Weekly Credit Update. 10 March Analyst Ola Heldal

Transcription

1 Weekly Credit Update 10 March 2015 Analyst Ola Heldal Investment Research Important disclosures and certifications are contained from page 20 of this report

2 Contents - Market news - Trade ideas - Company news - Chart pack - List of official and shadow ratings and recommendations 2

3 What s on our mind - General credit market news The strong market tone continued last week. The itraxx Main and cross-over tightened by 2bp and 15bp, respectively. US non-farm payrolls were solid on Friday. This pushed US 10-year treasury yields 13bp wider and the US dollar hit a 11-year high. The FTSE Eurofirst 300 rose to its highest close since 2007, as peripheral government yields grinded tighter in conjunction with the slide in the EUR, and European investors re-positioned for the commencement of the ECB s bond purchases. The ECB started its EUR60bn per month asset purchase programme yesterday, however it does not include corporate bonds for now. In the Nordic region, several mandates were awarded and some new issues launched, including Storebrand Liv T2, NC-5 in NOK which priced at 3M NIBOR+305bps, and Vattenfall, which was roadshowing a new hybrid. Sources: Bloomberg, Danske Bank Markets for both charts 3

4 Buy SSAB EUR 2019s against SSAB SEK 2019s (published 16 Feb) Indicative ASW offer (bps) EUR bonds - High Yield 400 Industrials: BB+ Industrials: BB 350 Industrials: BB- SSABAS EUR '19 (BB-/NR) SSABAS SEK '19 (BB-/NR) From a credit perspective, SSAB showed steady progress in its Q4 results despite a slight underperformance versus consensus earnings. Cash flow was not enough to reduce the overall net debt but credit metrics still managed to improve due to a larger LTM adjusted EBITDA. Credit metrics are, in our view, a little on the weak side for the group s BB- rating but S&P has built in an improvement in its basecase scenario and, as such, the rating should not be in danger given the strong momentum SSAB is currently seeing. We expect 2015 to be positive from a credit point of view with improved earnings and further improvements in credit metrics. The SEK bond trades at bid (ASW EUR6m 322bp) and the EUR bond at ask (ASW EUR6m 341bp). The trade provides a pick-up of 19bps with 1.5 months extension, which looks attractive, in our view. Source: Bloomberg, Danske Bank Markets 4

5 Recent trade ideas Type Trade Idea Currency trade Outright Switch from SSABs SEK '19 to SSABs EUR '19 CITCON '3.75 Outright EGASDK '20 Sector spread Curve spread Outright SASSS '17 Curve spread Outright Switch from NDA AT1 to SEB AT1 Switch from SECUSS '17 to SECUSS '21 Switch from ATCOA '19 to ATCOA '23 VLVY' 17 or VLVY'19 SSAB's EUR bonds look cheap compared to the SEK bonds and provide a pick-up of some 19bp with an extension of 1.5 months. We believe that CITCON'3.75s trade at an attractive level relative to the 'BBB' curve. EGASDK '20s, which we see as 'B', indicatively trade way too cheap relative to the industrial 'B' curve. See the end of this presentation for a list of our coverage including shadow ratings and recommendations Opened Start spread 19 Opened Start spread 104 Opened Start spread 683 We have an Overweight rating on SEB and an Underweight rating on Nordea and don t believe a Opened bp pick-up for a four-year maturity extension is worthwhile. Start spread -8 The Securitas 2021 bond trades wider than the BBB- Opened curve while the Securitas 2017 bond trades at the BBB+ curve. We recommend buying the Securitas 2021 vs the Securitas Pick up 57bp (z-spread) Start spread 81 for a 4-year maturity extension. We believe the SAS 2017 offers attractive absolute Opened value supported by adequate liquidity. Start spread 807 The Atlas Copco 2019s trade tighter than the average A+ rated EUR corporate. Go out the curve Opened and buy the 23s. Start spread 16 We see the VLVY cash curve as attractively valued Opened and an (uncertain) downgrade is more than priced into spreads. Start spread 72 Source: Danske Bank Markets 5

