Weekly Credit Update. 14 February Senior analyst Louis Landeman

Transcription

1 Weekly Credit Update Senior analyst Louis Landeman llan@danskebank.com 14 February 2017 This document is intended for institutional investors and is not subject to all the independence and disclosure standards applicable to debt research reports prepared for retail investors. Investment Research Important disclosures and certifications are contained from page 31 of this report

2 - General credit market news and current themes - Scandi high yield/unrated - Scandi investment grade - Credit indicators - Coverage universe, credit ratings and recommendations Contents 2

3 What s on our minds - General credit market news In the past week synthetic credit indices traded broadly sideways in spite of the increased political stress in Europe due to the forthcoming elections in France and Greece s debt problems. The European credit market saw some support from further inflows into both IG and HY bond funds. Inflows into IG funds accelerated last week, while EUR-denominated HY funds saw net inflows for the third consecutive week. The inflows into bond funds coincided with a busy week for both IG and HY new issuance activity. According to data from IGM, EUR IG supply totalled EUR26bn last week dominated by SSAs - with EUR1.9bn of HY supply. The trend of Nordic companies gaining official ratings continued as the Swedish manufacturer of outdoor maintenance and recreational products Husqvarna was assigned a BBB rating by Standard & Poor s with stable outlook. While Husqvarna s SEK bonds already traded in line with the SEK BBB index prior to the announcement, the bonds still managed to tighten some additional 10-15bp. In the real estate sector we presented a trade idea on Swedish Kungsleden following its announcement to carry out a SEK1.6bn rights issue. Considering the company s ambition to strengthen its balance sheet, we think that the SEK 2019 bond looks attractively valued. We also recommend buying Vestas 2022s in EUR as we believe these bonds trade wide relative to peers with similar credit quality. Source: Bloomberg, Danske Bank Markets (both charts) 3

4 Scandi HY/unrated 4

5 ASW (bps) Buy NOKIA 2019 USD, trading at wide margin to Nokia 2019 EUR Published on 23 May 2016 Medium credit risk Buy Kungsleden 2019s in SEK - Reducing leverage through rights issue (Published 7 February) Key arguments for the trade Last week, Kungsleden announced that its board had decided to conduct a rights issue of around SEK1.6bn in order to strengthen its balance sheet. Consequently, we see a positive credit trend for Kungsleden. Kungsleden also presented a revised financial policy, with a near-term target for LTV of 50-55% (previously 55% target for 2020). Kungsleden s bonds have previously traded in line with sector peers such as Klövern and Sagax and the SEK BB index. Considering the company s ambition to strengthen its balance sheet, we think a repricing corresponding to around one credit notch is justified (i.e. around 30-40bp tightening potential on the 2019 bond). Chart 1. Relative value, indicative mid spreads As of end-september 2016, Kungsleden s gross LTV was 58%, down from 64% at YE The secured LTV stood at 54% at end- September. In conjunction with the rights issue announcement, the company stated that it will strive for an LTV in the interval of 50-55% at this point in the cycle (pro forma rights issue: 52%). Following the company s announcement, we upgraded our bond recommendation on Kungsleden from Marketweight to Overweight (see Kungsleden - Reducing leverage through rights issue, 7 February 2017). Chart 2. Recent years LTV vs new target range 65% 60% 55% 50% 45% / / / /01 Castellum Ab Corem Property D Carnegie Fabege Ab Fastpartner Ab Heimstaden Hemfosa Fastighe Klovern Ab Kungsleden Sagax Ab Victoria Park Wihlborgs Fastig 40% E 2017E New LTV target range Gross LTV ASW spreads based on observed mid prices in market Source: Bloomberg, Danske Bank Markets Source: Bloomberg, Danske Bank Markets 5

6 Recent trade ideas (high yield and unrated) Type Trade Currency Idea Date Outright Buy Kungsleden 2019s in SEK SEK Considering Kungsleden's ambition to strengthen its balance sheet, we think a repricing 07 feb 2017 corresponding to around one credit notch is justified Outright Buy SAS SEK 2019 Conv SEK The SAS SEK 2019 Conv is attractively priced and backed by a significant cash position 20 jan 2017 Outright Buy TDC EUR 3015 Hybrid EUR Outright Buy Castellum 2020's in SEK SEK The TDC 3015 Hybrids trade attractive relative to other 'BB' rated EUR hybrids Following the acquisition of Norrporten, Castellum has further strengthened its business risk profile. Outright Buy Golar LNG Partners bonds NOK, USD The LNG shipping market is set for several tenders for long-term contracts in We find the yield in Golar LNG Partners attractive at current levels and argue the company should catch up with the relative strong performance of peers. Outright Buy Fastpartner 2018s in SEK SEK FastPartner s bonds are still trading at generous spread levels and, in our opinion, the bonds should have potential for further tightening. 04 jan nov nov okt 2016 Outright Buy Outukumpu 2021 EUR Outukumpu 2021 trade attractive compared to fair value "B+" EUR industrials curve and we expect further deleveraging. 31 okt 2016 Outright Buy Victoria Park 2020s in SEK SEK Building scale through organic growth and acquisitions Switch Buy Kemira 2022s, fund by selling Kemira 2019s EUR The spread differential between the Kemira 2019s and 2022s has widened significantly since the end of A flattening of the Kemira curve indicates potential for at least 20bp tightening, in our view. 15 sep sep 2016 Source: Danske Bank Markets See the end of this document for a list of our coverage including recommendations. 6

