Weekly Credit Update 12 December 2017

Transcription

1 Weekly Credit Update 12 December 2017 Bendik Engebretsen Phone 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 23 of this report

2 What s on our minds general credit market view Latest EUR Selected investment Basis (cash vs As we approach the holidays, investors books will soon close for the year and the already slow secondary market is cooling down. Yet we still see some activity in the primary market, both in EUR and local currencies. In the EUR market, Australian OMV Group (A-/Baa1) printed a 9-year EUR1000m unsecured bond the company s largest ever bond. The heavily overbooked transaction was a solid illustration of the market s enduring appetite for corporate bonds. In the high-yield Euro market, Platin GmbH (NR/B3), an intermediate holding company of Schenck Process Holding GmbH, issued a 5-year EUR425m secured bond at 5.375% fixed. Aside from numerous EUR prints, we also witnessed Nortura s NOK200m fixed and Akademiska Hus 250m fixed issuances, which could be amongst the last corporate bond issuances in local currency of Over the week we saw limited movement in itraxx Europe, which started and ended the week at c.47bp roughly 7bp tighter than mid-november levels. The Crossover remained tight as well, ending the week at 232bp. The Swedish 10- year Swap rate has tightened somewhat since October, going from 1.26% in mid- October to 1.08% in mid-december. The development is partly related to the decline in Swedish house prices, which we expect to be roughly 10% since August. We expect the Fed to hike the target range to % at this week's meeting and to continue signalling three hikes in 2018 and We believe that a rate increase of one quarter-point is already incorporated in the credit markets, hence we do not expect the decision to impact credit significantly. itraxx Main* *indices not adjusted for recent roll to S28 itraxx Crossover* *indices not adjusted for recent roll to S28 2

3 Buy JYBC Tier % call 2024 (EUR) - Recent under leaves room for tightening Key arguments for the trade Under. Since it was issued in April, Jyske s Tier % with call in 2024 has underperformed EUR benchmark Tier 2s with call in five years or more issued by other Scandi banks. Attractive pickup. The bond is rated BBB by S&P and trades with a 25bp premium to the Banks Tier 2 BBBs curve. Ready for future regulation. Based on Jyske s estimates of the effects of IFRS 9 and Basel IV on its CET1 ratio, it would still be compliant with its regulatory capital requirements. Furthermore, it would be compliant with MREL, according to our calculations, based on the information in its Q3 17 report it received from the Danish FSA in October. Strong capital targets with 14% for its CET1 ratio and 17.5% for its total capital ratio being long term even after a full implementation of potential Basel IV. Strong credit story with an improving asset quality and focus on growing within mortgages. Key risks to the trade Liquidity. With an issue size of EUR300m, a share of the premium could be for lower liquidity compared with EUR benchmark issues. Our latest research on Jyske Bank Jyske Bank - Q3 17: Ready for future regulation, 27 October Jyske Bank - Q2 17: Still a strong credit case, 22 August Relative value, indicative mid Mid Spread (EUR)* 140 NYKRE (NR/BBB) 4% call ' JYBC (NR/BBB) 2.25% call '24 Banks Tier 2 BBB's Historical spread development ASW (EUR) NYKRE (NR/BBB) 2.75% call '22 SEB (Baa1/BBB+) 1.375% call '23 80 SWEDA (Baa1/A-) 1% call '22 SEB (Baa1/BBB+) 2.5% call '21 NDASS (Baa1/A-) 1% call '21 60 DNBNO (NR/A-) 1.25% call '22 DANBNK (NR/BBB+) 2.75% call '21 NDASS (Baa1/A-) 1.875% call '20 40 SHBASS (A3/A-) 2.656% call '19 20 Source: Bloomberg, Danske Bank DCM Research Banks Tier 2 A's 0 YTW** * Z-. Discount margin for floaters. Swapped to indicated currency. ** Years-to-worst Note: Fair value curve(s) based on Danske Bank DCM Research's (mid) peer group of European issuers See Trade Recommendation - Buy JYBC Tier % call 2024 (EUR), 27 November Apr-2017 Jun-2017 Aug-2017 Oct-2017 JYBC 2.25% call '24 SEB 1.375% call '23 NYKRE 2.75% call '22 SWEDA 1% call '22 Source: Bloomberg (pricing source: CBBT), Danske Bank DCM Research

