CORPORATE BOND MONTHLY THOMSON REUTERS MAY 2017

Transcription

1 CORPORATE BOND MONTHLY THOMSON REUTERS MAY 217

2 For more information or questions, please contact: Hugo Pereira Senior Market Analyst THOMSON REUTERS Colm (C.J.) Doherty Head of Credit Market Insight THOMSON REUTERS

3 CORPORATE BOND MONTHLY Global Corporate Bond Issuance Slide 6 U.S. Corporate Bond Issuance Slide 2 International Corporate Bond Issuance Slide 35 Secondary Market Slide 46 Fund Flows Slide 51 3

4 KEY POINTS Global I-grade issuance increased by over $113 billion to $354 billion in May, the highest recorded volume in a year. Year-to-date global issuance stands at $1.5 trillion, which is 7% off 216 s record pace. Low global interest rates and low market volatility continue to drive investor demand for assets. Global high-yield issuance added almost $3 billion of issuance in May, in line with activity in the previous month. Despite tightening spreads, global year-to-date issuance currently stands 45% lower compared to last year s levels. There was $29 billion of emerging markets corporate bond volume in May, taking YTD volume past $138 billion, which is 66% higher than last year. Issuance this year has averaged $28 billion/month, compared to an average of $15 billion/month through May of 216. U.S. I-grade issuance jumped to $153 billion in May (from $83 billion the prior month), taking year-to-date volume to $617 billion, in line with levels recorded last year. Volume in May was driven by Qualcomm s $11 billion offering backing the acquisition of NXP semiconductors. U.S. high-yield bonds added $23 billion of volume in May, a jump from the $18 billion recorded the previous month and in line with the average for this year. Year-to-date volume stands at $128 billion, which marks a 35% jump in issuance over last year s levels. 4

5 KEY POINTS Issuance of International I-grade corporate bonds jumped to over $42 billion in May, from $9 billion the previous month. YTD volume now stands at $157 billion, which is 12% lower compared to last year. Investor demand and the conclusion of the French presidential election drove market activity. Issuance of high-yield International bonds for Euro borrowers declined to under $5 billion in May, the lowest level recorded this year. Volume year-to-date now stands at $48 billion, or flat when measured yearover-year. Yields on the BofA Merrill Lynch Global Corporate Index edged downward by 9 bps in May to 2.5%, as the average bid increased 62 bps to Yields have decreased by 19 bps since the beginning of the year. The average HY bond bid increased 37 bps in May, pushing the yield for U.S. high-yield bonds down by 11 bps to 5.54%, according to the Bank of America Merrill Lynch High Yield Index. Yields have tightened by 63 bps so far this year. Based on the most recent data available, U.S. investment grade corporate bond funds posted another inflow of $1 billion in May, the 15 th consecutive monthly inflow. I-grade funds have netted inflows of almost $95 billion so far this year. Based on the most recent data available, high-yield bond funds posted a small outflow of $1.6 billion in May. Approximately $9 billion have exited HY funds year-to-date, as HY funds have recorded outflows in 1 out of the last 13 months. 5

6 GLOBAL CORPORATE BOND ISSUANCE

7 GLOBAL INVESTMENT GRADE CORPORATE BONDS GLOBAL INVESTMENT GRADE CORPORATE BONDS Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Global I-grade issuance increased by over $113 billion to $354 billion in May, the highest recorded volume in a year. Year-to-date global issuance stands at $1.5 trillion, which is 7% off 216 s record pace. Low global interest rates and low market volatility continue to drive investor demand for assets. 1,2 1, GLOBAL CORPORATE BOND ISSUANCE 7

8 GLOBAL HIGH YIELD CORPORATE BONDS GLOBAL HIGH YIELD CORPORATE BONDS Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Global high-yield issuance added almost $3 billion of issuance in May, in line with activity in the previous month. Despite tightening spreads, global year-to-date issuance currently stands 45% lower compared to last year s levels GLOBAL CORPORATE BOND ISSUANCE 8

