Peter Kline, Managing Director 312-325-8983 Richard Jones, Managing Director 312-325-8906 Michael Mahoney, Managing Director 314-418-2661 Daniel Chapman, Managing Director 877-673-2258 Jeffrey Duncan, Managing Director 704-335-4570 Kavian Boots, Managing Director 312-325-8723 Investment Grade Loan Market Market Commentary: The investment grade loan market continues to see limited new issue supply from event driven financings. After the success of highprofile deals like the $14.4 billion Thermo Fisher Scientific acquisition of Life Technologies and Kroger Company's $2.5 billion acquisition of Harris Teeter Supermarkets, banks are hoping for more M&A activity in the latter half of 2013. Consensus among market participants indicates that a pick-up in M&A will largely be dependent upon the ability of issuers to overcome the unresolved macroeconomic backdrop and relatively high valuations in the marketplace. In the meantime, the significant trend of amend-and-extend activity continues as borrowers lock in favorable terms with fresh 5-year tenors on existing deals (largely making up the 34% increase in investment grade volume from 1Q13 to 2Q13). Such deal churning leaves lenders anxious to deploy incremental capital and book funded assets. Domestic investment grade term loan issuance jumped to $13.3 billion in 2Q13, up from just $4.9 billion in the first quarter, and the term loan share of the investment grade market of 7.67% in the second quarter was the third highest it has been since 3Q08. Given significant investor appetite, borrower friendly trends in pricing, tenor, and structure are not likely to subside any time soon despite the anticipation of higher funding costs for Indicative Corporate Investment Grade Pricing Grid Undrawn Cost (bps) Drawn Cost (bps) S&P Traditional Grid CDS-Based Grid Rating 364-day Multi-year Drawn* Floor* Cap* AA 2-5 4-6 62.5-75 10-15 75-100 A+ 4-6 6-8 75-87.5 25-30 87.5-112.5 A 5-7.5 8-10 87.5-100 30-35 100-125 A- N/A 10-12.5 100-112.5 N/A N/A BBB+ N/A 12.5-15 112.5-125 N/A N/A BBB N/A 15-22.5 125-150 N/A N/A BBB- N/A 22.5-30 150-175 N/A N/A BB+ N/A 30-40 175-225 N/A N/A Source: U.S. Bank National Association * Spread to LIBOR This grid is subject to change and is indicative in nature only. As of July 26, 2013 lenders due to changes in the regulatory environment. lenders due to changes in the regulatory environment. Fidelity National Financial, Inc. BBB-/Baa3 (S&P/Moody s) Fidelity National Financial, Inc. (NYSE: FNF) is a diversified holding company. Through its various subsidiaries, it provides title insurance, mortgage services and diversified services. The Company also owns interests in a provider of global human capital management and payment solutions; a designer, manufacturer, re-manufacturer, marketer and distributor of after-market and original equipment electrical components for vehicles; and restaurants. The Company recently closed a set of facilities to support its $2.9 billion acquisition of Lender Processing Services and amend & extend its existing $800 million 4-year corporate revolver. The new Senior Unsecured facilities totaled $1.9 billion, comprised of a $1.1 billion 5-year Delayed DrawTermLoantofinancethe acquisition and an $800 million 5-year revolver to replace its existing facility. Pricing remained unchanged from the prior deal, opening at L+175 drawn and 30bps undrawn. Bank of America, U.S. Bank, JP Morgan, and Wells Fargo led the new transaction. Middle Market Loan Segment Market Commentary: This new section of the Snapshot will cover the Middle Market Middle Market Pricing Trends Jan 11 July 13 loan segment, which for U.S. Bank includes loans to corporate borrowers with annual revenues of $500 million or below. While some of these companies are public, most are privately held, including some private equity owned companies. Our primary focus will be on the non-levered, non-sponsored end of the Middle Market. 