6 Company news from the past week Name News Implication Ahlstrom Ahlstrom announced that it has sold part of its stake in Munksjö for a capital gain of about EUR6m. The stake was a legacy from when the group divested its label-making business to Munksjö. The news is slightly credit positive as uncertain and more volatile share value is converted to more certain and stable cash value. We have not counted share values in our ratio calculations i.e. the cash received from the proceeds should improve adj. ratios slightly unless Ahlstrom decides to distribute proceeds to shareholders. Credit positive Volvo Volvo (Marketweight) announced it would sell some of its shares in Eicher Motors Limited (EML). The disposal will have no impact on either the ownership or control of the Indian truck and bus manufacturer, VE Commercial Vehicles (VECV), the JV between Volvo Group and Eicher. VECV is currently the third largest manufacturer of commercial vehicles in the Indian market. The cash gain of SEK2.4bn from the sale is positive from a credit perspective but is unlikely to move Volvo s leverage down to any significant degree. In our view, the main problem with Volvo continues to be its profitability, and deleveraging will not solve this issue. Credit positive Sandvik Sandvik (Marketweight): As previously communicated in 2013, Sandvik s supply chain is to be optimised, reducing the number of production units from 150 to about 125 over three to four years. The first phase has progressed according to plan and was initiated in the fourth quarter of 2013, involving 11 unit closures (of which five had been implemented at year-end 2014). Sandvik is now launching the second phase comprising a total of 10 unit closures, predominantly in Europe. In addition, Sandvik will implement further measures to adjust the cost base to current demand as well as make a project write-down related to Mining Systems. The total group savings are estimated at approximately SEK1.1 billion on a yearly run rate by the end of Nonrecurring charges associated with the initiatives, totaling about SEK1.9 billion, will impact Q1 15. Approximately SEK500m of these savings have already been achieved and the second phase is set to bring a further SEK600m, which is a fairly small amount considering the size of Sandvik. Overall, neutral to slightly positive news from a credit perspective in our view. We maintain our Marketweight rating on the name. Credit positive Source: Danske Bank Markets 6

7 Company news from the past week Name News Implication SAS AB (rated B-/S) reported Q1 15 figures in line with expectations (taking into account the significant volatility in the airline industry) but weaker than Q1 14. Reported EBITDA was negative SEK375m vs SEK461m in Q1 14 (however Q1 14 was positively impacted by a nonrecurring gain of SEK1.044m related to payroll expenses - so underlying EBITDA improved slightly y/y. Adjusted for one-offs, the pretax loss was SEK0.8bn vs SEK-1.2bn in Q1 14. Net debt rose to SEK2.1bn and reported net debt to LTM EBITDA was 2.8x (this excludes the NPV of op. leasing). Importantly, SAS continues to have a solid cash position with cash and cash equivalents of SEK7.1bn at end Q1 15. Committed undrawn facilities were SEK2.8bn. Shortterm SAS financial debt was SEK3.8bn. The strike in late February cost SAS a total of SEK50m. All in all, pretty much as we expected - the large cash position is comforting but earnings are still Credit neutral unsatisfying to us despite Q1 always being a difficult quarter. We continue to be positive on the SAS 2017s but after strong performance in recent months, upside is capped in our view. For the full year, SAS still expects to be able to make a pre-tax profit. This will be supported by lower fuel costs. SAS has now hedged 75% of expected fuel consumption for the next 12 months. (SAS has hedged 68% of its expected USD deficit on a 12-month basis). Based on current hedge levels, the expected group fuel cost for SAS in the 2015 financial year is SEK bn vs SEK8.8bn in FY 14 (some of the positive impact from the decline in jet fuel is mitigated by the weakening SEK vs USD). We expect a further positive effect in Outokumpu (DBM:'b'): The EU is set to impose antidumping duties on imports of stainless steel Outokumpu cold rolled sheet from China and Taiwan later this month, which should be very good for Credit positive stainless steel prices in Europe and hence also good for Outokumpu Norwegian (DBM shadow rating: BB-/B+) cancelled a significant part of its flights on Friday (Sweden, Denmark and Norway) due to a pilot strike. Based on experience from a largely grounded fleet following the Icelandic ash cloud, we guesstimate the daily cost to be some NOK20-30m. As of end 2014, NAS had a cash position of NOK2.0bn with short-term debt of NOK3.1bn. However, the majority of the short-term debt (according to Norwegian) is in fact related to aircraft financing. This part of the short-term debt will be funded by the Ex-Im bank and therefore is de-facto long-term financing/debt. Nevertheless, due to accounting issues NAS Norwegian has to present it as short-term debt until aircrafts are delivered. This mitigates the short-term Credit negative liquidity pressure - although a prolonged strike would definitely be a serious matter. At the same time it should be noted that NOK8.8bn of the NOK10.2bn long-term financing is aircraft financing - this is mainly done through the US import-export bank (state-guaranteed) and is long term in nature. We believe NAS has the ability to free up capital by doing sale and lease backs in order to mitigate the short-term liquidity pressure in Furthermore, we believe that NAS will continue to honour the bond covenants - again due to its strong asset base and potential Source: Danske Bank Markets sale and leaseback transactions. As a last resort, it could carry out a rights issue. 7