9 GLOBAL HIGH YIELD CORPORATE BONDS: USD DENOMINATED GLOBAL HIGH YIELD CORPORATE BONDS USD DENOMINATED Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 85% of May issuance was USD denominated. Year-to-date, 79% of issuance was USD-denominated, in line with last year s share GLOBAL CORPORATE BOND ISSUANCE 9

10 GLOBAL HIGH YIELD CORPORATE BONDS: NON-USD DENOMINATED GLOBAL HIGH YIELD CORPORATE BONDS NON-USD DENOMINATED Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Non-USD denominated share of global HY issuance stands at 15% in May and 21% year-to-date GLOBAL CORPORATE BOND ISSUANCE 1

11 GLOBAL HIGH YIELD CORPORATE BONDS: EURO DENOMINATED GLOBAL HIGH YIELD CORPORATE BONDS EUR DENOMINATED Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Euro-denominated Issuance made up a 13% share in May and 21% year-todate, slightly lower than the 25% share recorded over the same time period last year GLOBAL CORPORATE BOND ISSUANCE 11

12 GLOBAL HIGH YIELD CORPORATE BONDS: GBP DENOMINATED GLOBAL HIGH YIELD CORPORATE BONDS STERLING DENOMINATED Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 There was $1 billion of GBP-denominated high-yield issuance in May, taking YTD volume past $6.5 billion, compared to $1.5 billion of volume recorded at the same time last year GLOBAL CORPORATE BOND ISSUANCE 12

13 BREAKDOWN OF GLOBAL CORPORATE BOND ISSUANCE Share of corporate bond issuance 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % SHARE OF GLOBAL CORPORATE BOND ISSUANCE I-grade High Yield Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 High-yield s share of overall global volume declined to 8% in May, and makes up 11% of issuance year-to-date. GLOBAL CORPORATE BOND ISSUANCE 13

14 INVESTMENT GRADE CORPORATE BONDS U.S. DOMICILED ISSUERS BY CURRENCY INVESTMENT GRADE CORPORATE BONDS USD Euro Other Euro share 1Q1 2Q1 3Q1 4Q1 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Apr-17 May-17 The share of debt issued by U.S. borrowers denominated in euros spiked to 19% in May, as several headline-grabbing borrowers tapped the Euro-market for funds, including General Electric with a $8.7 billion offering and Apple with a $2.8 billion issue. 25% 2% 15% 1% 5% % Euro share GLOBAL CORPORATE BOND ISSUANCE 14

15 GLOBAL INVESTMENT GRADE CORPORATE BONDS ISSUED YTD217 BY DOMICILE NATION GLOBAL INVESTMENT GRADE CORPORATE BONDS USA China France Germany Japan United Kingdom South Korea Canada Australia Spain Hong Kong Sweden Netherlands Italy Switzerland India Belgium Malaysia Norway Thailand Singapore Republic of Mexico Brazil United Arab Denmark New Zealand Finland Taiwan Indonesia Russian Austria Kazakhstan Saudi Arabia Portugal Oman Kuwait Qatar Luxembourg Philippines Chile Poland Bahrain Bermuda Argentina Bahamas Colombia Nigeria Peru Cyprus Iceland Jersey British Virgin Greece Monaco Turkey Liechtenstein Panama Czech Republic U.S. borrowers made up one-third of year-to-date global I-grade issuance, followed by Chinese issuers at 13% and French borrowers with a 6% share. 1,4 1,2 1, GLOBAL CORPORATE BOND ISSUANCE 15

16 GLOBAL HIGH YIELD CORPORATE BONDS ISSUED YTD217 BY DOMICILE NATION USA China United Canada France Hong Kong Italy GLOBAL HIGH YIELD CORPORATE BONDS Republic of Spain Germany Luxembourg Netherlands Australia Finland Bahamas Russian Cyprus Brazil Jersey South Africa Peru Ukraine American issuers made up over half (57%) of YTD global high-yield volume, Chinese issuers were a distant second at 7%. Switzerland Sweden Denmark Belgium Singapore Indonesia GLOBAL CORPORATE BOND ISSUANCE 16