2Q13 Middle Market loan volume of $51 billion was up 19% from both 1Q13 and yearearlier (2Q12) levels. Even with the increase in issuance, over 90% of banks surveyed by Loan Pricing Corporation (LPC) reported that they were unable to meet their lending goals in 2Q13 largely because so much of this increased volume was refinancing of existing deals. Intense competition between arrangers has promoted more aggressive terms and pricing. Strong lender demand and healthy bank balance sheets have supported deals, and participant bank pushback against lower pricing or looser terms has been minimal. For Non-Sponsored deals for 3Q13 about 50% of lenders report being willing to go over 3x Source: U.S. Bank National Association. Note: Pricing grid considers indicative pricing for senior leverage. This is up dramatically from the10%oflenderswillingtogothathigh traditional commercial and corporate borrowers with gross revenues less than $500 million back in the second and third quarters of 2012. Structure and pricing for Middle Market As of July 19, 2013 deals tend to be more borrower-specific and relationship-driven. The market is generally more regional or geographic-market specific, often with Club Deal dynamics which can result in greater variability in loan spreads and upfront fees than in more broadly syndicated market segments. That said, drawn spreads have continued to slowly decline over the last year, even as spreads in the Investment Grade and Mid-Corporate segments have been flat. Currently, minimum pricing to attract lenders to a middle market loan with some usage is generally in the L+100 to 125bps range, but in some club deals pricing has been lower. Also, upfront fees are lower than a year ago, and are usually in tighter ranges, with Old $/New $ models common with extension deals. Although it is unusual, in some club deals with strong levels of usage and (usually) meaningful bank cross-sell opportunities, there have been no upfront fees offered. Manufacturer of valueadded packaging products and systems Sales approx. $400MM TD/EBITDA* approx. 1.5x The Company recently replaced a $50 million bilateral single bank facility with its first syndicated revolving credit, sized at $100 million with a $50 million accordion feature. Cash flow leverage (TD/EBITDA*) is capped at 3.0x, and there is a three-tier leverage-based pricing grid, with drawn spreads ranging from 100bps at the low end of the grid (< 1.0x leverage) to 175bps at the high end (>2.5x). Unused fees were flat at 12.5bps regardless of usage. Upfront fees were also flat at 10.0bps for all allocations. In addition to the cash flow leverage cap, covenants include a fixed charge coverage ratio of 2.0x, a positive net income requirement, and an annual capital expenditure limitation. The syndication had three banks in total. Market commentary is provided by U.S. Bank M&A Merger & Acquisition *Total Debt / Earnings Before Interest, Taxes, Depreciation and Amortization 1
Peter Kline, Managing Director 312-325-8983 Richard Jones, Managing Director 312-325-8906 Michael Mahoney, Managing Director 314-418-2661 Daniel Chapman, Managing Director 877-673-2258 Jeffrey Duncan, Managing Director 704-335-4570 Kavian Boots, Managing Director 312-325-8723 Leveraged Loan Market Market Commentary: FollowingtheJuneswoon, whichsawmanyofthe Indicative Leveraged Pricing issuer-friendly themes of the first five months of 2013 overturned, the Average New-Issue Pricing (YTM) new-issue market continues to strengthen and evidence suggests that Ratings Jul-12 Dec-12 Mar-13 Jun-13 Jul-13 the financing window is again wide open, even for aggressively BB/BB- 5.23% 4.21% 3.74% 4.05% 4.51% structured deals which are benefitting from reverse-flex activity to trim B+/B 7.16% 6.33% 5.34% 5.38% 5.38% pricing and other terms. Since July 15, there have been no fewer than Source: Standard & Poor's LCD nine reverse-flexes while only one loan has officially been flexed higher. A s o f July 2 5, 2 0 13 This contrasts with the first two weeks of July, when arrangers flexed eight loans higher against no reverse-flexes and with the month of June, which favored investors for the first time since November 2012 as pricing flexed higher on 36 institutional loans against just eight loans that reverse-flexed. Dividend recap volume hit a quarterly high in 2Q13 with issuance nearing $21 billion. YTD recap volume approximated $31 billion as issuers have spent much of the year focusing on opportunistic refinancing in the absence of significant LBO* activity. LBO volume reached $26.6 