4 Latest EUR Selected investment Basis (cash vs 4 See Trade Recommendation BUY EG FRN 2020s, 1 December 2017

5 Trade recommendations open trades (EUR) 1 of 2 Latest EUR (1) Selected investment Basis (cash vs Open date Type Trade FX Idea HPR* Z-Spread (bp) Jyske s Tier % with call in 2024 has underperformed EUR benchmark Tier 2s with call in 5 27-Nov- Buy JYBC Tier % call years or more issued by other Scandi banks and trades Outright EUR (EUR) with a 25bp premium to the Banks Tier 2 BBB curve -0.4% 7.27 leaving room for tightening, in our view. 13-Nov Nov-2017 Outright Outright Buy LANSBK 0.5% 2022 (EUR) Buy Icelandic D-SIB banks EUR senior unsecured EUR EUR 30-Oct-2017 Outright Buy Stora Enso 2027s EUR 25-Sep Aug Apr Apr Mar Outright Buy METSA 2027s in EUR EUR Switch Outright Switch Switch Buy DONGAS 3% call 2020 and fund by selling DONGAS 4.875% call 2018 Buy ELENIA 2.875% 2020 (EUR) Switch to SANDSS 3.8% 2022 (EUR) from SANDSS FRN 2021 () Switch to NDASS 2% 2021s from NDASS 4% 2020s EUR EUR EUR EUR Länsförsäkringar Bank s EUR senior unsecured bond (rated A (stable) by S&P and A1 (stable) by Moody s) trades 14bp and 17bp wider than the EUR Financials senior A curve and EUR Financials senior A+ curve, respectively. Icelandic D-SIBs, Arion Banki, Landsbankinn and Islandsbanki are all rated BBB+ with a stable outlook by S&P and their EUR senior unsecured bonds offer attractive pick ups to the EUR Financials senior BBB+ curve. We believe lowered capex needs for the next couple of years could push Stora Enso to lower its leverage ceiling and pave the way for an upgrade to Investment grade. The METSA 2027s offer solid carry relative to the rating with upside potential from a likely upgrade to investment grade from S&P. The increasingly low short- to medium-term risk in DONG Energy justifies taken on further duration. We do, however, see longer-term risks, which is why we prefer the medium term. The Elenia 2.875% 2020 is attractive compared to Nordic utilities. Being BBB rated, Elenia trades wider than the BBB- fair value curve. Switching to SANDSS 3.8% 2022 (EUR) from SANDSS FRN 2021 (), we estimate, based on indicative mid-prices, that a spread pick-up around 40bp is possible to receive NDASS 2020s have clearly outperformed NDASS 2021s. Now is a good opportunity to take profit on the 2020s and pick up the 2021s to maintain Nordea exposure. -0.1% 4.50 Benchmar k (bp) 0.8% % % % % % Benchmark* Utilities Utilities 5 * HPR is P(t)/P(0)-1+C*(T), where P(t) is the BID price today, P(0) is the ASK price at initiation of the trade and C*(T) is the coupon without reinvestment Source: Bloomberg pricing (pricing sources used [in order of priority] are DBCR, BGN, BVAL, CBBT and TRACE), Danske Bank DCM Research

6 Trade recommendations open trades (EUR) 2 of 2 Latest EUR (2) Selected investment Open date Type Trade FX Idea HPR* Z-Spread (bp) 23-Feb-2017 Outright Buy SCA Hygiene EUR SCHHYG 2025s trade on the 'BBB-' fair value curve 1.7% Feb-2017 Outright Buy Vestas 2022s EUR 11-Nov-2016 Outright Buy Sandvik EUR2022 and EUR2026 EUR 11-Nov-2016 Outright Buy Metso EUR 2022 EUR 31-Oct-2016 Outright Buy Outokumpu 2021 EUR 25-Oct-2016 Outright Buy TVO EUR Vestas bonds are trading just tighter than the BB+ fair value curve, which leaves them with substantial potential compared to the BBB fair value curve. 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. Trump could be the trigger for mining bonds. Combined with very attractive valuation of the Metso EUR 2022 bond we recommend buying the bond. Outokumpu 2021 trade attractive compared to fair value B+ EUR industrials curve and we expect further deleveraging. TVO s EUR curve trades attractive compared to the fair value BB+ industrials curve and its curve offers a pick-up compared to the EUR curve. 1.8% % % % % Benchmark Benchmark* (bp) IBOXX EURO Consumer Goods IBOXX EURO IBOXX EURO Non Financials BBB IBOXX EURO Non Financials BBB IBOXX EURO Utilities Basis (cash vs 3-Oct-2016 Outright Buy Caruna 1.5% 2023 outright EUR Being BBB+ rated, Caruna trades between the BBB- and the BBB curve. 0.5% IBOXX EURO Utilities 6 * HPR is P(t)/P(0)-1+C*(T), where P(t) is the BID price today, P(0) is the ASK price at initiation of the trade and C*(T) is the coupon without reinvestment Source: Bloomberg pricing (pricing sources used [in order of priority] are DBCR, BGN, BVAL, CBBT and TRACE), Dankse Bank DCM Research