17 GLOBAL EMERGING MARKET CORPORATE DEBT GLOBAL EMERGING MARKET CORPORATE DEBT Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 There was $29 billion of emerging markets corporate bond volume in May, taking YTD volume past $138 billion, which is 66% higher than last year. Issuance this year has averaged $28 billion/month, compared to an average of $15 billion/month through May of GLOBAL CORPORATE BOND ISSUANCE 17

18 GLOBAL INVESTMENT GRADE CORPORATE BONDS: BIGGEST ISSUERS, YTD217 BIGGEST INVESTMENT GRADE ISSUERS Rank Issuer Amount (US$ Bils.) Rank Issuer Amount (US$ Bils.) 1 Morgan Stanley Dexia Credit Local SA Apple Inc China CITIC Bank Corp Ltd Microsoft Corp Toyota Motor Credit Corp Wells Fargo & Co Barclays PLC 7. 5 Verizon Communications Inc Westpac Banking Corp JPMorgan Chase & Co ENEL Finance International NV Bank of America Corp Intel Corp Goldman Sachs Group Inc ING Groep NV Broadcom Corp Stichting AK RaboBk AT&T Inc Telefonica Emisiones S.A.U Citigroup Inc Sherwin-Williams Co China Railway Corp Huarong Finance 217 Co Ltd Qualcomm Inc Societe Generale SA Becton Dickinson & Co Credit Agricole SA-London Br National Australia Bank Ltd BNP Paribas SA HSBC Shanghai Pudong Dvlp Bk GE China Development Bank Corp Volkswagen Intl Finance NV Pfizer Inc American Express Credit Corp Cooperatieve Rabobank UA Deutsche Telekom International BMW Finance NV Royal Bank of Scotland Group Daimler Finance North America Siemens NV State Grid Overseas Inv (216) General Motors Finl Co Inc LVMH Moet Hennessy Louis Commonwealth Bank of Australia IBM Corp ABN AMRO Bank NV Banco Santander SA 4.93 GLOBAL CORPORATE BOND ISSUANCE 18

19 GLOBAL HIGH YIELD CORPORATE BONDS: BIGGEST ISSUERS, YTD217 BIGGEST HIGH YIELD ISSUERS Rank Issuer Amount (US$ Bils.) Rank Issuer Amount (US$ Bils.) 1 Valeant Pharmaceuticals Intl Equinix Inc CCO Holdings, LLC Lennar Corp Ardagh Packaging Finance PLC Hertz Corp Community Health Systems Inc Scientific Games Corp Park Aerospace Holdings Ltd 3. 3 American Axle & Mnfg Inc BWAY Parent Co Inc Wellcare Health Plans Inc China Evergrande Group Icahn Enterprises LP First Quantum Minerals Ltd Six Flags Entertainment Corp PetSmart Inc Ultra Resources Inc Post Holdings Inc BlueLine Rental Finance Silgan Holdings Inc Rusal Capital Designated IMS Health Inc CaixaBank SA Restaurant Brands Intl Inc Grifols SA FMG Resources(August 26)Pty Telecom Italia SpA T-Mobile USA Inc Springleaf Finance Corp Ascent Resources Utica LLC Peabody Energy Corp Cheniere Corpus Christi Hldg Change Healthcare Holdings Inc Hilton Worldwide Finance LLC Vedanta Resources PLC Netflix Inc Anglo American Capital PLC 1. 2 Fortune Star(BVI) Ltd EP Energy LLC Zayo Group LLC AECOM Technology Corp Navient Corp KAR Auction Services Inc ThyssenKrupp AG Loxam SA Nokia Oyj Wynn Las Vegas LLC.9 25 Viacom Inc Team Health Holdings Inc.87 GLOBAL CORPORATE BOND ISSUANCE 19

20 U.S CORPORATE BOND ISSUANCE

21 U.S. INVESTMENT GRADE CORPORATE BONDS U.S. INVESTMENT GRADE CORPORATE BONDS Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 U.S. I-grade issuance jumped to $153 billion in May (from $83 billion the prior month), taking year-todate volume to $617 billion, in line with levels recorded last year. Volume in May was driven by Qualcomm s $11 billion offering backing the acquisition of NXP semiconductors U.S. CORPORATE BOND ISSUANCE 21