7 Best and worst performers (Nordic coverage universe) - High yield/unrated 1 week in local currencies 1 month in local currencies ,755 Farstad Shipping ASA NOK 2018 Beerenberg Holdco II AS NOK 2018 Outokumpu OYJ EUR 2019 Odfjell SE NOK 2018 Stolt-Nielsen Ltd NOK 2019 Stolt-Nielsen Ltd NOK 2020 BW Offshore Ltd NOK 2021 Stena AB EUR 2020 Teekay Offshore Partners LP/Teekay Stora Enso OYJ EUR 2018 Color Group AS NOK 2017 Hoist Kredit AB EUR 2017 Fred Olsen Energy ASA NOK 2019 Odfjell SE NOK 2017 Victoria Park AB SEK 2018 North Atlantic Drilling Ltd NOK 2018 Seadrill Ltd SEK 2019 North Atlantic Drilling Ltd USD 2019 Seadrill Ltd NOK 2018 Olympic Ship AS NOK , Farstad Shipping ASA NOK 2018 Beerenberg Holdco II AS NOK 2018 SAS AB SEK 2019 Teekay Offshore Partners LP NOK 2018 Teekay Offshore Partners LP/Teekay Odfjell SE NOK 2018 Golar LNG Partners LP NOK 2017 Ahlstrom OYJ EUR 2019 Golar LNG Partners LP USD 2020 Ship Finance International Ltd NOK 2019 BW Offshore Ltd NOK 2020 Norwegian Air Shuttle ASA NOK 2018 Color Group AS NOK 2017 Fred Olsen Energy ASA NOK 2019 Seadrill Ltd SEK 2019 Seadrill Ltd USD 2020 North Atlantic Drilling Ltd NOK 2018 North Atlantic Drilling Ltd USD 2019 Olympic Ship AS NOK 2019 Seadrill Ltd NOK Change in local currencies (bp) Change in local currencies (bp) Source: Bloomberg, Danske Bank Markets (both charts) 7

8 Recent Nordic high yield/unrated issuance* Date Issuer Coupon CCY Volume Maturity S&P / Mdy / Fitch ASW/DM Link Mobility Group Asa 4.75% EUR 50 m Feb-22 / / Mercury Bondco 7.125% EUR 600 m May-21 B / B3e / Horizon Parent Holdings 8.25% EUR 350 m Feb-22 CCC+ / / Veneto Banca Spa 0.5% EUR m Feb-20 B / / BBB Banca Monte Dei Paschi S EUR003M +85bps EUR 500 m Jan-21 / B2 * / B- * Tobin Properties Ab STIB3M +900bps SEK 470 m Jul-19 / / Forex Bank Ab STIB3M +565bps SEK 250 m Feb-27 / / Norwegian Air Shuttle As STIB3M +500bps SEK 800 m Aug-20 / / Teekay Lng Partners NIBOR3M +600bps NOK m Oct-21 / / Hoegh Lng Holdings NIBOR3M +500bps NOK m Feb-22 / / Olav Thon Eiendomsselska 2.9% NOK 250 m Jan-27 / / Sparebank 1 Ringerike NIBOR3M +83bps NOK 270 m Mar-22 / / Brage Finans Sa NIBOR3M +94.5bps NOK 350 m Sep-18 / / Vasakronan Ab NIBOR3M +91bps NOK 600 m Jan-22 / / Sveavalvet Ab STIB3M +650bps SEK 250 m Dec-19 / / Tele2 Ab STIB3M +87bps SEK m Mar-19 / / Norlandia Health Care STIB3M +450bps SEK m Dec-21 / / Norlandia Health Care NIBOR3M +450bps NOK 750 m Dec-21 / / Hufvudstaden Fastigh Ab 1.2% SEK 500 m Dec-21 / / Volvo Car Ab STIB3M +235bps SEK m Mar-22 BB / Ba2 / Volvo Car Ab 2.5% SEK 500 m Mar-22 BB / Ba2 / Hemfosa Fastigheter Ab STIB3M +280bps SEK 750 m Dec-19 / / Host Property Ab STIB3M +600bps SEK 300 m Dec-19 / / Kongsberg Gruppen Asa 2.9% NOK 450 m Dec-23 / / 119* Sparekasse Kronjy (Tier 2) CIBO03M +400bps DKK 200 m Dec-26 / / 400 *Excluding increases in existing bond issues (taps) Source: Bloomberg, Danske Bank Markets 8

9 Company news from the past week (high yield/unrated) Name News Implication The positive momentum in TVO (OW) continues, following UPM (owns 25% of TVO) being upgraded TVO to Baa3/S from Ba1/PO by Moody's. TVO benefits from having strong owners, as these are contractually obligated to pay all fixed costs in TVO. Credit positive for TVO Credit positive EG Heimstaden Danish it provider EG might get some tailwind in the upcoming Danish public IT tenders. This is because the association of Danish municipalities has decided to prematurely terminate a contract with KMD due to significant delays. KMD is the largest provider of public IT systems and amongst the favorites to win upcoming tenders. A worsened relationship between KMD and parts of the public sector in Denmark could be viewed as a boost to EG s chance of winning the lucrative long-term public contracts instead of KMD. EG s acquisition of public IT provider Silkeborg Data in 2015 has certainly improved EG s glut in its offering towards public contracts. Marginally positive for EG at this stage. Heimstaden (MW) acquired three project properties in Copenhagen for DKK1.2bn. Location at Islands Brygge. Residential properties that are to be ready Hence, Heimstaden's rapid expansion continues. Slightly credit negative due to increased project risk.. Credit positive Credit negative Source: Danske Bank Markets 9