8 Selected new issues Date Issuer Coupon CCY Volume Maturity S&P / Mdy / Fitch ASW/DM Nordea Bank Ab NIBOR3M +310bps NOK m Perp / / BBBe Nordea Bank Ab STIB3M +310bps SEK m Perp / / Berkshire Hathaway Inc 1,625% EUR m Mar-35 AA / Aa2 / A Berkshire Hathaway Inc 0,75% EUR 750 m Perp AA / Aa2 / A Berkshire Hathaway Inc 1,125% EUR m Perp AA / Aa2 / A Storebrand Livsforsikrin NIBOR3M +305bps NOK m BBB / / 305 Source: Danske Bank Markets 8

9 Chart pack: euro spreads and returns Euro IG ASW, iboxx indices IG Total Return, iboxx indices, =100 Euro HY ASW, Merrill Lynch indices HY Total Return, Merrill Lynch indices, =100 Source: Macrobond Financial, Danske Bank Markets [all charts] 9

10 Chart pack: relative value itraxx vs iboxx EUR CDS Spreads Nordic Banks Euro vs US CDS indices - IG (Markit) Euro vs US HY bond indices (Merrill Lynch) Source: Bloomberg, Macrobond Financial, Danske Bank Markets [all charts] 10

11 Chart pack: general market development European swap and government yields 3M TED spread, US and euro area Euro swap curve spread EUR/USD basis swaps Source: Macrobond, Danske Bank Markets [all charts] 11

12 Chart pack: fund flows Europe, net sales US, net sales Sweden, net sales Norway, net sales Source: Macrobond Financial, Danske Bank Markets [all charts] 12

13 Chart pack: macro GDP y/y growth, calendar adjusted Purchasing Manager Indices Euro area y/y change in bank lending Euro area lending standards Source: Macrobond Financial, Danske Bank Markets [all charts] 13