22 U.S. HIGH YIELD CORPORATE BONDS U.S. HIGH YIELD CORPORATE BONDS Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May U.S. CORPORATE BOND ISSUANCE U.S. high-yield bonds added $23 billion of volume in May, a jump from the $18 billion recorded the previous month and in line with the average for this year. Year-to-date volume stands at $128 billion, which marks a 35% jump in issuance over last year s levels. 22

23 BREAKDOWN OF U.S. CORPORATE BOND ISSUANCE Share of corporate bond issuance 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % SHARE OF U.S. CORPORATE BOND ISSUANCE High-Yield I-grade Jan-1 May-1 Sep-1 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 U.S. CORPORATE BOND ISSUANCE Investment grade volume made up 87% of volume in May and 83% of year-to-date issuance. 23

24 U.S. INVESTMENT GRADE CORPORATE BONDS ISSUED YTD217 BY INDUSTRY Financials High Technology Energy and Power U.S. INVESTMENT GRADE CORPORATE BONDS Telecommunic ations Healthcare Industrials Consumer Staples Retail Consumer Products Real Estate Materials Media and Entertainment U.S. CORPORATE BOND ISSUANCE Half of year-to-date I-grade issuance was for financials ($31 billion). Technology companies are second with $74 billion of volume for a 12% share of volume, energy and power made up 9% of volume. 24

25 U.S. INVESTMENT GRADE CORPORATE BONDS ISSUED YTD217, BY SUB-INDUSTRY U.S. HIGH YIELD CORPORATE BONDS Banks Other Financials Credit Institutions Semiconductors Power Oil & Gas Computers & Software Telecommunication Asset Management Food and Beverage Wireless Insurance Pharmaceuticals Telecommunication Professional Services Healthcare REITs Transportation & Chemicals Automobiles & Electronics Brokerage Aerospace & Defense Healthcare Home Improvement Discount and Petrochemicals Pipelines Cable Biotechnology Food & Beverage Other Consumer Internet and Tobacco Recreation & Leisure Other Industrials Non Residential Agriculture & Hospitals Metals & Mining Educational Services Other Real Estate Construction Broadcasting Hotels and Lodging Building/Constructi Apparel Retailing Automotive Retailing Residential Containers & IT Consulting & Household & AFINANCE U.S. CORPORATE BOND ISSUANCE At the sub-industry level, banks were the largest issuers of I-grade paper with $165 billion of volume so far this year for a 27% share. They were followed by other financials with a 9% share and credit institutions with 7% of volume. 25

26 U.S. HIGH YIELD CORPORATE BONDS ISSUED YTD217, BY INDUSTRY Materials Energy and Power Financials U.S. HIGH YIELD CORPORATE BONDS Industrials Media and Entertainment Healthcare High Technology Retail Consumer Staples Telecommunic ations Consumer Products Real Estate U.S. CORPORATE BOND ISSUANCE On the high-yield side, 18% of year-to-date issuance was in the materials sector ($24 billion), followed by energy companies with $2 billion (16% share) and financials with a 13% share. 26

27 U.S. HIGH YIELD CORPORATE BONDS ISSUED YTD217, BY SUB-INDUSTRY U.S. HIGH YIELD CORPORATE BONDS Oil & Gas Metals & Mining Other Financials Building/Constructi Containers & IT Consulting & Transportation & Cable Food and Beverage Pharmaceuticals Hospitals Credit Institutions Healthcare Food & Beverage Casinos & Gaming Professional Services Automobiles & Power Other Retailing Chemicals Telecommunication Recreation & Leisure Wireless Motion Pictures / Automotive Retailing Brokerage Construction Asset Management Computers & Petrochemicals Other Consumer Other Real Estate Machinery REITs Tobacco Educational Services Publishing Alternative Energy Telecommunication Computers & Paper & Forest Electronics Water and Waste Diversified Financials Aerospace & Defense Agriculture & Banks Healthcare Hotels and Lodging Broadcasting Space and Satellites Internet Software & Other Industrials U.S. CORPORATE BOND ISSUANCE At the sub-sector level, oil & gas and metals & mining sectors lead issuance with a with a 12% and 1% share of year-to-date issuance, respectively. 27