10 Scandi investment grade 10

11 Buy NOKIA 2019 USD, trading at wide margin to Nokia 2019 EUR Published on 23 May 2016 Buy Vestas 2.75% 2022 outright (revisited) Trading wide compared to companies with comparable credit risks (Published 9 February 2017) Key arguments for the trade Vestas bonds are trading just tighter than the BB+ fair value curve, which leaves them with a substantial performance potential compared to the BBB fair value curve. Even when adjusting for a premium for Vestas s unrated status, we see a tightening potential of around 50bp. Vestas delivered its Q4 16 result. The performance was driven both by the projects division (benefiting from global demand for wind turbines) and by the stable service segments. Strong Q4 16 FCF left reported net debt to EBITDA at negative 1.8x. We see the corresponding metric in adjusted terms at 0.7x (we apply a conservative approach and treat prepayments as debt). We see continued strong momentum for Vestas s business case driven by global demand from renewable energy and driven by the industry s success in cost cutting which in some instances already makes wind more attractive than conventional generation methods, even without subsidies. Earnings from Vestas s service segment are relatively stable as they originate from long-term service and maintenance contracts. Vestas is actively growing this and has also won contracts on non-vestas turbines. We expect that Vestas s share of earnings from this segment will grow considerably from the current 14%. See Vestas Wind Systems Q4 16, 8 February 2017 Relative value (EUR), indicative mid spreads (Chart 1) Credit spread development (Chart 2) Ask Spread (EUR)* VWSDC 2.75% '22 Industrials BB+ Industrials BBB- Industrials BBB 0 YTW** * Z-spreads. Discount margin for floaters. Swapped to indicated currency. ** Years-to-worst Note: Fair value curve(s) based on Danske Bank Markets' (mid) peer group of European issuers ASW Issue Currency Oct-2016 Nov-2016 Nov-2016 Dec-2016 Jan-2017 Jan-2017 VWSDC EUR 2.75% 2022 IBOXX EURO Industrials Source: Bloomberg, Danske Bank Markets Source: Bloomberg, Danske Bank Markets 11

12 Recent trade ideas (investment grade) Type Trade Currency Idea Date Outright Buy Vestas EUR2022s EUR Vestas bonds are trading just tighter than the BB+ fair value curve 09 feb 2017 which leaves them with a substantial performance potential compared to the 'BBB' fair value curve Switch Switch to SHBASS 1.125% 2022s from SHBASS 4.375% 2021s Outright Buy Carlsberg EUR 2024 (revisited) EUR We recommended to buy the Carlsberg EUR2024. The fundamental case has improved further following the H1 16 report from Carlsberg. Switch Buy Carlsberg EUR 2024 and fund it by selling Carlsberg EUR 2019 (revisited) EUR Outright Buy TVO EUR, SEK EUR The SHBASS 1.125% 2022s have underperformed the SHBASS 4.375% 2021s since the bank reported Q3 16 results. While the impact of Brexit and Basel 4 remain risks, they do not justify the kink in the SHBASS curve, in our view. Outright Buy Sandvik EUR2022 and EUR2026 EUR Trump could be the trigger for mining bonds. Combined with very attractive valuation of the Sandvik EUR 2022 and EUR 2026 bonds we have become positive on the name. Outright Buy Metso EUR 2022 EUR Trump could be the trigger for mining bonds. Combined with very attractive valuation of the Metso EUR 2022 bond we recommend to buy the bond. TVO s EUR curve trades attractive compared to the fair value BB+ industrials curve and its SEK curve offers a pick up compared to the EUR curve Outright Buy Caruna 1.5% 2023 outright EUR Being BBB+ rated, Caruna trades between the BBB- and the BBB curve We recommended to buy the Carlsberg EUR2024 and fund it by selling the Carlsberg EUR2019. The fundamental case has improved further following the H1 16 report from Carlsberg. 04 jan nov nov okt okt aug aug 2016 Switch Buy DONGAS 3% call 2020 and fund by selling DONGAS 4.875% call 2018 EUR The DONGAS 3% call 2020 have clearly underperformed the DONGAS 4.875% call 2018 in the past 6 months. This is unjustified given the benign newsflow in DONG Energy 09 aug 2016 Source: Danske Bank Markets See the end of this document for a list of our coverage including recommendations 12

