EUROPEAN HIGH YIELD REPORT 1Q15 EDITION

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1 Howard Tang, CFA Global Head of Debtwire Research howard.tang@debtwire.com Yana Dostinova Head of Europe Research yana.dostinova@debtwire.com Nick Smith-Saville Senior Analyst nicholas.smith-saville@debtwire.com SURGING M&A ACTIVITY SENDS ISSUANCE TO EUR 5BN Thomas Elliott Credit Analyst thomas.elliott@debtwire.com Vasudha Sud, CFA Credit Analyst + 7 vasudha.sud@debtwire.com Peter Prek Credit Analyst + 7 peter.prek@debtwire.com EUROPEAN HIGH YIELD REPORT EDITION

2 CONTENTS - Highlights - Monthly issuance by value and volume - Industry statistics 5 - Country statistics 7 - Breakdowns by tenor, seniority, use of proceeds and currency 9 - Debut issuers - Rating statistics and Deal size statistics - FRN issuance - Initial spreads vs credit ratings by quarter Debtwire Europe high yield issuance and pipeline criteria Debtwire Europe s high yield issuance and pipeline research tracks new high yield bond issuance under the following criteria: Debt issued and/or marketed in western Europe that is publicly traded; Speculative grade corporate family rating and issue rating by both S&P and Moody s. Excludes any split-rated crossover issuers and/or issues; Non-rated bonds are included in the table if YTM at issuance is comparable with rated sub-investment grade notes. Debtwire Europe s issuance and pipeline research does not include any of the following security types: Convertible bonds; Equipment trust certificates, enhanced equipment trust certificates and pass through certificates; Asset-backed securities. The data is derived from a combination of Debtwire intelligence and company announcements. analytics.debtwire.com

3 Highlights market overview The European high yield market had a strong start to 5, with issuance surging 85% YoY to EUR 5.bn, though companies printed only 7 bonds in the first quarter of 5 versus 79 in Q. Activity in the market was driven primarily by mergers & acquisitions, which accounted for EUR.6bn, or 6% of total issuance in, up from just EUR.5bn, or 6%, a year earlier. The period was also marked by a number of mega deals, with the largest coming from the Canadian pharmaceutical company Valeant Pharmaceuticals, which raised EUR 9.5bn-equivalent in a multi-tranche bond in March to finance its acquisition of Salix Pharmaceuticals. Telecommunications companies topped the industry table, both in terms of value and volume, as issuance spiked.x YoY to EUR.bn in, while the number of placed bonds jumped to 9 from 5 a year earlier. Luxembourg-based Altice accounted for a major share of the total with its EUR.7bn-equivalent bond issue in January, which financed the telco s acquisition of Portugal Telecom s Portuguese assets. Liberty Global s British subsidiary Virgin Media was particularly active in the market, issuing a total of five long-dated bonds to refinance debt and part-fund the transfer of UPC Ireland to the Virgin Media credit pool. On the other hand, the collapse in oil prices in H negatively impacted energy services providers, with companies in the sector printing only two bonds for a total of EUR 85m in, down from EUR.bn raised via eight bonds in Q. Activity in the transportation sector also slowed dramatically, with only Hurtigruten coming to the market in the first quarter, compared with eight companies a year prior. The Norwegian cruise operator raised EUR 55m in January to finance its acquisition by private equity firm TDR. British groups were the most active in terms of volume in, the same as last year, with seven issuers placing a total of bonds mostly to refinance debt. However, the EUR 6bn raised put the country behind both Canada and Italy, which were boosted by Valeant s and Gtech s jumbo EUR 9.5bn and EUR.bn deals, respectively. On the negative side, Spain s issuance dropped % YoY to EUR.9bn in on only four deals versus eight a year earlier. Switzerland accounted for the largest leveraged buyout transaction in the quarter, as SIG Combibloc placed a EUR 675m 7.75% senior unsecured bond in February, while allocating EUR.bn-equivalent in cove-lite loans, to fund the carton packaging company s takeover by Onex Partners. In general, bonds issued in the first three months of 5 carry longer maturities compared to those from a year earlier, with tenors above seven years representing 58% of total issuance value versus just 6% in Q. The aforementioned mega deals by Valeant and Gtech partly explain this trend, though there were numerous other issuers coming to the market with + year bonds, including Unitymedia, which placed two -year notes in to refinance existing debt. Due mainly to the large proportion of acquisition funding, senior unsecured bond issuance fell to 6% of the total in from 7% in the same period a year ago, while senior secured bonds gained market share and accounted for EUR 8bn, or almost %, of issuance versus just EUR 6.bn, or 6%, a year earlier. Going forward, the high yield market in Europe is likely to strengthen further on the back of the European Central Bank s EUR. trillion quantitative easing programme, which began in March and has already pushed sovereign yields across much of the Eurozone to new record lows. As such, companies may decide to refinance their existing debt, while low rates and improving macroeconomic outlook in the region are expected to support M&A activity as well. This trend is also likely to attract ever more American companies to the European debt markets. Value of High Yield Issuance per Quarter Volume of High Yield Issuance per Quarter EURm 6, 5,, 5,95 5, Number of bonds ,,56 6 5,, 7,9 8,8 7 Q Q Q Q Q Q Q Q analytics.debtwire.com