14 Our coverage and shadow ratings 1 of 5 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings Danske Bank S&P Moody's Fitch Analyst(s) Recomm. Company Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating Outlook Ahlstrom Oyj B+ Stable Mads Rosendal Akelius Residential Property Ab BBB- Stable BBB- Louis Landeman Ambu A/S BBB- Stable Jakob Magnussen Ap Moeller - Maersk A/S BBB+ Stable Baa1 Stable Brian Børsting MARKET WEIGHT Arla Foods Amba BBB+ Stable Mads Rosendal Atlas Copco Ab A Stable A2 Stable Mads Rosendal UNDERWEIGHT Avinor As AA- Stable A1 Stable Ola Heldal MARKET WEIGHT Bank 1 Oslo Akershus As BBB+ Stable T. Hovard / L. Holm Bank Norwegian As BBB Stable T. Hovard / L. Holm Beerenberg Holdco Ii As B Stable Øyvind Mossige Billerudkorsnas Ab BBB- Stable Mads Rosendal Bw Offshore BB+ Stable Øyvind Mossige Cargotec Oyj BBB- Stable Mads Rosendal Carlsberg Breweries A/S Baa2 Neg BBB Stable Brian Børsting MARKET WEIGHT Cermaq Asa BB Stable Knut-Ivar Bakken Citycon Oyj BBB Stable Baa2 Stable Emil Hjalmarsson Color Group As BB- Stable B+ Niklas Ripa Com Hem Holding Ab BB- Stable Ola Heldal Danfoss A/S BBB Stable Jakob Magnussen Danske Bank A/S A Neg A3 Stable A Stable Dfds A/S BBB- Stable Niklas Ripa Dlg Finance As BB- Stable Mads Rosendal Dna Ltd BBB- Stable Ola Heldal Dnb Bank Asa A+ Stable A1 Neg T. Hovard / L. Holm UNDERWEIGHT Dong Energy A/S BBB+ Stable Baa1 Stable BBB+ Stable Jakob Magnussen MARKET WEIGHT Dsv A/S BBB Stable Brian Børsting Eg Holding B Stable Jakob Magnussen Eika Boligkreditt As A- Stable T. Hovard / L. Holm Eika Gruppen As BBB Stable T. Hovard / L. Holm Electrolux Ab BBB Stable Wr WD Brian Børsting MARKET WEIGHT Elenia Oy Jakob Magnussen OVERWEIGHT Elisa Oyj BBB Pos Baa2 Stable Ola Heldal OVERWEIGHT Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 14

15 Our coverage and shadow ratings 2 of 5 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings Danske Bank S&P Moody's Fitch Analyst(s) Recomm. Company Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating Outlook Entra Eiendom As A- Stable Ola Heldal Farstad Shipping Asa BB Neg BB- Øyvind Mossige Fingrid Oyj A+ Stable A1 Stable A+ Stable Jakob Magnussen MARKET WEIGHT Finnair Oyj BB Stable Brian Børsting Fortum Oyj A- Neg A2 Neg A- Neg Jakob Magnussen UNDERWEIGHT Fortum Varme Holding Samagt Med St BBB+ Stable Jakob Magnussen Fred Olsen Energy Asa BB Stable BB- Sondre Stormyr G4S Plc BBB- Stable Brian Børsting OVERWEIGHT Getinge Ab BB+ Neg Louis Landeman Golden Close Maritime Corp Ltd B- Sondre Stormyr Heimstaden Ab BB Stable BB- Louis Landeman Hemso Fastighets Ab BBB+ Stable BBB Emil Hjalmarsson Hkscan Oyj BB Stable Brian Børsting Hoist Kredit Ab BB- Stable B+ Gabriel Bergin Husqvarna Ab BBB- Pos Emil Hjalmarsson Ikano Bank Ab BBB Stable T. Hovard / L. Holm Investor Ab AA- Stable A1 Stable Brian Børsting OVERWEIGHT Iss A/S BBB- Stable Brian Børsting MARKET WEIGHT J Lauritzen A/S B Stable B- Bjørn Kristian Røed Jernhusen Ab A- Stable Gabriel Bergin Jyske Bank A/S A- Stable Baa1 Neg T. Hovard / L. Holm OVERWEIGHT Kesko Oyj BBB Stable Mads Rosendal Klaveness Ship Holding As BB- Stable B+ Bjørn Kristian Røed Loomis Ab BBB- Stable Brian Børsting Luossavaara-Kiirunavaara Ab BBB+ Stable Louis Landeman Meda Ab BB- Stable Louis Landeman Metsa Board Oyj BB Stable B1 Pos Mads Rosendal Metso Oyj BBB Stable Baa2 Stable Mads Rosendal MARKET WEIGHT Ncc Ab BBB- Stable Emil Hjalmarsson Neste Oil Oyj BBB- Stable Jakob Magnussen MARKET WEIGHT Nokia Oyj BB Pos Ba2 Pos BB Stable Ola Heldal MARKET WEIGHT Nokian Renkaat Oyj BBB+ Stable Jakob Magnussen Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 15