7 Trade recommendations open trades (local currency) 1 of 2 7 Latest EUR (3) Selected investment Basis (cash vs Open date Type Trade FX Idea HPR* 1-Dec-2017 Outright 17-Oct-2017 Outright 11-Oct Sep Sep Sep Sep Sep Jun-2017 Outright Switch Switch Switch Switch Switch Outright Buy EGASDK FRN 2020s (DKK) Buy Ship Finance 2019 bond in NOK Buy BW Offshore FRN 2020s in NOK Switch from SBAB 0.5% 2021 in EUR to SBAB 0.9% 2022 in Switch from NDASS 0.3% 2022 in EUR to NDASS 0.15% 2020 in Switch from TELNO 4.125% 2020 EUR to TELNO FRN 2019 in Switch from Telia 3.625% 2024 in EUR into 3.625% 2023 in Switch from VATFAL EUR hybrid (call 2027) to VATFAL hybrid (call 2022) Buy Elekta FRN March 2022s in DKK We believe that the price drop following the mishandling of the KY contract is overdone and see the impairment as a one-off. The recent tap of the bond underlines confidence in EG from its creditors and removes any liquidity concerns. Z-Spread (bp) * HPR is P(t)/P(0)-1+C*(T), where P(t) is the BID price today, P(0) is the ASK price at initiation of the trade and C*(T) is the coupon without reinvestment Source: Bloomberg pricing (pricing sources used [in order of priority] are DBCR, BGN, BVAL, CBBT and TRACE), Danske Bank DCM Research Benchmar k (bp) -0.9% 0.00 Following the restructuring agreement with Seadrill and partial conversion of the 2018 convertible bond, the NOK strong liquidity position could prompt even higher prices in the 2019 bond. -0.2% BW Offshore's bonds maturing in 2020 are trading at ~110bp wider than the two longer-dated bonds NOK and thus we expect a positive correction in BWO01 and 2.1% BWO02 in the near term. Switching from SBAB 0.5% 2021 in EUR to SBAB 0.9% 2022 in, we estimate, based on indicative mid-prices, that a spread pick-up around 18bp is possible to receive. Switching from NDASS 0.3% 2022 in EUR to NDASS 0.15% 2020 in, we estimate, based on indicative midprices, that a spread pick-up around 10bp is possible to receive. The switch also shortens the maturity by two years. Switching from TELNO 4.125% 2020 EUR to TELNO FRN 2019 in, we estimate, based on indicative mid-prices, that a spread pick-up around 20bp is possible to receive. Switching from Telia 3.625% 2024 in EUR to 3.625% 2023 in, we estimate, based on indicative mid-prices, that a spread pick-up around 25bp is possible to receive. When pricing to the first call date, the switch from EUR to lowers the spread slightly, but the leg compensates well by shortening the maturity by five years. Elekta's transformational programme is coming to an end and debt metrics have improved recently. We do not believe this is reflected in at current levels and see tightening potential around 20bp to the 'BBB-' curve. -0.2% % % % % % Benchmark*

8 Trade recommendations open trades (local currency) 2 of 2 Open date Type Trade FX Idea HPR* Z-Spread Benchmar Benchmark* (bp) k (bp) Latest EUR (4) Selected investment 17-May-2017 Switch 17-May-2017 Outright 17-May-2017 Outright 9-May Apr Apr Feb-2017 Switch Switch Switch Outright Switch from Jefast 2021 to Jefast 2019 in Buy Victoria Park 2018s in Buy Castellum 2022s in Switch to DSV 3.5% 2022 (DKK) from DNFSDC 1.375% 2022 (EUR) Switch to VLVY FRN 2018 () from VLVY FRN 2018 (EUR) Switch to TVOYFH 3.9% 2018 () from TVOYFH 4.6% 2019 (EUR) Buy Kungsleden 2019s in DKK We argue that Jefast's 2019 bond is trading too wide relative to the 2021 bond considering its shorter maturity and its secured status. We consider especially Victoria Park's shorter-dated bonds attractively priced compared to sector peers, with good tightening potential as the 2018 bond comes closer to maturity. We believe that Castellum's longer-dated bonds trade wide relative to the company's credit quality and compared to peers in the market. The DSV 3.5% 2022 (DKK) is attractively priced versus the DNFSDC 1.375% 2022 (EUR) even allowing for the lower liquidity and the unrated status of DSV. Switching to VLVY FRN 2018 () from VLVY FRN 2018 (EUR), we estimate, based on indicative midprices, that a spread pick-up around 22bp is possible to receive. Switching to TVOYFH 3.9% 2018 () from TVOYFH 4.6% 2019 (EUR), we estimate, based on indicative midprices, that a spread pick-up around 55bp is possible to receive. Considering Kungsleden's ambition to strengthen its balance sheet, we think a repricing corresponding to around one credit notch is justified. 2.6% % % % % % % Basis (cash vs 8-Nov-2016 Outright Buy Castellum 2020s in Following the acquisition of Norrporten, Castellum has further strengthened its business risk profile. 2.7% Oct-2016 Outright Buy FastPartner 2018s in FastPartner s bonds are still trading at generous spread levels and, in our opinion, the bonds should have potential for further tightening. 1.9% * HPR is P(t)/P(0)-1+C*(T), where P(t) is the BID price today, P(0) is the ASK price at initiation of the trade and C*(T) is the coupon without reinvestment Source: Bloomberg pricing (pricing sources used [in order of priority] are DBCR, BGN, BVAL, CBBT and TRACE), Dankse Bank DCM Research