13 Best and worst performers (Nordic coverage universe) - Investment grade 1 week in local currencies 1 month in local currencies -13 Teollisuuden Voima Oyj Teollisuuden Voima Oyj Swedish Match AB EUR Teollisuuden Voima Oyj EUR SCA Hygiene AB EUR G4S International Finance PLC EUR Danske Bank A/S EUR Teollisuuden Voima Oyj EUR Danske Bank A/S EUR Nordea Bank AB EUR Nordea Bank AB EUR Teollisuuden Voima Oyj EUR SpareBank 1 SR-Bank ASA EUR Swedbank AB SEK Volvo Treasury AB EUR Danske Bank A/S SEK Sampo Oyj SEK Swedish Match AB SEK SpareBank 1 SR-Bank ASA NOK Danske Bank A/S SEK SpareBank 1 SMN NOK SpareBank 1 SR-Bank ASA NOK 2018 SpareBank 1 SMN NOK Change in local currencies (bp) Metso OYJ EUR OP Corporate Bank plc EUR Skandinaviska Enskilda Banken AB EUR -20 Teollisuuden Voima Oyj EUR SpareBank 1 SR-Bank ASA EUR SpareBank 1 SMN EUR Svenska Handelsbanken AB EUR 2018 Sydbank A/S EUR 2018 Swedbank AB SEK 2018 Swedbank AB SEK 2018 Swedbank AB SEK 2018 SpareBank 1 SR-Bank ASA NOK 2018 Danske Bank A/S SEK 2019 Statkraft AS EUR 2017 Telia Co AB EUR 2031 Danske Bank A/S SEK 2019 SpareBank 1 SMN NOK Change in local currencies (bp) Source: Bloomberg, Danske Bank Markets (both charts) 13

14 Selected new investment-grade issues** Date Issuer Coupon CCY Volume Maturity S&P / Mdy / Fitch ASW/DM Leaseplan Corporation Nv EUR003M +65bps EUR 5 m Feb-20 BBB- / Baa1 / BBB Eika Boligkreditt As 0.375% EUR 500 m Feb-24 / Aa1e / Unilever Nv 1% EUR 600 m Feb-27 A+ / A1 / A Unilever Nv 0.375% EUR 600 m Feb-23 A+ / A1 / A Ryanair Dac 1.125% EUR 750 m Aug-23 BBB+ / / BBB Stockholm Sweden STIB3M +100bps SEK m Feb-22 AAA / / Stockholm Sweden 0.675% SEK m Feb-22 AAA / / Skandinaviska Enskilda 0.3% EUR 500 m Feb-22 A+ / Aa3e / AA Norddeutsche Landesbank EUR003M +30bps EUR 10 m Feb-24 / A3 / A Agence Francaise Develop 0.375% EUR 250 m Apr-24 AA / / AAe Bayerische Landesbank 1.12% EUR 10 m Mar-27 / A1 / A Bergen Kommune NIBOR3M +44.7bps NOK m May-21 / / Landshypotek Bank Ab 0.065% SEK 300 m Jan-19 A- / / A Storebrand Bank Asa NIBOR3M +175bps NOK 150 m Feb-27 BBB+ / / 175 Source: Bloomberg, Danske Bank Markets *Estimated **Excluding increases in existing bond issues (taps) 14

15 Company news from the past week (investment grade) Name News Implication Carlsberg According to a Bloomberg article Carlsberg (MW) is considering a purchase of 20% of China s Tsingtao Brewery - a stake that is currently owned by Japanese brewer Asahi. The price should be around USD1.2bn. According to the article no final decision has been made but Carlsberg has hired advisors to work on a bid. In our view it would be a very surprising move if Carlsberg decided to acquire a minority shareholding with no control at this time as the CEO stated as late as yesterday Credit neutral that it is not about size but about strengthening Carlsberg s core. It would also contradict the statement in the annual report 2016 that leverage was expected to decline in 2017 versus We only see a small likelihood of this happening. Norwegian Banks First take on proposal regarding implementation of BRRD in Norway (560 pages) is that it looks like it will be a straightforward implementation comparable to Denmark. This is evident given that they don t suggest to build a Stability Fund to be able to do pre-cautionary recapitalisation and that they only aim to build a Resolution Fund to the minimum of one percent of guaranteed deposits after 10 years - about NOK10bn. Furthermore, it was explicitly stated at the press conference that senior bonds could be used for bail in if own funds do not suffice. This is slightly credit negative as one could have expected them to be more supportive towards senior creditors like Sweden. Credit negative PostNord DNB (UW): the proposed implementation of BRRD in Norway is already reflected in a negative adjustment notch to S&P's rating. So we do not expect any rating changes following this. PostNord (UW) reported a record fall in Danish mail volumes (-23% y/y), which took operating income in PostNord Denmark to a loss (ex one-offs). Due to the continued and increasingly weak situation in the Danish business PostNord will introduce a completely new production model in Denmark, which will entail "major restructuring costs and losses" in the coming two years. In Q4, PostNord takes a goodwill and tangible assets impairment of SEK1.2bn in Denmark, which resulted in a quarterly EBIT of negative SEK1bn. Swedish mail volumes are also declining at a fast pace y/y, but EBIT ex one-offs increased y/y due to higher parcel (e-commerce) volumes and cost adjustments. From a credit perspective, we note a positive cash contribution to the group of around SEK900m from the Posten Pension fund, which (together with reduction in pension provisions due to higher rates) helps decrease net debt and takes adjusted leverage just below 2x from 2.8x in Q3. We continue to see challenging times ahead for PostNord and remain cautious on their SEK bonds, currently trading in line with the BBB curve. Credit negative Source: Danske Bank Markets 15