16 Our coverage and shadow ratings 3 of 5 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings Danske Bank S&P Moody's Fitch Analyst(s) Recomm. Company Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating Outlook North Atlantic Drilling Ltd BB- Neg B+ Sondre Stormyr Norwegian Air Shuttle Asa BB- Stable B+ Brian Børsting Norwegian Property Asa BBB- Stable Ola Heldal Nykredit Bank A/S A+ Neg Baa2U Stable A Stable T. Hovard / L. Holm MARKET WEIGHT Nynas Group B+ Stable B+ Jakob Magnussen Ocean Yield Asa BB BB- Øyvind Mossige Odfjell Se B+ Stable B Bjørn Kristian Røed Olav Thon Eiendomsselskap Asa BBB+ Stable Ola Heldal Olympic Shipping As B+ Stable B Øyvind Mossige Orkla Asa BBB+ Pos Ola Heldal Outokumpu Oyj B Pos Mads Rosendal Pohjola Bank Oyj AA- Neg Aa3 Neg A+ Stable T. Hovard / L. Holm UNDERWEIGHT Posten Norge As A- Stable Ola Heldal Postnord Ab BBB+ Stable Gabriel Bergin Prosafe Se BB Stable Sondre Stormyr Ramirent Oyj BB+ Stable Brian Børsting Sampo Oyj Baa2 Stable T. Hovard / L. Holm MARKET WEIGHT Sandnes Sparebank BBB+ Stable T. Hovard / L. Holm Sandvik Ab BBB Neg Mads Rosendal MARKET WEIGHT Sas Ab B- Stable Wr Stable Brian Børsting Sbab Bank Ab A Neg A2 Neg T. Hovard / L. Holm MARKET WEIGHT Scania Ab A- Stable Mads Rosendal MARKET WEIGHT Schibsted Asa BBB Stable Ola Heldal Seadrill Ltd BB Neg BB- Sondre Stormyr Securitas Ab BBB Stable Wr Brian Børsting MARKET WEIGHT Skandinaviska Enskilda Banken Ab A+ Neg A1 Neg A+ Pos T. Hovard / L. Holm OVERWEIGHT Skanska Ab BBB+ Stable Emil Hjalmarsson Skf Ab BBB+ Neg Baa1 Stable Mads Rosendal UNDERWEIGHT Sognekraft As BBB Stable BBB Jakob Magnussen Solstad Offshore Asa BB- Stable B+ Øyvind Mossige Spar Nord Bank A/S BBB+ Stable T. Hovard / L. Holm Sparebank 1 Boligkreditt As A- Stable Aaa T. Hovard / L. Holm Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 16

