U.S. Corporate Credit Outlook 1Q2016 Standard & Poor s Global Fixed Income Research www.spratings.com/gfir March 2016 Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor s. Copyright 2015 by Standard & Poor s Financial Services LLC. All rights reserved.
U.S. Corporate Credit Market: Credit Conditions Are Growing More Challenging For Lower-Rated Companies Despite economic growth in 2015, the credit market ran into headwinds: - In the build-up to The Fed s December rate hike, U.S. corporate bond issuance surged as companies sought to lock-in low rates - We expect speculative-grade corporate issuers to see increasing borrowing costs in the coming quarters following the Fed interest rate increase, while most higher-rated corporate entities should continue to have a favorable lending environment as investors pursue moderate yields while remaining more risk-averse With slowing demand and plunging equities in China, falling commodity prices, and increased U.S. stock market volatility, investor risk aversion is on the rise - Credit spreads, returns, issuance, and rating outlooks point toward increased headwinds for lower-rated companies in the near-term - For FY 2015, investment-grade corporate bond returns were down (-0.8%), while speculative-grade returns fell (-3.8%) - In 2015, U.S. corporate downgrades climbed by 67% to 461 and defaults rose to 66 - The oil and gas and metals, mining, and steel sectors have been hardest hit in the U.S. they accounted for 33% of downgrades and 55% of defaults in 2015 - U.S. trailing 12-month speculative-grade default rate was 2.8% in January 2016, though if we exclude the energy and natural resources sector, the default rate would have been 1.43% - We expect the U.S. speculative-grade default rate to rise to 3.9% by December 2016, only our pessimistic scenario exceeds the long-term average annual default rate of 4.4% 2
Rating Actions and Outlooks
U.S. Corporate Downgrades Accelerating In Recent Quarters (Count) 150 U.S. Corporate Upgrades And Downgrades Downgrades Upgrades 100 50 0 50 100 150 200 250 300 350 400 U.S. corporate downgrades in 2015 increased by 67% over the prior year, and this was the sharpest increase in number of downgrades since the 85% increase in 2008 Through the first two months of 2016, downgrades have remained near the elevated level of 4Q15 * Data as of 2/29/2016. Note: Downgrades shown as a negative number. Source: Standard & Poor's Global Fixed Income Research 4
Nonfinancials Leading Corporate Quarterly Rating Actions In 1Q2016 Count U.S. Corporate Upgrades And Downgrades (Nonfinancials) Downgrades IG Upgrades IG Downgrades SG Upgrades SG Count 20 U.S. Corporate Upgrades And Downgrades (Financials) Downgrades IG Upgrades IG Downgrades SG Upgrades SG 120 100 80 60 40 20 0 20 40 60 80 100 120 140 160 180 10 0 10 20 30 40 YTD (through Feb) nonfinancial downgrades total 150 (upgrades total 8), while financial company downgrades total 11, with no upgrades so far this year By far, the majority of U.S. corporate downgrades YTD in 2016 are speculative-grade companies * Data as of 2/29/2016. Note: Downgrades shown as a negative number. Source: Standard & Poor's Global Fixed Income Research 5
U.S. Corporate Rating Actions Oil And Gas Sector Downgrades Lead Other Sectors U.S. Investment Grade Rating Actions By Sector (2016 YTD U.S.) (count) Downgrades Upgrades 10 5 0 5 Oil & Gas Bank High Technology Utility Consumer Products Metals, Mining & Steel Health Care Retail/Restaurants Insurance Forest Capital Goods Financial Inst (ex Banks) Transportation Home/RE Aerospace & Defense U.S. Speculative Grade Rating Actions By Sector (2016 YTD U.S.) Downgrade Upgrade (count) 70 60 50 40 30 20 10 0 10 Oil & Gas Metals, Mining & Steel Utility Media & Entertainment High Technology Capital Goods Financial Inst (ex Banks) Retail/Restaurants Telecommunications Health Care Transportation Insurance Consumer Products CP&ES Home/RE 45% of U.S. corporate downgrades YTD (through February) are from the oil and gas sector The oil and gas sector leads both investment- and speculative-grade corporate downgrades in 2016 through February Forest *Data as of Feb. 29, 2016. Note: Downgrades shown as a negative number. CP&ES -- Chemicals, packaging, and environmental services; Home/RE -- Homebuilders/real estate companies; Forest -- Forest products and building materials; Financial Institutions excludes banks. Rating changes exclude entities with no rated debt. Source: Standard & Poor's Global Fixed Income Research. 6