28 HIGH YIELD BONDS BREAKOUT OF ENERGY & POWER SECTOR Q1 2Q1 3Q1 4Q1 1Q11 2Q11 3Q11 4Q11 U.S. HIGH YIELD CORPORATE BONDS Alternative Energy Sources Oil & Gas Other Energy & Power Petrochemicals Pipelines Power Water and Waste Management 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Apr-17 May-17 U.S. CORPORATE BOND ISSUANCE Looking at within energy & power, oil & gas companies continue to drive issuance with $3.2 billion added in May. Year-to-date, oil & gas made up 78% of energy issuance. 28

29 U.S. INVESTMENT GRADE CORPORATE BONDS ISSUED YTD217, BY RATING U.S. INVESTMENT GRADE CORPORATE BONDS AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- N/A U.S. CORPORATE BOND ISSUANCE 18% of I-grade bonds issued year-to-date carry borrower ratings of AA- or higher, 43% were rated between BBB- and BBB+. 29

30 U.S. HIGH YIELD CORPORATE BONDS ISSUED YTD217, BY RATING U.S. HIGH YIELD CORPORATE BONDS BB+ BB BB- B+ B B- CCC+ CCC N/A U.S. CORPORATE BOND ISSUANCE 45% of high-yield bonds issued in 1Q17 are rated BB- or higher, 39% are rated between B- and B+. 3

31 U.S. INVESTMENT GRADE CORPORATE BONDS NEW ISSUE YIELDS* Average yield to maturity(%) Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 *excludes floating rate bonds U.S. INVESTMENT GRADE CORPORATE BONDS Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 U.S. CORPORATE BOND ISSUANCE Average new issue yields for U.S. I-grade bonds tightened by 13 bps in May to 3.38%. Yields have declined 48 bps since the beginning of the year. 31

32 U.S. I-GRADE CORPORATE BONDS : NEW ISSUE YIELDS* BY RATING YTD217 Average yield to maturity(%) AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- NR *excludes floating rate bonds U.S. INVESTMENT GRADE CORPORATE BONDS U.S. CORPORATE BOND ISSUANCE Broken out by rating, average new issue yields ranged from 2.73% for AA+ rated borrowers to 4.25% for BBB-. 32

33 U.S. HIGH YIELD CORPORATE BONDS NEW ISSUE YIELDS* Average yield to maturity(%) Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 *excludes floating rate bonds U.S. HIGH YIELD CORPORATE BONDS Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Average new issue yields dropped 25 bps in May to 6.5%. U.S. CORPORATE BOND ISSUANCE 33

34 U.S. HIGH YIELD CORPORATE BONDS : NEW ISSUE YIELDS* BY RATING YTD217 Average yield to maturity(%) BB+ BB BB- B+ B B- <=CCC+ NR *excludes floating rate bonds U.S. HIGH YIELD CORPORATE BONDS U.S. CORPORATE BOND ISSUANCE Breaking out new issue yields by rating, average yields ranged from 5.1% for BB+ rated issues to 8.33% for bonds rated CCC+ or lower. 34

35 INTERNATIONAL CORPORATE BOND ISSUANCE

36 INTERNATIONAL INVESTMENT GRADE CORPORATE* BONDS ISSUED IN EUROS Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 *excludes banks INTERNATIONAL INVESTMENT GRADE CORPORATE BONDS (EUR ISSUES) Issuance of international I-grade corporate bonds jumped to over $42 billion in May, from $9 billion the previous month. YTD volume now stands at $157 billion, which is 12% lower compared to last year. Investor demand and the conclusion of the French presidential election drove market activity INTERNATIONAL CORP. BOND ISSUANCE 36