4 market overview Value of High Yield Issuance per Month EURm 5,,,6 5,,69,97,8, 5, 6,7 5,9 Volume of High Yield Issuance per Month Number of bonds analytics.debtwire.com

5 industry statistics Value of High Yield Issuance per Industry Q EURm Telecommunications,5,58 Pharmaceuticals 9,5 Gaming,8 55 Automotive,,75 Construction & Homebuilding,,5 Chemicals & materials,8,8 Industrial products & services,5,5 Technology, Food & Beverage,7 969 Energy Services 85,8 Metals & Mining Volume of High Yield Issuance per Industry Telecommunications Automotive Gaming Chemicals & materials Pharmaceuticals Healthcare Construction & Homebuilding Food & Beverage Utilities Technology Services Q Number of bonds 9 Paper & Forest Products 7 5 Paper & Forest Products Services Manufacturing Leisure Healthcare Retail Entertainment Utilities Transportation Restaurant Consumer Products , , Leisure Industrial products & services Energy Services Entertainment Restaurant Transportation Retail Packaging Metals & Mining Manufacturing 8 9 Packaging Industrial products and services Real Estate Financial Services 5 68, 6,5 Consumer Products Industrial products and services Real Estate Financial Services Aerospace & defense 5 Aerospace & defense 5 analytics.debtwire.com

6 industry statistics Industry Statistics Industry Amount Issued (EURm) No. of Issuers No. of Bonds Coupon Price YTM Net Leverage Average Maturity Telecommunications, %. 5.6%.x Pharmaceuticals 9,5 5.6%. 5.6% N/A Gaming, %. 5.6%.7x Automotive, 5 8.7% %.x 9 Construction & Homebuilding, 5.7% %.9x Chemicals and materials, %. 6.7%.8x Industrial products and services,5.8% 99..%.x Technology, 6.%. 6.% 6.x Food & Beverage,7 5.9% %.6x Energy Services %. 6.75%.95x Metals & Mining 75.% % N/A Paper & Forest Products % %.68x Services % %.9x Manufacturing %. 7.75% 6.55x 9 Leisure %. 6.6%.7x Healthcare %. 5.78%.5x Retail 6.88% N/A N/A N/A Entertainment 5.75%..75%.x Utilities 8 6.7%. 6.7% 5.x Transportation %. 7.5% 5.x Restaurant %. 7.88%.x 5 Consumer Products 6 8.% %.9x Packaging %. 7.7% N/A Total 5, % %.x 6 analytics.debtwire.com