16 Company news from the past week (investment grade) Name News Implication Nibe NIBE (MW) announced it has acquired 50% of Canadian heat pump company CGC Group (with an option to acquire the remainder). CGC will add around 1% to 2017E sales and EBIT, so another addon acquisition for NIBE and we do not expect the deal to put any short-term pressure on debt metrics. Credit neutral NIBE is expected to release Q4 figures on Thursday. Nordax Nordax' operating profit slightly lower in Q4 than in Q3 due to trading income and higher costs, but NII up 6%. Expenses rose due to higher volumes, investments and regulatory as a result of this, the cost/income ratio increased to 38.8% up 4pp q/q. Positively, the net interest margin was higher in all of Nordax markets. Loan losses were stable overall with a loan loss ratio in Q4 of 1.3%, with q/q improvement in Sweden and Finland, while the Norwegian loan loss ratio increased to 2.2% from 1.5% (1.7% for the full year). Lending volumes increased 2.5% in the quarter excluding FX effects. Capitalisation slightly higher at 14% from 13.9% in Q3. Slightly credit positive results as Nordax delivers on the business model and showing slight increases in margins on higher volumes, while credit quality remained stable. Credit neutral Source: Danske Bank Markets 16

17 Credit indicators Credit Indicators 17

18 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] 18

19 Chart pack: relative value itraxx vs iboxx Euro vs US CDS indices - IG (Markit) Euro vs US HY bond indices (Merrill Lynch) Source: Macrobond Financial, Danske Bank Markets [all charts] 19

20 Chart pack: general market development European swap and government yields 3M Libor, US, Euro area, Sweden and Norway Euro swap curve spread EUR/USD basis swaps Source: Macrobond Financial, Danske Bank Markets [all charts] 20

21 Chart pack: funds flow Europe, net sales US, net sales Sweden, net sales Norway, net sales Source: Macrobond Financial, Danske Bank Markets [all charts] 21

22 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] 22

23 Chart pack: Cash vs. CDS Sub financials cash vs. cds Senior financials cash vs. cds itraxx main vs. Iboxx non-financials A itraxx main vs. Iboxx non-financials BBB Source: Macrobond Financial, Danske Bank Markets [all charts] 23

24 Coverage universe, credit ratings and recommendations 24

25 Our coverage 1 of 5 Ratings from S&P/Moody's/Fitch S&P Moody's Fitch Sector Analyst(s) Recomm. Company Rating Outlook Rating Outlook Rating Outlook Ahlstrom Oyj MATERIALS M. Rosendal / J. Magnussen MARKETWEIGHT Akelius Residential Property Ab BBB- Stable REAL ESTATE L. Landeman / G. Bergin MARKETWEIGHT Aktia Bank Plc A- Stable A3 Pos BANKS K. Jensen / G. Bergin Alandsbanken Abp BBB Stable BANKS K. Jensen / G. Bergin Ambu A/S HEALTHCARE J. Magnussen / M. Rosendal OVERWEIGHT Ap Moller - Maersk A/S BBB Neg Baa2 Neg SHIPPING B. Børsting/J. Magnussen MARKETWEIGHT Arla Foods Amba CONSUMER GOODS M. Rosendal / G. Bergin Atlas Copco Ab A Stable A2 Stable A Stable MACHINERY & HEAVY INDUSTRIALS B. Børsting / M. Rosendal UNDERWEIGHT Avinor As AA- Neg A1 Stable TRANSPORTATION H. Syed/ B. Børsting MARKETWEIGHT Balder Baa3 Stable REAL ESTATE L. Landeman / G. Bergin MARKETWEIGHT Beerenberg Holdco Ii As ENERGY J. Meyer / B. Engebretsen Billerudkorsnas Ab MATERIALS M. Rosendal / L. Landeman MARKETWEIGHT Bonum Pankki Oyj BBB Stable BANKS K. Jensen / G. Bergin Carlsberg Breweries A/S Baa2 Stable BBB Stable CONSUMER GOODS B. Børsting / M. Rosendal MARKETWEIGHT Caruna Networks Oy BBB+ Stable UTILITIES J.Magnussen / L.Landeman OVERWEIGHT Castellum Ab REAL ESTATE L. Landeman / G. Bergin OVERWEIGHT Citycon Oyj BBB Stable Baa1 Stable REAL ESTATE L. Landeman / G. Bergin MARKETWEIGHT Color Group As TRANSPORTATION B. Børsting / M. Rosendal MARKETWEIGHT Com Hem Holding Ab BB Stable TMT M. Rosendal / J. Magnussen OVERWEIGHT Corem Property Group Ab REAL ESTATE L. Landeman / G. Bergin UNDERWEIGHT Danfoss A/S BBB Stable MACHINERY & HEAVY INDUSTRIALS B. Børsting / J. Magnussen MARKETWEIGHT Destia Group Oy CONSTRUCTION A. Moberg / L. Landeman OVERWEIGHT Dfds A/S SHIPPING B. Børsting / M. Rosendal OVERWEIGHT Dlg Finance As CONSUMER GOODS M. Rosendal / B. Børsting Dna Ltd TMT M. Rosendal / J. Magnussen OVERWEIGHT Dnb Bank Asa A+ Neg Aa2 Neg BANKS K. Jensen / G. Bergin UNDERWEIGHT Dong Energy A/S BBB+ Stable Baa1 Neg BBB+ Stable UTILITIES J. Magnussen / L. Landeman MARKETWEIGHT Dsv A/S TRANSPORTATION B. Børsting / M. Rosendal OVERWEIGHT Eg Holding SERVICES & IT J. Magnussen / B. Børsting Eika Boligkreditt As BANKS K. Jensen / G. Bergin Eika Forsikring As INSURANCE K. Jensen / G. Bergin Eika Gruppen As FINANCIALS K. Jensen / G. Bergin Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 25