37 INTERNATIONAL HIGH YIELD BOND ISSUES FOR EUROPEAN BORROWERS INTERNATIONAL HIGH YIELD CORPORATE BOND ISSUES EUROPEAN BORROWERS Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Issuance of high-yield International bonds for Euro borrowers declined to under $5 billion in May, the lowest level recorded this year. Volume year-to-date now stands at $48 billion, or flat when measured yearover-year INTERNATIONAL CORP. BOND ISSUANCE 37

38 INTERNATIONAL INVESTMENT GRADE CORPORATE* BONDS IN EUROS FIXED VS. FLOATING Floating Fixed Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 *excludes banks INTERNATIONAL INVESTMENT GRADE CORPORATE BONDS IN EUROS The share of high-yield issuance that is fixed rate increased to 88% in May, and stands at 86% year-to-date, compared to the 89% share recorded last year. INTERNATIONAL CORP. BOND ISSUANCE 38

39 INTERNATIONAL I-GRADE GRADE CORPORATE* BONDS IN EUROS ISSUED YTD217 BY INDUSTRY Financials *excludes banks INTERNATIONAL INVESTMENT GRADE CORPORATE BONDS IN EUROS Energy and Power Industrials Telecommunic ations Consumer Products Consumer Staples Healthcare Real Estate High Technology Financials lead the way with a 2% share of year-to-date international I-grade bond issuance ($31 billion), with energy and power second with a 17% share ($27 billion). Materials Retail Media and Entertainment INTERNATIONAL CORP. BOND ISSUANCE 39

40 INTERNATIONAL I-GRADE GRADE CORPORATE* BONDS IN EUROS ISSUED YTD217 BY SUB-INDUSTRY Credit Institutions Oil & Gas Telecommunication *excludes banks INTERNATIONAL INVESTMENT GRADE CORPORATE BONDS IN EUROS Power Industrial Professional Services Food and Beverage Pharmaceuticals Transportation & Automobiles & Computers & Water and Waste REITs Other Consumer Construction Household & Wireless Healthcare Food & Beverage Chemicals Machinery Electronics Real Estate Tobacco Travel Services Other Industrials Other Real Estate At the sub-sector level, credit institutions represented 19% of YTD Euro I- grade international bond issuance. Oil & gas are second with a 7% share of volume ($1.8 billion). Hotels and Lodging Metals & Mining Internet and Broadcasting AFINANCE Alternative Energy Publishing Containers & Agriculture & INTERNATIONAL CORP. BOND ISSUANCE 4

41 INTERNATIONAL HIGH YIELD ISSUES FOR EUROPEAN BORROWERS ISSUED YTD217 BY INDUSTRY Financials INTERNATIONAL HIGH YIELD ISSUES EUROPEAN BORROWERS Materials Industrials Telecommunic ations Retail Healthcare Consumer Products Energy and Power Financials made up the largest share of high-yield volume so far this year with $15.5 billion in volume (32% share). Materials were second with a 25% share ($12 billion). High Technology Consumer Staples Media and Entertainment INTERNATIONAL CORP. BOND ISSUANCE 41

42 INTERNATIONAL HIGH-YIELD CORPORATE* BONDS IN EUROS ISSUED YTD217 BY SUB-INDUSTRY Metals & Mining Other Financials Containers & *excludes banks INTERNATIONAL INVESTMENT GRADE CORPORATE BONDS IN EUROS Transportation & Banks Credit Institutions Professional Services Telecommunication Brokerage Pharmaceuticals Food & Beverage Telecommunication Asset Management Automobiles & Chemicals Building/Constructi Wireless Discount and Power Automotive Retailing Healthcare Oil & Gas Food and Beverage At the sub-sector level, metals & mining made up 13% of year-to-date issuance with $6.2 billion in volume. Other financials were second with a 12% share of issuance ($5.6 billion). IT Consulting & Insurance Healthcare Electronics Water and Waste Recreation & Leisure Other High Hotels and Lodging INTERNATIONAL CORP. BOND ISSUANCE 42