Negative Bias Is Up 2% YTD In 2016 50% 45% 40% 35% 30% 25% 20% 15% U.S. Overall Corporate Bias Negative Bias (%) Positive Bias (%) Avg Neg Bias (Trailing 5 year) Avg Pos Bias (Trailing 5 year) U.S. Corporate Rating Bias By Category (as of 2/29/2016) Negative (%) Stable (%) Positive (%) 0 20 40 60 80 100 AAA AA A BBB BB 10% 5% 0% 2000 2000 2001 2002 2003 2003 2004 2005 2006 2006 2007 2008 2009 2009 2010 2011 2012 2012 2013 2014 2015 2015 B CCC / C The corporate credit outlook is still largely stable, 77% of U.S. companies have a stable outlook However, the negative bias has risen above its five-year moving average, while the positive bias continues to trail its moving average Data as of Feb. 29, 2016. Shaded areas are periods of recession as defined by the National Bureau of Economic Research. Source: Standard & Poor s Global Fixed Income Research 7
Negative Bias Rising For Both Investment- And Speculative-Grade Companies U.S. Investment-Grade Corporate Bias Negative Bias (%) Positive Bias (%) Avg Neg Bias (Trailing 5 year) Avg Pos Bias (Trailing 5 year) 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2000 2000 2001 2002 2003 2003 2004 2005 2006 2006 2007 2008 2009 2009 2010 2011 2012 2012 2013 2014 2015 2015 U.S. Speculative-Grade Corporate Bias Negative Bias (%) Positive Bias (%) Avg Neg Bias (Trailing 5 year) Avg Pos Bias (Trailing 5 year) 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2000 2000 2001 2002 2003 2003 2004 2005 2006 2006 2007 2008 2009 2009 2010 2011 2012 2012 2013 2014 2015 2015 The negative bias is rising for both investment- and speculative-grade companies, and the bias has risen above its five-year moving average Speculative-grade companies show a higher negative bias than investment-grade companies, while the positive biases are comparable Data as of Feb. 29, 2016. Shaded areas are periods of recession as defined by the National Bureau of Economic Research. Source: Standard & Poor s Global Fixed Income Research 8
U.S. Corporate Outlooks Negative Outlook Is Highest For Banks And Commodity Producers U.S. Investment Grade Corporate Rating Bias By Sector (as of 2/29/2016) Negative Bias Stable Bias Positive Bias Negative Bias Stable Bias Positive Bias (%) 0 20 40 60 80 100 (%) 0 20 40 60 80 100 Oil & Gas (BBB) Health Care (BBB+) Bank (BBB+) Telecommunications (BBB) Retail/Restaurants (BBB+) Capital Goods (A ) Utility (BBB+) CP&ES (BBB+) Consumer Products (BBB+) Insurance (A ) Media & Entertainment (BBB) Aerospace & Defense (BBB+) Fin Inst (ex bank) (BBB) High Technology (BBB) Forest (BBB) Homebuilders/RE (BBB) Transportation (BBB+) Metals (BBB) Diversified (BBB+) Automotive (BBB) U.S. Speculative Grade Corporate Rating Bias By Sector (as of 2/29/2016) Insurance (B) Falling commodity prices, lower price floors are assumed for the metals, mining, and steel, and oil and gas sectors, resulting in a more negative outlook for these sectors The negative bias for speculative-grade banks mostly reflects credit weakness for banks exposed to either the oil and gas sector or Puerto Rico Bank (BB) Oil & Gas (B ) Metals (B) Fin Inst (ex bank) (B+) Utility (B+) Homebuilders/RE (B+) Retail/Restaurants (B) High Technology (B) Consumer Products (B) Aerospace & Defense (B+) Transportation (B+) Telecommunications (B+) Media & Entertainment (B+) Capital Goods (B) Health Care (B) Automotive (B+) CP&ES (B) Forest (B+) 9 Data as of Feb. 29, 2016. Note: Sector median ratings shown in parentheses. Net bias is the positive bias minus the negative bias. Metals = metals, mining, & steel; CP&ES = chemicals, packaging, & environmental services; Forest = forest products and building materials; Source: Standard & Poor's Global Fixed Income Research.