7 country statistics Value of High Yield Issuance per Country Canada Italy,5 Q 6,58 9,5 EURm Volume of High Yield Issuance per Country United Kingdom France Q Number of bonds 7 United Kingdom,6 6,7 USA 9 Luxembourg,7 Germany 9 9 Germany,79,78 Italy 7 8 USA,9 Luxembourg 5 France,875,85 Spain 8 Spain,95, Canada Netherlands,5,5 Switzerland Switzerland,, Netherlands Mexico,7 Norway 7 Norway 75,9 Mexico Ireland (Republic) 6 68 South Africa South Africa 5 Ireland (Republic) Sweden,9 Sweden 8 Portugal 85 Portugal Greece Greece Finland 5 Finland Bermuda 69 Bermuda 7 analytics.debtwire.com

8 country statistics Country Statistics Country Amount Issued (EURm) No. of Issuers No. of Bonds Coupon Price YTM Net Leverage Average Maturity Canada 9,5 5.6%. 5.6% N/A Italy 6, %. 5.%.58x United Kingdom 6,7 9.96%..96%.6x Luxembourg, %. 6.77%.7x Germany, % %.x USA, % % 5.x France, %. 5.8%.9x Spain,95.% %.x Netherlands,5.5%..5%.56x 5 Switzerland, 5.7% %.89x Mexico,7 5.%. 5.% 5.9x Norway % % 5.8x Ireland (Republic) 6 7.5%. 7.5% 5.x South Africa 5.8%..8%.x Total 5, % %.5x 8 analytics.debtwire.com

9 tenor, seniority, use of proceeds and currency Value of High Yield Issuance by Tenor Volume of High Yield Issuance by Tenor Historical Seniority Profile EURm Number of bonds Q Q Senior Subordinated Second Lien Senior Unsecured Senior Secured, 7 7,67 %,, 5 9% 9,959 8%, 9,67 7% 59.5% 7,958 8, 7, % 5 6% 5 5% 6, %, % 6 %,6, %,,8 6.% % % yr yr yrs yrs 5yrs 6yrs 7yrs 8yrs 9yrs yrs yrs yrs 5yrs yr yrs yrs yrs 5yrs 6yrs 7yrs 8yrs 9yrs yrs yrs yrs 5yrs Q Use of Proceeds - Use of Proceeds - Q Issuance by Currency - Issuance by Currency - Q General corporate purposes % LBO financing % Refinance bonds % Refinance loans % Refinance debt 6% Refinance loans 7% Refinance debt % Other % Add-on acquisition 6% USD.5% USD.6% GBP.% NOK.6% SEK.7% GBP 7.5% Add-on acquisition 6% Other % Refinance bonds 9% General corporate purposes 9% EUR 8.9% Other currencies (CHF, AUD, DKK).% EUR 6.7% LBO financing % 9 analytics.debtwire.com

10 debut issuers Debut vs Existing Issuers by Volume Number of issuers Debut issuers Existing issuers 9 Use of Proceeds by Value Refinance Debt 6% Debut Issuers by Industry Restaurant Utilities Entertainment LBO Financing 9% Manufacturing Q Services Energy Services Number of debut issuers The number of first-time issuers fell to just six in, versus 6 in the first quarter of, with debutant issuance value dropping 6% YoY to EUR.bn. Of these, around EUR.bn, or 6%, went towards debt refinancing, with the remainder funding leveraged buyouts. Senior secured bonds accounted for EUR 75m, or only % of the overall issuance, down from EUR.8bn, or 65%, in Q. The largest deal of the period was SIG Combibloc s EUR 675m 7.75% eight-year senior unsecured placement in February, which part funded the company s LBO by Onex Partners; the EV for the transaction stood at EUR.75m. Debut Issuers by Country United Kingdom Elsewhere, French waste paper recycling company Paprec came to the market in March with a EUR 8m dual tranche green bond to refinance existing indebtedness. The bond comprised a EUR 95m senior secured tranche and a EUR 85m senior subordinated tranche, carrying coupons of 5.5% and 7.75%, respectively. Another notable deal was the British theme park operator Merlin Entertainment s upsized EUR 5m seven-year senior unsecured issuance in March, which priced at.75% and became the lowest-coupon high yield bond ever placed by a debut issuer in Europe. The Ba-rated bond has since performed well and was quoted at., with a.65% yield, as of 7 April. France Switzerland Germany Number of debut issuers analytics.debtwire.com