17 Our coverage and shadow ratings 4 of 5 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings Danske Bank S&P Moody's Fitch Analyst(s) Recomm. Company Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating Outlook Sparebank 1 Nord Norge A2 Neg A Stable T. Hovard / L. Holm UNDERWEIGHT Sparebank 1 Smn A2 Neg A- Stable T. Hovard / L. Holm UNDERWEIGHT Sparebank 1 Sr-Bank Asa A2 Neg A- Stable T. Hovard / L. Holm UNDERWEIGHT Sponda Oyj BBB- Stable Emil Hjalmarsson St1 Nordic Oy BB Stable Jakob Magnussen Statkraft Sf A- Stable Aaa Stable Jakob Magnussen OVERWEIGHT Statnett Sf A+ Stable Wr Stable Jakob Magnussen MARKET WEIGHT Statoil Asa AA- Stable Aa2 Stable Jakob Magnussen UNDERWEIGHT Steen & Strom As BBB+ Stable Ola Heldal Stena Ab BB Stable B2 Stable Niklas Ripa OVERWEIGHT Stockmann Oyj Abp B+ Stable Mads Rosendal Stolt-Nielsen Ltd BB+ Stable BB Bjørn Kristian Røed Stora Enso Oyj BB Stable Ba2 Stable WD Mads Rosendal MARKET WEIGHT Storebrand Bank Asa BBB+ Stable BBB+ Neg Baa2 Neg T. Hovard / L. Holm Sunnfjord Energi As BBB- Stable BBB- Jakob Magnussen Suomen Hypoteekkiyhdistys A- Stable T. Hovard / L. Holm Svensk Fastighetsfinansiering Ab BBB Stable Louis Landeman Svenska Cellulosa Ab Sca A- Stable Baa1 Stable Mads Rosendal OVERWEIGHT Svenska Handelsbanken Ab AA- Neg Aa3 Neg AA- Stable T. Hovard / L. Holm MARKET WEIGHT Swedavia Ab A- Stable Gabriel Bergin Swedbank Ab A+ Neg A1 Neg A+ Pos T. Hovard / L. Holm MARKETWEIGHT Swedish Match Ab BBB Stable Baa2 Stable Brian Børsting OVERWEIGHT Sydbank A/S Baa1 Neg T. Hovard / L. Holm OVERWEIGHT Saab Ab BBB+ Stable Wr Emil Hjalmarsson Tallink Group As BB Stable BB- Niklas Ripa Tdc A/S BBB Neg Baa3 Stable BBB Neg Ola Heldal MARKET WEIGHT Teekay Offshore Partners Lp BB- Stable B+ Bjørn Kristian Røed Tele2 Ab BBB Stable Ola Heldal Telefonaktiebolaget Lm Ericsson BBB+ Stable Baa1 Stable BBB+ Stable Ola Heldal MARKET WEIGHT Telenor Asa A Stable A3 Stable Ola Heldal MARKET WEIGHT Teliasonera Ab A- Stable A3 Neg A- Stable Ola Heldal UNDERWEIGHT Teollisuuden Voima Oyj BBB Neg Wr BBB Stable Jakob Magnussen OVERWEIGHT Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 17

18 Our coverage and shadow ratings 5 of 5 Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings Danske Bank S&P Moody's Fitch Analyst(s) Recomm. Company Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating Outlook Thon Holding As BBB+ Stable Ola Heldal Tine Sa BBB+ Stable Ola Heldal Upm-Kymmene Oyj BB+ Stable Ba1 Stable WD Mads Rosendal MARKET WEIGHT Vasakronan Ab A- Stable Emil Hjalmarsson Vattenfall Ab A- Stable A3 Stable A- Neg Jakob Magnussen MARKET WEIGHT Vestas Wind Systems A/S BBB- Pos Niklas Ripa OVERWEIGHT Victoria Park Ab BB- Stable B+ Louis Landeman Volvo Ab BBB Neg Baa2 Neg BBB Stable Mads Rosendal MARKET WEIGHT Wilh Wilhelmsen Asa BBB- Stable Bjørn Kristian Røed Yit Oyj B Neg Emil Hjalmarsson Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 18

19 Fixed Income Credit Research team Thomas Hovard, Chief Analyst Head of Credit Research Louis Landeman, Analyst TMT, Industrials llan@danskebank.com Mads Rosendal, Analyst Industrials, Pulp & Paper madro@danskebank.com Jakob Magnussen, Senior Analyst Utilities, Energy jakja@danskebank.com Knut-Ivar Bakken, Analyst Fish Farming knb@danskebank.com Brian Børsting, Senior Analyst Industrials brbr@danskebank.com Lars Holm, Senior Analyst Financials laho@danskebank.dk Gabriel Bergin, Analyst Strategy, Industrials gabe@danskebank.com Niklas Ripa, Senior Analyst High Yield, Industrials niri@danskebank.com Bjørn Kristian Røed, Analyst Shipping bred@danskebank.com Ola Heldal, Analyst TMT olh@danskebank.com Sondre Dale Stormyr, Analyst Offshore Rigs sost@danskebank.com Henrik René Andresen, Analyst Credit Portfolios hena@danskebank.com Øyvind Mossige, Senior Analyst Oil Services omss@danskebank.com Emil Hjalmarsson, Analyst Real Estate, Construction emih@danskebank.com 19

20 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 Ola Heldal, Analyst. Analyst certification Each research analyst responsible for the content of this research report certifies that the views expressed in the 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 high-quality 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. 20

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