Negative Bias Is Below Trend For Most Sectors 50% 45% Identifying Downgrade Potential Across Sectors Oil & Gas 40% 35% Metals, Mining & Steel Current Negative Bias (%) 30% Bank Finance Institutions (Ex.Banks) 25% Retail/Restaurants 20% Utility High Technology Health Care Telecommunications 15% Capital Goods Consumer Products Aerospace & Defense Media & Entertainment Homebuilders/Real Estate Chemicals, Co. Packaging & Transportation 10% Environmental Services Automotive Insurance 5% Forest Products & Building Materials Diversified 0% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Historical Average Negative Bias (%, 1995 2/16) Data as of Feb. 29, 2016. Source: Standard & Poor's Global Fixed Income Research. Oil and gas and metals, mining, and steel are the sectors with current negative biases that are highest above historical average Data as of Feb. 29, 2016. Source: Standard & Poor's Global Fixed Income Research 10
Defaults Expected To Rise In 2016 We expect default rates to rise modestly through the remainder of 2016, though only our pessimistic scenario exceeds the average rate of 4.4% U.S. trailing 12-month speculative-grade default rate was 2.8% in January 2016. If we exclude the energy and natural resources sector, the default rate would have been 1.43% in January. We forecast the default rate will rise to 3.9% by December 2016 (with 70 defaults), up from 2.8% in December 2015 *Shaded areas are periods of recession as defined by the National Bureau of Economic Research (NBER). Source: Standard & Poor's Global Fixed Income Research; Standard & Poor's CreditPro 11 (%) 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 U.S. speculative-grade default rate (actual) Base forecast (3.9%) Pessimistic (5.2%) Optimistic (3%) 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Contribution To Weakness Defaults And Weakest Links By Sector (Count) 7 6 Defaults By Sector (2016 YTD) (Count) 60 50 Weakest Links By Sector 5 40 4 3 2 1 30 20 10 0 0 The oil and gas sector has six defaults YTD through February while metals, mining, and steel has five. Oil and gas appears poised for more potential defaults, with 48 Weakest Links Weakest Links are issuers rated B- or lower with either a negative outlook CreditWatch, and these issuers have greater default risk than higher-rated entities Data as of Feb. 29, 2016. Defaults shows companies that defaulted 2/29/2016. Weakest Links as of 2/29/2016. CP&ES -- Chemicals, packaging, and environmental services; Home/RE -- Homebuilders/real estate companies; Metals Metals, mining, and steel; Forest -- Forest products and building materials; Financial Institutions includes banks, brokerages, finance cos, mortgage institutions and S&L. Source: Standard & Poor s Global Fixed Income Research. 12
Despite Tightening Funding Conditions, U.S. Companies Are Generally Well-Positioned To Meet Refinancing Demands U.S. Corporate Rated Debt Maturing By Year (Investment- and Speculative-Grade) ($ bln) 1200.0 Investment Grade Speculative Grade 1000.0 800.0 600.0 400.0 200.0 Maturing debt should be manageable in the near term, as companies have issued longerterm debt in recent years to lock-in low rates U.S. companies have $4.1 trillion in rated debt maturing through 2020, annual maturities rise to a peak of $1.05 trillion in 2020 32% of the maturing debt (through 2020) is speculative grade ( BB+ and lower) Data as of Dec. 31, 2015. Source: Standard & Poor's Global Fixed Income Research. 13 0.0 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
