Weekly Highlights - Week 48. Disappointing results from Frigoglass

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Sabrina Weaver
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1 Weekly Highlights - Week 48 Frigoglass - BUY Numericable - HOLD Verisure - BUY Eco-bat - HOLD Ardagh - SELL Disappointing results from Frigoglass We maintain our BUY recommendation after the announcement of disappointing results from Frigoglass What we believed was short-term weakness in the Cool segment has moved into Q3 and apparently also into Q4. However, we still believe in the long-term case with the emerging markets and Africa as the drivers of sales growth, and we therefore maintain our BUY recommendation. Click here to view the full analysis Continuing strong performance from Numericable As the issue is trading at a fair level, the results do not prompt us to change our current HOLD recommendation. Numericable shows continuing strong performance, which confirms an improved credit history. However, the company's EUR % 219 issue is trading at a fair level when considering that 35% of the issue will be redeemed on 8 December. Our recommendation is therefore still HOLD. Click here to view the full analysis Robust performance We maintain our BUY recommendation for Verisure's 8.75% 218 issue, which, in our view, has an attractive coupon. Verisure continues to show that its business model is robust and that it can maintain an underlying positive trend. Customer growth is still strong at 5.8% y/y and the EBITDA-margin remains at a high level of 33.9%. Click here to view the full analysis Weak Q3 results We change our recommendation from Buy to HOLD The Q3 results were weak and particularly the profitability was a disappointment, as the EBITDA-margin recorded a decline of 2.4 percentage points y/y. Combined with a limited upside to possible call in 214, we change our recommendation for the issue to HOLD from Buy. Click here to view the full analysis SELL maintained end of coverage We end our coverage of Ardagh with SELL recommendation Despite slightly better than expected results we maintain our SELL recommendation for Ardagh's 217 and 22 issues. We have had our SELL recommendation for three months now, and we therefore end our coverage of the company. Click here to view the full analysis Reseach team: Jens Houe Thomsen Bo Andersen Disclaimer & Disclosure: Please see the last page jht@jyskebank.dk boandersen@jyskebank.dk

2 Spread Development Change Change Spread/Rate 1 Week 1 Month 3 Month Ytd Spread/Rate 1 Week 1 Month 3 Month Ytd EUR High Yield non. Fin (HEAD) 45 bp. -7 bp. -7 bp. -63 bp. -77 bp. US High Yield non. Fin (HNF) 433 bp. -7 bp. -22 bp. -52 bp. -17 bp. EUR High Yield (HE) 423 bp. -6 bp. -12 bp. -73 bp bp. US High Yield (HA) 424 bp. -6 bp. -21 bp. -52 bp. -17 bp. itraxx Xover (Generic) 312 bp. -17 bp. -29 bp bp. -17 bp. CDX High Yield 17 bp. bp. bp. 3 bp. 7 bp. EUR Invest. Grade non. Fin. (EN) 119 bp. -1 bp. 1 bp. -3 bp. 3 bp. US Invest. Grade non. Fin. (CFX) 143 bp. -1 bp. -2 bp. -1 bp. -1 bp. EUR Invest. Grade (ER) 13 bp. bp. -1 bp. -1 bp. -15 bp. US Invest. Grade (CA) 141 bp. -1 bp. -3 bp. -14 bp. -12 bp. itraxx Europe Invest. Grade 78 bp. -2 bp. -6 bp. -27 bp. -4 bp. CDX Invest. Grade 69 bp. bp. -2 bp. -14 bp. -26 bp. itraxx Sr Financial 95 bp. -7 bp. -23 bp. -52 bp. -46 bp. US 1Y 2.74% -1 bp. 23 bp. -2 bp. 98 bp. itraxx Sub Financial 139 bp. -7 bp. -36 bp. -81 bp. -96 bp. German 1Y 1.7%. -5 bp. -5 bp. -16 bp. 38 bp. bp 2,5 2, 1,5 1, 5 EUR HY vs. US HY Spread development Difference (rhs) EUR HY (HEAD) US HY (HNF) bp bp EUR IG vs. US IG Spread development Difference (rhs) EUR HG (EN) US HG (CFX) bp Source: Bloomberg & Merrill Lynch & Jyske Bank

3 High Yield Bond Outperformers and Underperformes - Spread to Worst 1 Week Outperformers 1 Month Outperformers Ticker Coupon Maturity Rating Price STW Change Ticker Coupon Maturity Rating Price STW Change KPERST CCC KPERST CCC CEMEX B REYNOL CCC ARGID B KPERST CCC AGROK B MARKIV BB KERLIN CCC REYNOL CCC ECOBAT B TNETBB BB CODERE CC 54. 5,64-18 ISSDC B CODERE CC 55. 5, KERLIN CCC EOFP B YIOULA CC 78. 2, KINOVE B UNITY B KERLIN CCC EDCON B EDCON B EDCON B Week Underperformers 1 Month Underperformers Ticker Coupon Maturity Rating Price STW Change Ticker Coupon Maturity Rating Price STW Change AGROK B AGROK B HTC C 41. 4, IRM B ICECR B ICECR B IDEABB CC , CEMEX B CEMEX B ICECR B ICECR CCC ISSDC B COMHSS CCC , CETV CCC , ISSDC B CETV CCC , KPERST CCC WINDIM B UNILAB CCC ,78 67 IDEABB CC , KINOVE B PAJFP B , BORMIO B IDEABB CC 68. 2, Source: Merrill Lynch & Jyske Bank