26 Our coverage 2 of 5 Ratings from S&P/Moody's/Fitch S&P Moody's Fitch Sector Analyst(s) Recomm. Company Rating Outlook Rating Outlook Rating Outlook Ellevio Ab UTILITIES J.Magnussen / L.Landeman Electrolux Ab A- Stable Wr WD CONSUMER GOODS A. Moberg / G. Bergin MARKETWEIGHT Elenia Oy BBB UTILITIES J. Magnussen / L. Landeman MARKETWEIGHT Elisa Oyj BBB+ Stable Baa2 Stable TMT M. Rosendal / J. Magnussen MARKETWEIGHT Entra Asa REAL ESTATE H. Syed/ B. Engebretsen MARKETWEIGHT Fastpartner Ab REAL ESTATE L. Landeman / G. Bergin OVERWEIGHT Felleskjopet Agri Sa CONSUMER GOODS B. Børsting / M. Rosendal Fingrid Oyj AA- Stable A1 Pos AA- Stable UTILITIES J. Magnussen / L. Landeman OVERWEIGHT Finnair Oyj TRANSPORTATION B. Børsting / M. Rosendal MARKETWEIGHT Fortum Oyj BBB+ Stable Baa1 Stable BBB+ Stable UTILITIES J. Magnussen / L. Landeman UNDERWEIGHT Fortum Varme Holding Samagt MBBB+ Stable UTILITIES J. Magnussen / L. Landeman MARKETWEIGHT G4S Plc BBB- Neg SERVICES & IT B. Børsting / M. Rosendal MARKETWEIGHT Gaslog Ltd SHIPPING J. Meyer / B. Engebretsen MARKETWEIGHT Getinge Ab HEALTHCARE A. Moberg / L. Landeman UNDERWEIGHT Golar Lng Partners Lp SHIPPING J. Meyer / B. Engebretsen Heimstaden Ab REAL ESTATE L. Landeman / G. Bergin MARKETWEIGHT Hemso Fastighets Ab A- Stable REAL ESTATE L. Landeman / G. Bergin Hexagon Ab MACHINERY & HEAVY INDUSTRIALS A. Moberg / L. Landeman MARKETWEIGHT Hkscan Oyj CONSUMER GOODS M. Rosendal / B. Børsting MARKETWEIGHT Hoegh Lng Holdings Ltd SHIPPING J. Meyer / B. Engebretsen Hoist Kredit Ab Ba1 Stable BANKS G. Bergin / L. Landeman MARKETWEIGHT Husqvarna Ab BBB Stable CONSUMER GOODS A. Moberg / L. Landeman MARKETWEIGHT Ica Gruppen Ab CONSUMER GOODS A. Moberg / G. Bergin MARKETWEIGHT If P&C Insurance Holding Ltd A- Stable INSURANCE K. Jensen / G. Bergin Ikano Bank Ab BANKS K. Jensen / G. Bergin Investor Ab AA- Stable Aa3 Stable CORPORATES G. Bergin / B. Børsting OVERWEIGHT Iss A/S BBB Stable SERVICES & IT B. Børsting / M. Rosendal OVERWEIGHT J Lauritzen A/S SHIPPING J. Meyer / B. Engebretsen Jefast Holding Ab REAL ESTATE L. Landeman / G. Bergin OVERWEIGHT Jernhusen Ab REAL ESTATE L. Landeman / G. Bergin MARKETWEIGHT Jyske Bank A/S A- Stable Baa1U Stable BANKS K. Jensen / G. Bergin OVERWEIGHT Kemira Oyj Wr MATERIALS M. Rosendal / L. Landeman OVERWEIGHT Kesko Oyj CONSUMER GOODS B. Børsting / G. Bergin OVERWEIGHT Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 26