U.S. Corporate Speculative-Grade Maturities Peak In 2020 U.S. Corporate Speculative-Grade Debt Maturing By Year ($ bill) 500.0 BB B CCC/C 400.0 300.0 200.0 100.0 0.0 2016 2017 2018 2019 2020 Speculative-grade debt generally presents a higher refinancing risk than investment grade debt Though nearly $1.3 trillion in U.S. corporate speculative-grade is scheduled to mature through 2020, the majority of this debt will not mature until 2019-2020 Of the maturing debt, 47% is in the highest speculative-grade category of 'BB Lower-rated companies should benefit from having a longer window in which to refinance Data as of Dec. 31, 2015. Source: Standard & Poor's Global Fixed Income Research. 14
Issuance And Market Overview
8 6 4 2 0 2 4 6 4Q_2015 4Q_2009 1Q_2010 2Q_2010 3Q_2010 4Q_2010 1Q_2011 2Q_2011 3Q_2011 4Q_2011 1Q_2012 2Q_2012 3Q_2012 4Q_2012 1Q_2013 2Q_2013 3Q_2013 4Q_2013 1Q_2014 2Q_2014 3Q_2014 4Q_2014 1Q_2015 2Q_2015 3Q_2015 1Q_2016* 6 5 4 3 2 1 0 1 2 3 4 Bond Returns Swing Positive In 2016 After Losses In 4Q15 % % Investment Grade Total Return (Quarterly) Speculative Grade Total Return (Quarterly) 4Q_2009 1Q_2010 2Q_2010 3Q_2010 4Q_2010 1Q_2011 2Q_2011 3Q_2011 4Q_2011 1Q_2012 2Q_2012 3Q_2012 4Q_2012 1Q_2013 2Q_2013 3Q_2013 4Q_2013 1Q_2014 2Q_2014 3Q_2014 4Q_2014 1Q_2015 2Q_2015 3Q_2015 4Q_2015 1Q_2016* Speculative-grade returns rebounded 1.2% in 1Q16 (through February) after a loss of 2.5% in 4Q15 Investment-grade returns were up nearly 1.8% in 1Q16 (through February) following a loss of 1% in 4Q15 * Data as of 2/29/2016. Source: Standard & Poor's Global Fixed Income Research 16
Total Returns Show Divergence Between Sectors U.S. Investment Grade Corporate Composite Total Returns By Sector U.S. Speculative Grade Corporate Composite Total Returns By Sector FY 2015 YTD Return (2016) FY 2015 YTD Return (2016) (%) 20.0 15.0 10.0 5.0 0.0 5.0 (%) 30.0 25.0 20.0 15.0 10.0 5.0 0.0 5.0 10.0 Metals, Mining and Steel Oil and Gas Oil and Gas Metals, Mining and Steel Utility Utility Telecommunications Telecommunications Automotive CP&ES CP&ES Automotive Media and Entertainment Capital Goods Transportation Retail and Restaurants Retail and Restaurants Financial Institutions Capital Goods Aerospace and Defense Consumer Products Insurance Insurance Bank and Brokerage Aerospace and Defense High Technology High Technology Forest Forest Media and Entertainment Health Care Transportation Financial Institutions Consumer Products Home/RE Health Care Bank and Brokerage Home/RE Returns for speculative-grade metals, mining, and steel rebounded 2.8% in the first two months of 2016, after a decline of 26% in 2015 Oil and gas losses have extended from 2015 into 2016 *Data as of Feb. 29, 2016. Note: CP&ES -- Chemicals, packaging, and environmental services; Home/RE -- Homebuilders/real estate companies; Forest -- Forest products and building materials; Standard & Poor's Global Fixed Income Research. 17
Corporate Bond Yields Showing Investor Flight To Quality (%) 11.0 10.5 10.0 9.5 9.0 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 Investment Grade Yield Speculative Grade Yield Treasury 10 Year Speculative-grade yield has been on the rise since mid-2015; currently just below 10% Investment-grade yield is largely flat YTD, while the 10-Year Treasury yield is below 2% Data as of Feb. 29, 2016. Source: Standard & Poor's Global Fixed Income Research; Thomson Reuters 18
