject to risks and uncertainties. Factors that could cause a company s actual results and financial condition to differ from expectations include, without limitation: political uncertainty, changes in general economic conditions that adversely affect the level of demand for the company s products or services, changes in foreign exchange markets, changes in international and domestic financial markets and in the competitive environment, and other factors relating to the foregoing. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement This document may not be distributed in Canada or Australia. UniCredit Research page 11