11 r atings statistics and pik note issuance Moody s Rating Statistics Rating # Issues Amount (EURm) YTM Net Leverage Ba,.55%.x Ba 9 6,6 5.%.x Ba 6,8.6%.9x B, 5.68%.8x B, %.6x B 6, 6.6%.85x S&P Rating Statistics Rating # Issues Amount (EURm) YTM Net Leverage BB+ 9 6,7.8%.5x BB,5.%.x BB- 6,68 5.7%.x B+ 9, %.6x B,6 5.8%.8x B- 8,9 7.6% 5.7x Caa, 8.% 6.7x Caa N/A N/A Total 5 5,9 5.5%.x CCC % 5.9x CCC 9.6% 6.97x Total 5, %.67x Deal Size Statistics Deal size Amount Issued (EURm) No. of Issuers No. of Deals Coupon Price YTM Net Leverage Maturity Below EUR 5m %. 7.%.x EUR 5m - EUR 5m, % %.5x EUR 5m - EUR 75m 7,7 5.65% %.x EUR 75m - EUR.5bn,7 9 5.% %.5x Above EUR.5bn, %. 5.8%.7x Total 5, %. 5.9%.9x analytics.debtwire.com

12 r atings statistics and pik note issuance FRN Issuance Company Date Priced Currency Actual Size (m) Coupon OID Seniority Maturity Industry Country Picard Surgeles S.A -Feb-5 EUR E+.5% 99.5 Senior Secured 9 Food & Beverage France Wind Telecomunicazioni S.p.A. -Mar-5 EUR E+.5% Senior Secured Telecommunications Italy analytics.debtwire.com

13 spread analysis, Initial Spreads vs. Credit Rating - bps Norske Skogindustrier ASA EUR 9m.75% 9,, 8 6 Viridian Group Limited EUR 6m 7.5% Hurtigruten ASA EUR 55m 7.5% Sig Combibloc EUR 675m 7.75% Thomas Cook Group Plc EUR m 6.75% Wagamama Limited GBP 5m 7.875% HP Pelzer Holding GmbH EUR 5m 7.5% MEIF Renewable Energy UK PLC GBP 9m 6.75% Obrascon Huarte Lain SA EUR 5m 5.5% Altice S.A. EUR 75m 6.5% 5 Altice S.A. EUR 5m 5.5% Altice S.A. USD 8m 7.65% 5 Altice S.A. USD 6m 6.65% Altice S.A. USD 85m 7.65% 5 Laboratoire Cerba SA EUR 5m 8.5% Gtech SpA EUR 85m.75% Gtech SpA USD m 6.5% 5 Gtech SpA USD 6m 5.65% Gtech SpA EUR 7m.5% Gtech SpA USD 5m 6.5% Sappi Ltd EUR 5m.75% Ziggo B.V. EUR 8m.75% 5 ThyssenKrupp AG EUR 6m.5% 5 Virgin Media Inc GBP 55m.875% 7 Faurecia SA EUR 5m.5% Merlin Entertainments Group Limited EUR 5m.75% ThyssenKrupp AG EUR 75m.75% Laboratoire Cerba SA EUR 599m 7% Ziggo B.V. EUR m.65% 5 Ziggo B.V. USD m 5.875% 5 Wittur AG EUR 5m 8.5% BB+/Ba BB/Ba BB-/Ba B+/B B/B B-/B CCC+/Caa CCC/Caa Note: Spread over goverment bond benchmark, according to currency. analytics.debtwire.com