4 High Yield Bond Outperformers and Underperformes - Price 1 Week Outperformers 1 Month Outperformers Ticker Coupon Maturity Rating STW Price Change Ticker Coupon Maturity Rating STW Price Change TCGLN B EDCON B STTESE CCC1 1, EDCON B MANTEN B NWORLD B3 1, EDCON B YIOULA CC 2, EDCON B MANTEN B COMHSS CCC2 1, FROSTB CCC3 1, WINDIM B3 1, HDDGR CCC INLOTG B EDCON B IDEABB CC 2, EDCON B PEUGOT BB PEUGOT BB ARGID CCC TELEFO BB INAER B HDDGR CCC Week Underperformers 1 Month Underperformers Ticker Coupon Maturity Rating STW Price Change Ticker Coupon Maturity Rating STW Price Change IDEABB CC 2, PAJFP B2 1, COMHSS CCC2 1, IDEABB CC 2, KPERST CCC CETV CCC1 1, HTC C 4, CETV CCC1 1, UNILAB CCC2 1, IDEABB CC 2, EOFP B COMHSS CCC2 1, BORMIO B HTC C 4, SISTP B HTC C 4, TITKGA BB ARGID CCC1 1, RCOLIN B CETV B GYCGR BB CETV B ALUFP CCC ARGID CCC1 1, Source: Merrill Lynch & Jyske Bank

5 Issuance - EUR bn Issuance EUR High Yield ex. fin. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec No No. Issues EUR High Yield ex. Fin. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec bn. Issuance EUR High Yield incl. fin % 2% 15% 1% 5% EUR High Yield Rating distribution Issuance Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec % BB1 BB2 BB3 B1 B2 B3 CCC1 CCC Source: Merrill Lynch & Jyske Bank

6 European Issuance - EUR, USD & GBP bn. 9 EUR issuances excl. fin. No. 18 No. of EUR issuances excl. fin Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec bn. LTM Issuances in EUR, GBP & USD excl. fin USD GBP EUR No No. of issuances on rating excl. fin. BB1 BB2 BB3 B1 B2 B3 CCC1 CCC2 CC D Source: Merrill Lynch & Jyske Bank

7 Spread vs. GDP US GDP Growth & High Yield Spread bp. % -1 2,1-8 1, , High Yield Spread (HA) US GDP YoY (rhs, inverted) Bloomberg consensus EUR High Yield Spread vs. GDP Growth bp. % -6 2,1-4 1,6-2 1, High Yield Spread (HEAD) Euro GDP YoY (rhs, inverted) bp. 2, 1,5 GDP Growth & High Yield (since 25) y = e -.1x R² =.3442 bp. 2,5 2, High Yield vs. GDP Growth next Quarter (since 25) y = e -.176x R² =.473 1, 1,5 1, % 8 % 6 % 4 % 2 % % 2 % 4 % 6 % 8 % US GDP YoY Q4'13E GDP Growth Q2'13 GDP Growth 6 % 4 % 2 % % 2 % 4 % 6 % Euro GDP YoY Q4'13E GDP growth Q2'13 GDP Growth Source: Bloomberg, Merrill Lynch & Jyske Bank

8 Rating Drift High Yield Rating Drift US & EUR 6% 4% 2% % -2% -4% -6% -8% -1% Europe US EUR High Yield and High Grade Rating Drift 4% 2% % -2% -4% -6% -8% -1% High Grade High Yield EUR High Yield Rating Drift vs. Default Rate High Yield Rating Drift vs. PMI 4% % 6 15% -1% -6% -11% -16% 5% 1% 15% 2% Moody's High Yield Rating Drift (lhs) European Default Rate PMI Output Index (lhs) EUR HY RATING DRIFT 5M Lag (rhs) -5% -25% -45% -65% -85% Source: Moodys & Jyske Bank

9 Disclaimer & Disclosure Jyske Bank s corporate bond recommendations current breakdown Breakdown of recommendations, Corporate Bonds (number) STRONG BUY BUY HOLD SELL

29-11-213 29-11-213 Contacts for Institutional Customers Morten Storgaard Andersen +45 89 89 76 78 MSA@jyskebank.

10 Contacts for Institutional Customers Morten Storgaard Andersen Vice President, Head of Corporate Bonds Sales Nicolaj Brask Christiansen Senior Sales Manager, Corporate Bonds Sales René Søndergaard Vinther Sales Manager, Corporate Bonds Sales

High Yield Highlights - Week 49

6-12-213 High Yield Highlights - Week 49 Kerling - BUY Maintain BUY recommendation We maintain BUY, as we find early redemption unlikely until a clarification of JV Kerling stays on BUY for the 217 issue