9 high yield/unrated issuance* Latest EUR Selected new issues (High yield/unrated) Date Issuer Coupon CCY Volume Maturity S&P / Mdy / Fitch ASW/DM 08/12/2017 Newco Gb Sas 8% EUR 200 m Dec/22 / / - 07/12/2017 Pro-Gest Spa 3.25% EUR 250 m Dec/24 (P)BB- / (P)B2 / - 06/12/2017 Pvh Corp 3.125% EUR 600 m Dec/27 BB+ / Ba2 / - 04/12/2017 Platin 1426 Gmbh 5.375% EUR 425 m Jun/23 / B3e / - 04/12/2017 Picard Bondco 5.5% EUR 310 m Nov/24 B- / (P)Caa1 / CCC+e - 01/12/2017 Future Gaming Group Int 9.75% 140 m Dec/20 / / - 01/12/2017 Glx Holding As NIBOR3M +525bps NOK m Dec/23 / / /11/2017 Lysaker Park Holding 5.5% NOK 223 m Dec/21 / / - 28/10/2016 Crystal Almond Sarl 10% EUR 345 m Nov/21 / / - 29/11/2017 Lifco Ab 0.355% 835 m Dec/19 / / - 29/11/2017 Stockmann Oyj Abp 4.75% EUR 250 m Jan/22 / / - 17/11/2017 Sas Ab 5.375% m Nov/22 B+ / B1 / - 17/11/2017 Volvo Car Ab 2% EUR 500 m Jan/25 BB+ / Ba2 / - 14/11/2017 Klovern Ab STIB3M +170bps 850 m Nov/21 / / /11/2017 Containerships Ltd EUR003M +625bps EUR 60 m Nov/21 / / /11/2017 Volvofinans Bank Ab 1.14% 400 m Nov/22 / / - 01/11/2017 Sparebank 1 Bv NIBOR3M +150bps NOK 250 m Nov/27 / / 150 Basis (cash vs. * Excluding increases in existing bond issues (taps) 9

10 Selected new investment grade issues* Latest EUR Basis (cash vs. Selected new issues (Investment Grade) Date Issuer Coupon CCY Volume Maturity S&P / Mdy / Fitch ASW/DM 08/12/2017 Akademiska Hus 2.31% 250 m Dec/37 AA / / - 08/12/2017 Nortura Sa 1.25% NOK 200 m Dec/18 / / - 07/12/2017 Schneider Electric Se 0.875% EUR 750 m Dec/26 A- / Baa1 / WD - 07/12/2017 Omv Ag 1% EUR m Dec/26 / Baa1e / A-e - 30/11/2017 Yara International Asa STIB3M +100bps 450 m Dec/22 BBB / Baa2 / /11/2017 Yara International Asa NIBOR3M +75bps NOK m Dec/22 BBB / Baa2 / 75 30/11/2017 Yara International Asa 1.1% 800 m Dec/22 BBB / Baa2 / - 30/11/2017 Yara International Asa 2.45% NOK m Dec/24 BBB / Baa2 / - 30/11/2017 Yara International Asa 2.9% NOK m Dec/27 BBB / Baa2 / - 28/11/2017 Johnson Controls Intl Pl 0% EUR 750 m Dec/20 BBB+ / Baa1e / BBB /11/2017 Willhem Ab 2.86% NOK 750 m Dec/27 A- / / - 27/11/2017 Volvo Treasury Ab 0.35% m Dec/20 BBB+ / Baa1 / - 23/11/2017 Cgnpc International Ltd 1.625% EUR 500 m Dec/24 / A3e / A+ /*- - 16/11/2017 Bnp Paribas 1.5% EUR m May/28 A- / Baa1 / A+ - 14/11/2017 Danske Bank A/S 0.75% EUR 500 m Nov/27 AAA / / AAA -5 16/11/2017 Orsted A/S 2.25% EUR 500 m Nov/17 BB+ / Baa3 / BBB /11/2017 Orsted A/S 1.5% EUR 750 m Nov/29 BBB+ / Baa1 / BBB+ - 16/11/2017 Fingrid Oyj 1.125% EUR 100 m Nov/27 AA- / A1 / AA-e 35 16/11/2017 Islandsbanki STIB3M +200bps 750 m Nov/27 BBB- / / BBB /11/2017 Bank Norwegian As STIB3M +108bps 500 m Nov/20 BBB / / 108 * Excluding increases in existing bond issues 10

11 Europe, net sales US, net sales Latest EUR Basis (cash vs. Sweden, net sales Norway, net sales 11

12 Euro and Latest EUR Basis (cash vs. Euro IG ASW, iboxx indices Euro HY ASW, Merrill Lynch indices IG total return, iboxx indices EURO HY total return, Merrill Lynch indices 12

13 Latest EUR Basis (cash vs. itraxx vs iboxx EURO vs US CDS indices IG (Markit) Nordic Bank CDS EUR vs US HY bonds indices 13