Credit Spreads Widened In Recent Months Standard & Poor s Corporate Composite Credit Spreads (bps) AA A BBB 350 300 250 200 150 100 50 0 (bps) BB B CCC 2000 1800 1600 1400 1200 1000 800 600 400 200 0 1/2/2015 1/23/2015 2/13/2015 3/6/2015 3/27/2015 4/17/2015 5/8/2015 5/29/2015 6/19/2015 7/10/2015 7/31/2015 8/21/2015 9/11/2015 10/2/2015 10/23/2015 11/13/2015 12/4/2015 12/25/2015 1/15/2016 2/5/2016 2/26/2016 1/2/2014 2/2/2014 3/2/2014 4/2/2014 5/2/2014 6/2/2014 7/2/2014 8/2/2014 9/2/2014 10/2/2014 11/2/2014 12/2/2014 1/2/2015 2/2/2015 3/2/2015 4/2/2015 5/2/2015 6/2/2015 7/2/2015 8/2/2015 9/2/2015 10/2/2015 11/2/2015 12/2/2015 1/2/2016 2/2/2016 Since December, spreads above treasuries have been expanding across rating categories, though the lower-rated categories are widening more rapidly as investors are wary of credit risk Moving sharply wider in the last two months, CCC spreads briefly rose above 1,800 bps for the first time since 2009 Data as of 2/29/2016. Source : Standard & Poor's Global Fixed Income Research 19
Spreads Remain Widest For Commodity-Related Sectors U.S. Investment Grade Corporate Composite Spreads By Sector Spread (as of 2/29/16) Change 2016 (bps) 300 200 100 0 100 200 300 400 500 600 Oil and Gas Metals, Mining and Steel Telecommunications Forest Utility Automotive Media and Entertainment Home/RE Insurance Financial Institutions Bank and Brokerage CP&ES High Technology Retail and Restaurants Transportation Aerospace and Defense Consumer Products Capital Goods Health Care U.S. Speculative Grade Corporate Composite Spreads By Sector Spread (as of 2/29/16) Change 2016 (bps) 200 0 200 400 600 800 1000 1200 1400 1600 Oil and Gas Metals, Mining and Steel Utility Insurance Capital Goods Telecommunications Retail and Restaurants Transportation CP&ES Media and Entertainment High Technology Forest Financial Institutions Aerospace and Defense Consumer Products Automotive Health Care Speculative-grade corporate bonds from the metals, mining, and steel and oil and gas sectors show average credit spreads above 1,000 bps, signifying investors view these sectors as distressed Investment-grade spread for the metals, mining, and steel sector has contracted by 203 bps YTD, to 468 bps, while oil and gas has widened by 134 bps to 501 bps *Data as of Feb. 29, 2016. Note: Investment-grade spreads calculated for bonds with a 10-year maturity; speculative-grade spreads calculated on bonds with a five-year maturity. CP&ES -- Chemicals, packaging, and environmental services; Home/RE -- Homebuilders/real estate companies; Forest -- Forest products and building materials; Standard & Poor's Global Fixed Income Research. 20
U.S. Corporate Bond Issuance U.S. Corporate Bond Issuance (Rated) Investment Grade Bond Issuance ($ bln) 1,400 2012 2013 2014 2015 2016 ($ bln) 1,200 2012 2013 2014 2015 2016 1,200 1,000 1,000 800 800 600 600 400 400 200 200 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total U.S. corporate rated issuance climbed 18% in 2015 to $1.2 trillion as investmentgrade issuance surged, (up 24% YoY) Investment-grade companies actively issued new debt ahead of the Fed interest rate hikes to lock-in funding We expect 2016 global nonfinancial corporate issuance to decline 10%-15% overall, and we expect U.S. nonfinancial issuance growth to slow in 2016 after years of surging volume This decline in nonfinancial issuance could be offset by an increase from financial issuers 21 Data as of Feb. 29, 2016. Source: Standard & Poor's Global Fixed Income Research; Thomson Reuters