27 Our coverage 3 of 5 Ratings from S&P/Moody's/Fitch S&P Moody's Fitch Sector Analyst(s) Recomm. Company Rating Outlook Rating Outlook Rating Outlook Klaveness Ship Holding As SHIPPING J. Meyer / B. Engebretsen Klovern Ab REAL ESTATE L. Landeman / G. Bergin UNDERWEIGHT Kungsleden Ab REAL ESTATE L. Landeman / G. Bergin MARKETWEIGHT Lantmannen Ek For CONSUMER GOODS A. Moberg / G. Bergin MARKETWEIGHT Loomis Ab SERVICES & IT B. Børsting / M. Rosendal Luossavaara-Kiirunavaara Ab MATERIALS L. Landeman / G. Bergin MARKETWEIGHT Meda Ab HEALTHCARE L. Landeman / G. Bergin Metsa Board Oyj BB+ Pos Ba2 Stable MATERIALS M. Rosendal / L. Landeman MARKETWEIGHT Metso Oyj BBB Stable Baa2 Stable MACHINERY & HEAVY INDUSTRIALS B. Børsting / M. Rosendal OVERWEIGHT Ncc Ab CONSTRUCTION A. Moberg / L. Landeman MARKETWEIGHT Neste Oyj ENERGY J. Magnussen / L. Landeman MARKETWEIGHT Nibe Industrier Ab MACHINERY & HEAVY INDUSTRIALS A. Moberg / L. Landeman MARKETWEIGHT Nokia Oyj BB+ Stable Ba1 Stable BB+ Pos TMT M. Rosendal / J. Magnussen MARKETWEIGHT Nordax Bank Ab BANKS K. Jensen / G. Bergin Nordea Bank Ab AA- Neg Aa3 Stable AA- Stable BANKS K. Jensen / G. Bergin MARKETWEIGHT Norwegian Air Shuttle Asa TRANSPORTATION B. Børsting / M. Rosendal MARKETWEIGHT Norwegian Property Asa REAL ESTATE H. Syed/ B. Engebretsen MARKETWEIGHT Nykredit Bank A/S A Stable Baa3U Stable A Stable BANKS K. Jensen / G. Bergin MARKETWEIGHT Nynas Group ENERGY J. Magnussen / L. Landeman OVERWEIGHT Obos Bbl REAL ESTATE H. Syed/ B. Engebretsen MARKETWEIGHT Odfjell Se SHIPPING J. Meyer / B. Engebretsen Olav Thon Eiendomsselskap Asa REAL ESTATE H. Syed/ B. Engebretsen OVERWEIGHT Op Corporate Bank Plc AA- Stable Aa3 Stable WD BANKS K. Jensen / G. Bergin OVERWEIGHT Orkla Asa CONSUMER GOODS H. Syed/ B. Engebretsen MARKETWEIGHT Outokumpu Oyj B3 Pos MATERIALS M. Rosendal / L. Landeman OVERWEIGHT Postnord Ab TRANSPORTATION G. Bergin / L. Landeman UNDERWEIGHT Ramirent Oyj CONSTRUCTION J. Magnussen / B. Børsting Saab Ab Wr MACHINERY & HEAVY INDUSTRIALS A. Moberg / G. Bergin OVERWEIGHT Sandvik Ab BBB Neg MACHINERY & HEAVY INDUSTRIALS B. Børsting / M. Rosendal OVERWEIGHT Sas Ab B Stable Wr Stable TRANSPORTATION B. Børsting / M. Rosendal OVERWEIGHT Sbab Bank Ab A Neg A2 Pos BANKS K. Jensen / G. Bergin MARKETWEIGHT Securitas Ab BBB Stable Wr SERVICES & IT B. Børsting / M. Rosendal MARKETWEIGHT Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 27

28 Our coverage 4 of 5 Ratings from S&P/Moody's/Fitch S&P Moody's Fitch Sector Analyst(s) Recomm. Company Rating Outlook Rating Outlook Rating Outlook Ship Finance International Ltd Wr SHIPPING J. Meyer / B. Engebretsen OVERWEIGHT Skandinaviska Enskilda Banken AA+ Stable Aa3 Stable AA- Stable BANKS K. Jensen / G. Bergin MARKETWEIGHT Skanska Ab CONSTRUCTION L. Landeman / G. Bergin Skf Ab BBB- Stable Baa2 Stable MACHINERY & HEAVY INDUSTRIALS B. Børsting / M. Rosendal UNDERWEIGHT Sognekraft As UTILITIES J. Magnussen / L. Landeman Spar Nord Bank A/S BANKS K. Jensen / G. Bergin Sparbanken Skane Ab A- Neg BANKS K. Jensen / G. Bergin Sparebank 1 Boligkreditt As BANKS K. Jensen / G. Bergin Sparebank 1 Nord Norge A1 Stable A Stable BANKS K. Jensen / G. Bergin MARKETWEIGHT Sparebank 1 Smn A1 Stable A- Stable BANKS K. Jensen / G. Bergin UNDERWEIGHT Sparebank 1 Sr-Bank Asa A1 Neg A- Stable BANKS K. Jensen / G. Bergin UNDERWEIGHT Sparekassen Kronjylland BANKS K. Jensen / G. Bergin Sponda Oyj REAL ESTATE L. Landeman / G. Bergin OVERWEIGHT Srv Group Oyj REAL ESTATE A. Moberg / L. Landeman MARKETWEIGHT Ssab Ab B+ Stable MATERIALS M. Rosendal / L. Landeman OVERWEIGHT St1 Nordic Oy ENERGY J. Magnussen / L. Landeman OVERWEIGHT Statkraft Sf A- Neg Aaa Stable UTILITIES J. Magnussen / L. Landeman MARKETWEIGHT Statnett Sf A+ Stable Wr Stable UTILITIES J. Magnussen / L. Landeman MARKETWEIGHT Statoil Asa A+ Stable Aa3 Stable ENERGY J. Magnussen / L. Landeman UNDERWEIGHT Steen & Strøm As REAL ESTATE H. Syed/ B. Engebretsen OVERWEIGHT Stena Ab BB- Neg B3 Stable TRANSPORTATION B. Børsting / M. Rosendal UNDERWEIGHT Stockmann Oyj Abp CONSUMER GOODS M. Rosendal / G. Bergin MARKETWEIGHT Stolt-Nielsen Ltd SHIPPING J. Meyer / B. Engebretsen Stora Enso Oyj BB Pos Ba2 Pos WD MATERIALS M. Rosendal / L. Landeman MARKETWEIGHT Storebrand Bank Asa BBB+ Stable Nr BANKS K. Jensen / G. Bergin Storebrand Livsforsikring As BBB+ Stable Baa1 Stable INSURANCE K. Jensen / G. Bergin Sunnfjord Energi As UTILITIES J. Magnussen / L. Landeman Suomen Hypoteekkiyhdistys BBB Stable BANKS K. Jensen / G. Bergin Svenska Cellulosa Ab Sca BBB Baa1 Stable CONSUMER GOODS M. Rosendal / B. Børsting OVERWEIGHT Svenska Handelsbanken Ab AA- Neg Aa2 Stable AA Stable BANKS K. Jensen / G. Bergin MARKETWEIGHT Swedavia Ab TRANSPORTATION L. Landeman / G. Bergin MARKETWEIGHT Swedbank Ab AA- Neg Aa3 Stable AA- Stable BANKS K. Jensen / G. Bergin MARKETWEIGHT Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 28