14 Latest EUR Basis (cash vs. EU government bond yields EUR 10Y vs 2Y swap 3M Libor EUR/USD basis swaps 14

15 Macroeconomic environment Latest EUR Basis (cash vs. GDP y/y, calendar adjusted Euro area y/y change in bank lending Quarterly PMIs Euro area lending standards 15

16 Basis - Cash vs CDS Latest EUR Basis (cash vs. Sub financials cash vs CDS itraxx main vs iboxx non-financials A Senior financials cash vs CDS itraxx main vs iboxx non-financials BBB 16

17 1 of 5 Latest EUR Basis (cash vs. (1) Ratings from S&P/Moody's/Fitch S&P Moody's Fitch Sector Analyst(s) Recomm. Company Rating Outlook Rating Outlook Rating Outlook A. P. Moller - Maersk BBB NO Baa2 NO NR NR Transportation Brian Børsting Marketweight Akelius Residential Ab BBB- PO NR NR NR NR Real estate Louis Landeman Overweight Aktia Bank Plc A- S A3 PO Financials Katrine Jensen Marketweight Ambu NR NR NR NR NR NR Healthcare Jakob Magnussen Overweight Arion Bank BBB+ S Financials Jesper Damkjaer Overweight Arla Foods Amba Consumer goods Gabriel Bergin Marketweight Atlas Copco A S A2 S A S Machinery & heavy industrials Brian Børsting Underweight Avinor As AA- NO A1 S NR NR Transportation Brian Børsting Marketweight Balder BBB S Baa3 PO NR NR Real estate Louis Landeman Marketweight Beerenberg Holdco Ii As NR NR NR NR NR NR Energy Haseeb Syed Marketweight Billerudkorsnäs Materials Mads Rosendal Marketweight Bonheur NR NR NR NR NR NR Energy Bendik Engebretsen Marketweight Bw Offshore NR NR NR NR NR NR Energy Bendik Engebretsen Overweight Cabonline NR NR NR Services & IT August Moberg Marketweight Carlsberg NR NR Baa2 S BBB S Consumer goods Brian Børsting Marketweight Caruna BBB+ S Utilities Jakob Magnussen Overweight Castellum NR NR NR NR NR NR Real estate Louis Landeman Marketweight Citycon BBB S Baa1 S NR NR Real estate Louis Landeman Marketweight Color Group As NR NR NR NR NR NR Transportation Brian Børsting Overweight Com Hem BB PO NR NR NR NR TMT Mads Rosendal Overweight Corem NR NR NR NR NR NR Real estate Louis Landeman Marketweight Crayon Group NR NR NR NR NR NR Services & IT Haseeb Syed Marketweight Danfoss A/S BBB S NR NR NR NR Machinery & heavy industrials Brian Børsting Marketweight Dfds NR NR NR NR NR NR Transportation Brian Børsting Overweight Dlg Finance As Consumer goods Mads Rosendal Marketweight Dlr Kredit A/S A- S WR NR Financials Katrine Jensen Overweight Dna Ltd TMT Mads Rosendal Overweight Dnb A+ S Aa2 NO NR NR Financials Katrine Jensen Underweight Dsv NR NR NR NR NR NR Transportation Brian Børsting Overweight Eg Holding NR NR NR NR NR NR Services & IT Jakob Magnussen Overweight Eika Forsikring As Financials Katrine Jensen Marketweight Electrolux A- S NR NR Consumer goods August Moberg Marketweight Source: Standard & Poor s, Moody s, Fitch, Danske Bank DCM Research 17