U.S. Corporate Bond Issuance Speculative Grade Bond Issuance ($ bln) 2012 2013 2014 2015 2016 350 300 250 200 150 100 50 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ($ bln) 45 40 35 30 25 20 15 10 5 CCC+ and Lower Issuance 2012 2013 2014 2015 2016 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Despite surging investment-grade issuance, speculative-grade issuance fell short of 2014 s volume by 5%, and continues to lag through the first two months of 2016 Issuance from the lowest rating levels ( CCC+ and lower) dried-up in the 4 th quarter, with no new issues rated by S&P coming to market With continued volatility in equity, commodity, and currency markets, investors flight to quality dampened the market for riskier assets 22 Data as of Feb. 29, 2016. Source: Standard & Poor's Global Fixed Income Research; Thomson Reuters
Rating Distributions
Number of Newly Assigned Ratings Declined In 2015 Newly Assigned U.S. Corporate Issuer Ratings Count Q1 Q2 Q3 Q4 600 500 400 300 200 100 0 Newly Assigned U.S. Corporate Ratings By Year Count 2012 2013 2014 2015 350 300 250 200 150 100 50 0 AA A BBB BB B CCC/CC The number of newly-assigned U.S. corporate ratings declined by 40% in 2015 as fewer companies were rated for the first time The steepest decline has been for newly-rated B issuers as the number of new issuers from this rating category has declined by 45% in 2015 This suggests that the funding market is tightening, especially for the lesscreditworthy issuers 24 Data as of Dec. 31, 2015. Source: Standard & Poor's Global Fixed Income Research; Standard & Poor's CreditPro.
Corporate Rating Distributions U.S. Corporate Rating Distribution CCC/CC 3% AAA 0% U.S. Nonfinancial Corporate Rating CCC/CC 4% AAA 0% AA 1% U.S. Financial Corporate Rating Distribution BB 8% CCC/CC 1% AAA 0% B 35% BB 17% AA 5% A 16% BBB 24% B 42% A 11% BB 19% BBB 23% BBB 28% B 11% A 36% AA 16% 55% of U.S. corporate ratings are speculative-grade Nonfinancials have a much higher proportion of speculative-grade companies (at 65%) vs. financials (at 20%) As credit conditions become more challenging, those companies in the lower-rating categories are more susceptible to funding challenges 25 Data as of Dec. 31, 2015. Source: Standard & Poor's Global Fixed Income Research; Standard & Poor's CreditPro.
Copyright 2016 by Standard & Poor s Financial Services LLC. All rights reserved. No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an as is basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages. Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P s opinions, analyses and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof. S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees. Australia Standard & Poor's (Australia) Pty. Ltd. holds Australian financial services license number 337565 under the Corporations Act 2001. Standard & Poor s credit ratings and related research are not intended for and must not be distributed to any person in Australia other than a wholesale client (as defined in Chapter 7 of the Corporations Act). STANDARD & POOR S, S&P, CREDITPRO and RATINGSDIRECT are registered trademarks of Standard & Poor s Financial Services LLC.