43 INTERNATIONAL INVESTMENT GRADE CORPORATE* BONDS IN EUROS ISSUED YTD217, BY RATING *excludes banks INTERNATIONAL INVESTMENT GRADE CORPORATE BONDS IN EUROS AA+ AA AA- A+ A A- BBB+ BBB BBB- N/A 57% of Euro I-grade bond issuance is rated between BBB+ and BBB INTERNATIONAL CORP. BOND ISSUANCE 43

44 INTERNATIONAL HIGH-YIELD CORPORATE* BONDS IN EUROS ISSUED YTD217, BY RATING *excludes banks INTERNATIONAL INVESTMENT GRADE CORPORATE BONDS IN EUROS BB+ BB BB- B+ B B- CCC+ N/A 55% of international HY bonds rated were between BB+ and BB-. 27% were rated between B- and B INTERNATIONAL CORP. BOND ISSUANCE 44

45 INTERNATIONAL HIGH YIELD BOND ISSUES FOR ASIAN BORROWERS INTERNATIONAL HIGH YIELD CORPORATE BOND ISSUES ASIAN BORROWERS Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Asian HY issuance ticked up with $3.4 billion of volume in May, taking YTD volume to $21.3 billion, compared to the $4.7 billion recorded over the same time period last year INTERNATIONAL CORP. BOND ISSUANCE 45

46 SECONDARY MARKET

47 MOST ACTIVE ISSUERS BY VOLUME INVESTMENT GRADE MAY 217 # Issuer Ticker Volume (est.) Trade Count % of Mkt Cumulative Percent 1 BANK OF AMERICA CORP BAC 11,211,171,867 29, % 2.56% 2 JPMORGAN CHASE & CO JPM 11,6,497,991 3, % 5.8% 3 CITIGROUP INC C 1,817,889,43 28, % 7.56% 4 MORGAN STANLEY MS 9,644,71,251 19, % 9.76% 5 APPLE INC AAPL 9,52,293,31 14, % 11.94% 6 VERIZON COMMUNICATIONS INC VZ 9,277,224,61 16, % 14.6% 7 WELLS FARGO & CO WFC 8,924,144,91 2,25 2.4% 16.1% 8 GOLDMAN SACHS GROUP INC GS 8,294,898,939 32, % 18.% 9 AT&T INC T 7,465,552,83 23, % 19.71% 1 HSBC HOLDINGS PLC HSBC 6,4,522,628 8, % 21.17% 11 ANHEUSER-BUSCH INBEV FINANCE INC ABIBB 5,592,81,24 9, % 22.45% 12 QUALCOMM INC QCOM 4,984,643,26 3, % 23.59% 13 MICROSOFT CORP MSFT 4,737,162,93 8,89 1.8% 24.67% 14 SHERWIN-WILLIAMS CO SHW 4,466,392,76 2, % 25.69% 15 FORD MOTOR CO F 4,417,859,39 9,84 1.1% 26.7% 16 GENERAL MOTORS FINANCIAL COMPANY INC GM 4,196,313,4 1,99.96% 27.66% 17 INTEL CORP INTC 4,14,853,38 4,217.94% 28.6% 18 BARCLAYS PLC BACR 3,841,349,557 5,359.88% 29.48% 19 CAPITAL ONE FINANCIAL CORP COF 3,76,65,79 5,89.86% 3.34% 2 GENERAL ELECTRIC CO GE 3,697,813,45 18,528.85% 31.19% SECONDARY MARKET *Note: Size assumption of $12.1 MM used for trades > $5MM 47