18 2 of 5 Latest EUR Basis (cash vs. (2) Ratings from S&P/Moody's/Fitch S&P Moody's Fitch Sector Analyst(s) Recomm. Company Rating Outlook Rating Outlook Rating Outlook Elekta NR NR NR Healthcare August Moberg Overweight Elenia Oy BBB S Utilities Jakob Magnussen Overweight Elisa BBB+ S Baa2 S TMT Mads Rosendal Overweight Ellevio BBB S NR NR NR NR Utilities Jakob Magnussen Overweight Entra Real estate Haseeb Syed Marketweight Esb A- S A3 S A- S Utilities Jakob Magnussen Marketweight Essity BBB+ S Baa1 NO Mads Rosendal Overweight Faroe Petroleum NR NR NR NR NR NR Energy David Boyle Marketweight Fastpartner NR NR NR NR NR NR Real estate Louis Landeman Overweight Felleskjopet Agri Sa Consumer goods Brian Børsting Marketweight Fingrid Oyj AA- S A1 (unsopo A+ S Utilities Jakob Magnussen Overweight Finnair NR NR NR NR NR NR Transportation Brian Børsting Marketweight Fortum BBB+ NW Baa1 (unnw BBB+ NW Utilities Jakob Magnussen Underweight Fortum Värme BBB+ S NR NR NR NR Utilities Jakob Magnussen Marketweight G4S BBB- NO NR NR NR NR Services & IT Brian Børsting Marketweight Gas Networks Ireland A S A3 S NR NR Utilities Jakob Magnussen Marketweight Getinge NR NR NR Healthcare August Moberg Marketweight Glamox NR NR NR NR NR NR Materials Haseeb Syed Marketweight Heimstaden Ab NR NR NR NR NR NR Real estate Louis Landeman Marketweight Hemfosa Fastigheter Ab NR NR NR NR NR NR Real estate Louis Landeman Underweight Hexagon NR NR NR Machinery & heavy industrials August Moberg Overweight Hkscan NR NR NR NR NR NR Consumer goods Mads Rosendal Marketweight Hoist Finance NR NR Baa3 S NR NR Financials Jesper Damkjaer Marketweight Husqvarna BBB NR NR NR Consumer goods August Moberg Marketweight If P&C Insurance Holding Ltd A- S NR NR NR NR Financials Katrine Jensen Marketweight Ikano Bank Ab Financials Katrine Jensen Marketweight Investor AA- S Aa3 S NR NR Financials Gabriel Bergin Marketweight Islandsbanki BBB PO BBB S Financials Jesper Damkjaer Overweight Iss BBB S Baa2 S NR NR Services & IT Brian Børsting Marketweight Jefast NR NR NR NR NR NR Real estate Louis Landeman Marketweight Jernhusen Ab A S NR NR NR NR Real estate Louis Landeman Marketweight Jyske Bank A- S Baa1 (uns NR NR Financials Katrine Jensen Overweight Kemira Materials Mads Rosendal Marketweight Source: Standard & Poor s, Moody s, Fitch, Danske Bank DCM Research 18

19 3 of 5 Latest EUR Basis (cash vs. (3) Ratings from S&P/Moody's/Fitch S&P Moody's Fitch Sector Analyst(s) Recomm. Company Rating Outlook Rating Outlook Rating Outlook Kesko NR NR NR NR NR NR Consumer goods Gabriel Bergin Overweight Klövern NR S NR S NR NR Real estate Louis Landeman Marketweight Kojamo Oyj NR S Baa2 S NR NR Real estate Christopher HellesnesOverweight Kungsleden NR NR Ba1 PO NR NR Real estate Louis Landeman Marketweight Landsbankinn BBB+ S Financials Jesper Damkjaer Overweight Länsförsäkringar Bank Ab A S A1 S NR NR Financials Katrine Jensen Marketweight Lantmännen NR NR NR NR NR NR Consumer goods August Moberg Marketweight Link Mobility NR NR NR NR NR NR Services & IT Haseeb Syed Marketweight Loomis NR NR NR NR NR NR Services & IT Brian Børsting Marketweight Luossavaara-Kiirunavaara Ab NR NR NR NR NR NR Materials Louis Landeman Overweight Metsä Board BB+ PO Ba1 S Materials Mads Rosendal Overweight Metso BBB S NR NR NR NR Machinery & heavy industrials Brian Børsting Overweight Ncc NR NR NR Construction August Moberg Marketweight Neste NR NR NR NR NR NR Energy Jakob Magnussen Marketweight Nibe NR NR NR Machinery & heavy industrials August Moberg Marketweight Nokia BB+ S Ba1 S BB+ PO TMT Mads Rosendal Underweight Nordax Bank NR NR NR NR NR NR Financials Jesper Damkjaer Overweight Nordea AA- S Aa3 S AA- S Financials Jesper Damkjaer Marketweight Norgesgruppen NR NR NR NR NR NR Consumer goods Haseeb Syed Marketweight Norwegian Air Shuttle NR NR NR NR NR NR Transportation Brian Børsting Marketweight Norwegian Property Asa NR NR NR NR NR NR Real estate Haseeb Syed Marketweight Nykredit Bank A/S A S Baa1 (uns A S Financials Katrine Jensen Marketweight Nynas Group NR NR NR NR NR NR Materials Jakob Magnussen Underweight Obos Bbl Real estate Haseeb Syed Marketweight Obos Forretningsbygg NR NR NR NR NR NR Real estate Haseeb Syed Marketweight Olav Thon Eiendomsselskap Real estate Haseeb Syed Overweight Op Corporate Bank Plc AA- S Aa3 S NR NR Financials Katrine Jensen Overweight Orkla NR NR NR NR NR NR Consumer goods Haseeb Syed Marketweight Ørsted BBB+ S Baa1 S BBB+ S Energy Jakob Magnussen Marketweight Outokumpu B2 PO Materials Mads Rosendal Marketweight Postnord Ab NR NR NR NR NR NR Transportation Louis Landeman Marketweight Source: Standard & Poor s, Moody s, Fitch, Danske Bank DCM Research 19