29 Our coverage 5 of 5 Ratings from S&P/Moody's/Fitch S&P Moody's Fitch Sector Analyst(s) Recomm. Company Rating Outlook Rating Outlook Rating Outlook Swedish Match Ab BBB Stable Baa2 Stable CONSUMER GOODS A. Moberg / B. Børsting OVERWEIGHT Sydbank A/S Baa1 Stable BANKS K. Jensen / G. Bergin OVERWEIGHT Tallink Grupp As TRANSPORTATION B. Børsting / J. Magnussen Tdc A/S BBB- Stable Baa3 Stable BBB- Stable TMT M. Rosendal / J. Magnussen MARKETWEIGHT Technopolis Oyj REAL ESTATE L. Landeman / G. Bergin MARKETWEIGHT Teekay Lng Partners Lp SHIPPING J. Meyer / B. Engebretsen Tele2 Ab TMT M. Rosendal / J. Magnussen OVERWEIGHT Telefonaktiebolaget Lm Ericsson BBB Neg Baa3 Neg BBB+ Neg TMT M. Rosendal / J. Magnussen UNDERWEIGHT Telenor Asa A Stable A3 Stable TMT M. Rosendal / J. Magnussen MARKETWEIGHT Telia Co Ab A- Baa1 Stable A- Stable TMT M. Rosendal / J. Magnussen UNDERWEIGHT Teollisuuden Voima Oyj BB+ Stable Wr BBB Neg UTILITIES J. Magnussen / L. Landeman OVERWEIGHT Thon Holding As REAL ESTATE H. Syed/ B. Engebretsen OVERWEIGHT Topdanmark A/S INSURANCE K. Jensen / G. Bergin Tryg Forsikring A/S INSURANCE K. Jensen / G. Bergin Upm-Kymmene Oyj BB+ Pos Baa3 Pos WD MATERIALS M. Rosendal / L. Landeman OVERWEIGHT Vasakronan Ab REAL ESTATE L. Landeman / G. Bergin MARKETWEIGHT Vattenfall Ab BBB+ Neg A3 Neg BBB+ Stable UTILITIES J. Magnussen / L. Landeman MARKETWEIGHT Vestas Wind Systems A/S MACHINERY & HEAVY INDUSTRIALS J. Magnussen / M. Rosendal OVERWEIGHT Victoria Park Ab REAL ESTATE L. Landeman / G. Bergin OVERWEIGHT Volvo Ab BBB Pos Baa2 Stable BBB Stable MACHINERY & HEAVY INDUSTRIALS A. Moberg / M. Rosendal MARKETWEIGHT Wihlborgs Fastigheter Ab REAL ESTATE L. Landeman / G. Bergin MARKETWEIGHT Wilh Wilhelmsen Asa SHIPPING J. Meyer / B. Engebretsen Yit Oyj CONSTRUCTION A. Moberg / L. Landeman MARKETWEIGHT Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets 29

30 Fixed Income Credit Research team Thomas Hovard Head of Credit Research Henrik René Andresen Credit Portfolios Gabriel Bergin Strategy, Financials gabe@danskebank.com Brian Børsting Industrials brbr@danskebank.com Bendik Engebretsen Industrials bee@danskebank.com Katrine Jensen Financials katri@danskebank.com Louis Landeman Industrials, Real Estate llan@danskebank.com Jakob Magnussen Utilities, Energy jakja@danskebank.com Jonas Meyer Shipping mey@danskebank.com August Moberg Industrials & Construction aumo@danskebank.com Niklas Ripa Credit Portfolios niri@danskebank.com Mads Rosendal Industrials, TMT madro@danskebank.com Haseeb Syed Industrials hsy@danskebank.com Find the latest Credit Research: : Danske Bank Markets: Bloomberg: DNSK<GO> 30

31 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 Brian Børsting, Senior 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. Danske Bank s research reports are prepared in accordance with the recommendations of the Danish Securities Dealers Association. Danske Bank is not registered as a Credit Rating Agency pursuant to the CRA Regulation (Regulation (EC) no. 1060/2009); hence, Danske Bank does not comply with nor seek to comply with the requirements applicable to Credit Rating Agencies. 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. 31

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