14 spread analysis Initial Spreads vs. Credit Rating - Q bps 8 Loewen Play EUR 5m 8.5% CEVA Logistics USD 5m 9% 6 Kaufman & Broad SA EUR 7m 7% 9 Aldesa Construcciones EUR 5m 7.5% Groupe Autodistribution EUR m 6.5% 9 HSS Hire Service GBP m 6.75% 9 Ocean Rig USD 5m 7.5% 9 IVS Italia EUR 5m 7.5% Abengoa EUR 5m 6% INEOS EUR 6m 5.75% 9 Darty Plc EUR 5m 5.875% CEVA Logistics USD m 7% Digicel USD bn 7.5% Kerneos SA EUR m 5.75% Labeyrie EUR 75m 5.65% Ardagh Glass USD 5m 6.5% 9 Cabot GBP 75m 6.5% Ardagh Glass USD 5m 6.75% Stena USD 5m 5.75% Lowell GBP 5m 5.875% 9 Grupo Antolin EUR m.75% Almirall EUR 5m.65% Obrascon Huarte Lain EUR m.75% Virgin Media GBP 5m 6.5% 9 ThyssenKrupp EUR 5m.5% 9 Virgin Media USD 5m 5.5% 5 Arcelor Mittal EUR 75m % 9 Virgin Media GBP m 5.5% 5 Jaguar Land Rover GBP m 5% Fresenius EUR m % Renault SA EUR 5m.5% INEOS USD 59m 5.875% 9 Avis Budget EUR m 6% BB+/Ba BB/Ba BB-/Ba B+/B B/B B-/B CCC+/Caa CCC/Caa CCC-/Caa Note: Spread over goverment bond benchmark, according to currency. analytics.debtwire.com

15 YOUR DEBTWIRE TEAM Howard Tang, CFA Global Head of Debtwire Research howard.tang@debtwire.com Thomas Elliott Credit Analyst thomas.elliott@debtwire.com Jonathan Reed Managing Director jonathan.reed@debtwire.com Yana Dostinova Head of Europe Research yana.dostinova@debtwire.com Vasudha Sud, CFA Credit Analyst + 7 vasudha.sud@debtwire.com Angus Codd Head of Sales, EMEA + 7 ac@debtwire.com Nick Smith-Saville Senior Analyst nicholas.smith-saville@debtwire.com Peter Prek Credit Analyst + 7 peter.prek@debtwire.com Ken Meehan Editor-in-Chief ken.meehan@debtwire.com DISCLAIMER Disclaimer: Prepared by staff of Debtwire and is for information purposes only. We have obtained the information provided in this report in good faith from sources which we consider to be reliable, but we do not independently verify the information. Data in this report has been derived from company reports, press releases, presentations and Debtwire intelligence and Debtwire research. Issuance data is liable to change when Debtwire is made aware of the issuance of new bonds and loans that are not already included in the database. The information is not intended to form the basis of any investment decisions, should not be considered a recommendation by Debtwire or any other person and does not constitute an offer or solicitation with respect to the purchase or sale of any investment nor is it a confirmation of terms. Any calculations and valuations presented herein are intended as a basis for discussion. Any opinions or estimates given may change. Debtwire undertakes no obligation to provide recipients with any additional information or any update to or correction of the information contained herein. Debtwire, its officers, employees and affiliates shall not be liable to any person in any way whatsoever for any losses, costs or claims howsoever arising from any inaccuracies or omissions in the information contained herein or any reliance on that information. No liability is accepted by Debtwire for any loss that may arise from any use of the information contained herein or derived here from. This product may not be reproduced or redistributed outside the recipient s organization. This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Debtwire to any registration or licensing requirement within such jurisdiction. 5 analytics.debtwire.com