20 4 of 5 Latest EUR Basis (cash vs. (4) Ratings from S&P/Moody's/Fitch S&P Moody's Fitch Sector Analyst(s) Recomm. Company Rating Outlook Rating Outlook Rating Outlook Remove BBB+ S Baa1 S BBB+ S Utilities Jakob Magnussen Marketweight Saab NR NR NR Machinery & heavy industrials August Moberg Overweight Sandvik BBB PO NR NR NR NR Machinery & heavy industrials Brian Børsting Overweight Sas Group B+ S B1 S NR NR Transportation Brian Børsting Overweight Sato Oyj NR NR Baa3 S NR NR Real estate Louis Landeman Marketweight Sbab Bank Ab A NO A2 PO NR NR Financials Katrine Jensen Marketweight Schibsted NR NR NR NR NR NR TMT Haseeb Syed Marketweight Seb A+ S Aa3 S AA- S Financials Katrine Jensen Marketweight Securitas BBB S NR NR NR NR Services & IT Brian Børsting Marketweight Ship Finance International NR NR NR NR NR NR Shipping Haseeb Syed Overweight Skf BBB- S Baa2 S NR NR Machinery & heavy industrials Brian Børsting Underweight Spar Nord WR Financials Katrine Jensen Marketweight Sparebank 1 Nord Norge NR NR A1 S A S Financials Katrine Jensen Marketweight Sparebank 1 Smn NR NR A1 NO A- S Financials Katrine Jensen Marketweight Sparebank 1 Sr-Bank NR NR A1 NO A- S Financials Katrine Jensen Underweight Srv Group Oyj NR NR NR Construction August Moberg Marketweight Ssab B+ PO Machinery & heavy industrials Mads Rosendal Overweight St1 Nordic Oy NR NR NR NR NR NR Energy Jakob Magnussen Marketweight Statkraft Sf A- S Baa1 S BBB+ S Utilities Jakob Magnussen Overweight Statnett Sf A+ S A2 S NR NR Utilities Jakob Magnussen Marketweight Statoil A+ S Aa3 S NR NR Energy Jakob Magnussen Underweight Steen & Strom As Real estate Haseeb Syed Overweight Stena Ab BB- NO B1 S NR NR Transportation Brian Børsting Underweight Stockmann NR NR NR NR NR NR Consumer goods Mads Rosendal Marketweight Stora Enso BB+ S Ba2 PO NR NR Materials Mads Rosendal Overweight Storebrand Livsforsikring BBB+ S Baa1 S Financials Katrine Jensen Marketweight Svenska Cellulosa Ab BBB+ S Baa1 NO Consumer goods Mads Rosendal Overweight Svenska Handelsbanken AA- S Aa2 S AA S Financials Katrine Jensen Marketweight Swedavia Ab NR NR NR NR NR NR Transportation Louis Landeman Marketweight Swedbank AA- NO Aa3 S AA- S Financials Katrine Jensen Marketweight Swedish Match BBB S Baa2 S NR Consumer goods August Moberg Overweight Sydbank NR NR Baa1 PO NR NR Financials Katrine Jensen Overweight Source: Standard & Poor s, Moody s, Fitch, Danske Bank DCM Research 20

21 5 of 5 Latest EUR Basis (cash vs. Ratings from S&P/Moody's/Fitch S&P Moody's Fitch Sector Analyst(s) Recomm. Company Rating Outlook Rating Outlook Rating Outlook Tallink Group As NR NR NR NR NR NR Transportation Brian Børsting Marketweight Tdc BBB- S Baa3 S BBB- S TMT Mads Rosendal Marketweight Technopolis NR NR NR NR NR NR Real estate Louis Landeman Marketweight Teekay Offshore Partners Lp NR NR NR NR NR NR Energy Bendik Engebretsen Marketweight Teekay Shuttle Tankers NR NR NR NR NR NR Shipping Bendik Engebretsen Marketweight Tele2 TMT Mads Rosendal Overweight Telefonaktiebolaget Lm Ericsson BB+ S Ba2 NO BBB- NO TMT Mads Rosendal Marketweight Telenor A S A3 S NR NR TMT Mads Rosendal Marketweight Telia A- NO Baa1 S A- S TMT Mads Rosendal Overweight Teollisuuden Voima Oyj BB+ NW NR NR BBB- S Utilities Jakob Magnussen Overweight Thon Holding As Real estate Haseeb Syed Overweight Topdanmark Financials Jesper Damkjaer Tresu Machinery & heavy industrials Mads Rosendal Overweight Tryg Forsikring A/S NR NR S Financials Katrine Jensen Marketweight Upm-Kymmene BBB- PO Baa3 S WR NR Materials Mads Rosendal Overweight Vasakronan Ab NR NR NR NR NR NR Real estate Louis Landeman Marketweight Vattenfall BBB+ S A3 S BBB+ S Utilities Jakob Magnussen Marketweight Vestas Wind Systems NR NR NR NR NR NR Machinery & heavy industrials Jakob Magnussen Marketweight Victoria Park NR NR NR NR NR NR Real estate Louis Landeman Overweight Volvo BBB+ S Baa1 S BBB S Machinery & heavy industrials August Moberg Marketweight Wallenius Wilhelmsen Logistics NR NR NR NR NR NR Transportation Brian Børsting Overweight Wihlborgs NR NR NR NR NR NR Real estate Louis Landeman Underweight Yara BBB S Baa2 S NR NR Machinery & heavy industrials Bendik Engebretsen Marketweight Yit NR NR NR Construction August Moberg Overweight Source: Standard & Poor s, Moody s, Fitch, Danske Bank DCM Research (5) 21