48 MOST ACTIVE ISSUERS BY VOLUME HIGH YIELD MAY 217 # Issuer Ticker Volume (est.) Trade Count % of Mkt Cumulative Percent 1 FRONTIER COMMUNICATIONS CORP FTR 6,678,194,64 14, % 3.58% 2 VALEANT PHARMACEUTICALS INTERNATIONAL VRXCN 5,383,297,99 2, % 6.47% 3 INTELSAT JACKSON HOLDINGS SA INTEL 4,699,199,69 1, % 8.99% 4 SPRINT CAPITAL CORP S 3,14,927,51 3, % 1.67% 5 CHS/COMMUNITY HEALTH SYSTEMS INC CYH 3,34,44,57 2, % 12.3% 6 GENON ENERGY INC GENONE 2,999,532,689 3, % 13.91% 7 HERTZ CORP HTZ 2,972,41,36 8, % 15.5% 8 DYNEGY INC DYN 2,496,13,27 2, % 16.84% 9 PETSMART INC PETM 2,469,924,83 1, % 18.17% 1 BECTON DICKINSON AND CO BDX 2,438,867,48 1, % 19.47% 11 CENTURYLINK INC CTL 2,68,585,59 7, % 2.58% 12 TENET HEALTHCARE CORP THC 1,915,477,68 1, % 21.61% 13 HCA INC HCA 1,99,711,64 2, % 22.64% 14 FREEPORT-MCMORAN INC FCX 1,75,654,83 3,991.91% 23.55% 15 CHESAPEAKE ENERGY CORP CHK 1,697,871,27 1,743.91% 24.46% 16 TRANSOCEAN INC RIG 1,655,853,17 7,347.89% 25.35% 17 CENOVUS ENERGY INC CVECN 1,56,73, % 26.19% SECONDARY MARKET 18 DISH DBS CORP DISH 1,449,23,72 1,721.78% 26.96% 19 CALPINE CORP CPN 1,447,377,15 1,15.78% 27.74% 2 T-MOBILE USA INC TMUS 1,425,117,59 2,4.76% 28.5% * Note: Size assumption of $3.8MM used for trades > $1MM 48

49 CORPORATE GLOBAL BOND INDEX Yield to worst (%) GLOBAL BOND INDEX YIELDS - CORPORATE BofA Merrill Lynch Global Corp Index SECONDARY MARKET Yields on the BofA Merrill Lynch Global Corporate Index edged downward by 9 bps in May to 2.5%, as the average bid increased 62 bps to Yields have decreased by 19 bps since the beginning of the year. 49

50 U.S. HIGH YIELD BOND INDEX Yield to worst (%) U.S. HIGH YIELD BOND INDEX BofA Merrill Lynch US HY Index SECONDARY MARKET The average HY bond bid increased 37 bps in May, pushing the yield for U.S. high-yield bonds down by 11 bps to 5.54%, according to the Bank of America Merrill Lynch High Yield Index. Yields have tightened by 63 bps so far this year. 5

51 FUND FLOWS

52 U.S. INVESTMENT GRADE CORPORATE BOND FUND FLOWS* INVESTMENT GRADE CORPORATE BOND FUND FLOWS FUND FLOWS Based on the most recent data available, U.S. investment grade corporate bond funds posted another inflow of $1 billion in May, the 15 th consecutive monthly inflow. I-grade funds have netted inflows of almost $95 billion so far this year. 52

53 U.S. INVESTMENT GRADE CORPORATE BOND FUND FLOWS - MUTUAL FUND VS. ETF BREAKOUT* INVESTMENT GRADE CORPORATE BOND FUND FLOWS FUND FLOWS Breaking I-grade fund flows out by ETF and mutual-funds categories, mutual funds posted an inflow of $4.6 billion in May, while ETFs pulled in $5.5 billion. Year-to-date, I-grade mutual funds have pulled in almost $66 billion, while ETFs added $29 billion. 53

54 U.S. HIGH YIELD BOND FUND FLOWS* HY BOND FUND FLOWS FUND FLOWS Based on the most recent data available, high-yield bond funds posted a small outflow of $1.6 billion in May. Approximately $9 billion have exited HY funds, year-to-date, as HY funds have recorded outflows in 1 out of the last 13 months. 54

55 U.S. HY BOND FUND FLOWS MUTUAL FUND VS. ETF BREAKOUT* HY BOND FUND FLOWS FUND FLOWS Broken out by category, May saw an outflow of $734 million from high-yield ETFs, while $845 million exited HY mutual funds. 55