22 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 brbr@danskebank.com David Boyle & Norwegian HY dboy@danskebank.com Jesper Damkjær Financials damk@danskebank.com Bendik Engebretsen & Norwegian HY bee@danskebank.com Christopher Hellesnes General cahe@danskebank.se Katrine Jensen Financials katri@danskebank.com Louis Landeman, Real Estate llan@danskebank.com Jakob Magnussen Utilities, Energy jakja@danskebank.com August Moberg & Construction aumo@danskebank.com Niklas Ripa Credit Portfolios niri@danskebank.com Mads Rosendal, TMT madro@danskebank.com Haseeb Syed & Norwegian HY hsy@danskebank.com Find the latest Credit Research: : Danske Bank DCM Research: Bloomberg: DNSK<GO> 22

23 Disclosures This research report has been prepared by Danske Bank DCM Research, a division of Danske Bank A/S ( Danske Bank ). The author of this research report is Bendik Engebretsen, 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. Completion and first dissemination The completion date and time in this research report mean the date and time when the author hands over the final version of the research report to Danske Bank s editing function for legal review and editing. The date and time of first dissemination mean the date and estimated time of the first dissemination of this research report. The estimated time may deviate up to 15 minutes from the effective dissemination time due to technical limitations. See the final page of this research report for the date and time of first dissemination. Validity time period This communication as well as the communications in the list referred to below are valid until the earlier of (a) dissemination of a superseding communication by the author, or (b) significant changes in circumstances following its dissemination, including events relating to the market or the issuer, which can influence the price of the issuer or financial instrument. 23

24 Investment recommendations disseminated in the preceding 12-month period A list of previous investment recommendations disseminated by the lead analyst(s) of this research report in the preceding 12-month period can be found at www- 2.danskebank.com/Link/researchdisclaimer. Select DCM Research recommendation history Recommendation history. Other previous investment recommendations disseminated by Danske Bank DCM Research, Debt Capital Markets Research are also available in the database. General disclaimer This research has been prepared by Danske Bank DCM Research (a division of Danske Bank A/S). It is provided for informational purposes only. It does not constitute or form part of, and shall under no circumstances be considered as, an offer to sell or a solicitation of an offer to purchase or sell any relevant financial instruments (i.e. financial instruments mentioned herein or other financial instruments of any issuer mentioned herein and/or options, warrants, rights or other interests with respect to any such financial instruments) ( Relevant Financial Instruments ). The research report has been prepared independently and solely on the basis of publicly available information that Danske Bank considers to be reliable. While reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and Danske Bank, its affiliates and subsidiaries accept no liability whatsoever for any direct or consequential loss, including without limitation any loss of profits, arising from reliance on this research report. The opinions expressed herein are the opinions of the research analysts responsible for the research report and reflect their judgement as of the date hereof. These opinions are subject to change, and Danske Bank does not undertake to notify any recipient of this research report of any such change nor of any other changes related to the information provided in this research report. This research report is not intended for, and may not be redistributed to, retail customers in the United Kingdom or the United States. This research report is protected by copyright and is intended solely for the designated addressee. It may not be reproduced or distributed, in whole or in part, by any recipient for any purpose without Danske Bank s prior written consent. Disclaimer related to distribution in the United States This research report was created by Danske Bank A/S and is distributed in the United States by Danske Markets Inc., a U.S. registered broker-dealer and subsidiary of Danske Bank A/S, pursuant to SEC Rule 15a-6 and related interpretations issued by the U.S. Securities and Exchange Commission. The research report is intended for distribution in the United States solely to U.S. institutional investors as defined in SEC Rule 15a-6. Danske Markets Inc. accepts responsibility for this research report in connection with distribution in the United States solely to U.S. institutional investors. Danske Bank is not subject to U.S. rules with regard to the preparation of research reports and the independence of research analysts. In addition, the research analysts of Danske Bank who have prepared this research report are not registered or qualified as research analysts with the NYSE or FINRA but satisfy the applicable requirements of a non-u.s. jurisdiction. Any U.S. investor recipient of this research report who wishes to purchase or sell any Relevant Financial Instrument may do so only by contacting Danske Markets Inc. directly and should be aware that investing in non-u.s. financial instruments may entail certain risks. Financial instruments of non-u.s. issuers may not be registered with the U.S. Securities and Exchange Commission and may not be subject to the reporting and auditing standards of the U.S. Securities and Exchange Commission. Report completed: 11 December 2017 at 15:50 CET Report disseminated: 12 December 2017 at 07:00 CET 24