billion in 2Q13. While more than double the level seen in 1Q13, it is well below pre-crisis levels when quarterly volume reached as high as $57 billion in 2Q07. The S&P/LSTA Leveraged Loan Index returned 0.29% for the week ended 7/24/13, bringing YTD loan returns to 3.31%, down from 5.47% during the same period in 2012. The BB/BB and B+/B indices returned 2.32% and 3.60% YTD, respectively, down from 4.05% and 6.50%, respectively, through YTD 2012. Visible inflows from loan mutual fund subscriptions and CLO issuance reached a record $75.9 billion during the first half of 2013, slightly more than the prior record of $75.6 billion set in the first half of 2007. $42.3 billion of new CLO** vehicles in the YTD period represent a 136% increase over the same period in 2012. Pinnacle Entertainment BB-/B1 Corporate Rating U.S. Bank served as Co-Documentation Agent on the $2.6 billion senior facilities led by J.P. Morgan and Goldman Sachs supporting Pinnacle's acquisition of Ameristar. Facilities include a $1.0 billion, five-year revolving credit and a $1.6 billion, covenant-lite term loan B split between an up to $500 million three-year tranche and a $1.1 billion seven-year tranche. Proceeds will be used to finance the cash consideration for the Ameristar acquisition, refinance existing credit facilities, pay related fees and expenses, redeem Pinnacle's existing 8.625% senior notes due 2017 and provide ongoing working capital. The Company is also marketing $800 million of senior notes, and will use future asset sales to repay an estimated $387 million of initial borrowings under the revolver. Pricing on the facility has firmed at L+275 with a 1% LIBOR floor and a 99.5 OID (on the seven-year tranche), compared to original talk of L+350 with a 1% floor and a 99 OID. The loan also includes 12 months of 101 soft call protection. Asset Based Finance Market Market Commentary: Asset Based Lending (ABL) activity has remained steady for the first half of 2013, with much of the $43.6 billion of volume primarily driven by a handful of transactions, and mostly existing ABL borrowers which have refinanced or upsized existing facilities, lowered pricing, and extended tenor. The outlook for 2H13 is mixed and may be dependent on the state of the high yield bond and Term Loan B markets. Despite the relatively tempered supply, banks continue to be eagerly looking for places to loan excess cash, particularly transactions with meaningful usage and/or other capital markets fee opportunities. Drawn pricing has remained steady at attractive rates for issuers, actually falling slightly since 1Q13 from both a drawn and undrawn perspective; a modest increase still exists for more storied credits and larger transactions. The covenant-lite institutional term loan market, despite a brief hiccup in June, also continues to be a very popular option with ABL issuers, with companies such as US Foods, Burlington Coat Factory, and Harbor Freight launching sizable term loans alongside their ABL revolvers in recent months. Indicative Asset Based Pricing Grid LIBOR Spreads Deal Size Credit Fundamentals <$125mm > $125mm Strong/Stable 125-200 150-200 Story Credits 200-275 225-275 Undrawn pricing typically ranges from 25.0 to 37.5 bps, with a grid that is inversely related to usage of the facility. As of July 30, 2013 ABC Supply Co., Inc. Roofing supplies Beloit, WI BB-/B1 Corporate Rating U.S. Bancorp served as Joint Lead Arranger, Joint Bookrunner, and Syndication Agent on a new $750 million, 5-year ABL revolving credit facility for ABC Supply Co., Inc. The new ABL facility (secured by working capital assets), along with a new $1.25 billion, 7-year covenant-lite institutional term loan (secured by fixed assets), financed the Company's commitment to repurchase the shares of its minority-owned sponsor. The 5-year ABL facility is priced at L+150bps drawn and 37.5bps undrawn. Market commentary is provided by U.S. Bank *LBO Leveraged Buy-out **CLO Collateralized Loan Obligation OID Original Issue Discount 2
Terry Martin, Managing Director 646-935-4581 Violet Grecu, Vice President 877-673-2289 David Wood, Managing Director 312-325-8745 Charles P. Carpenter, Managing Director 612-336-7629 Amanda Lamberti, Vice President 314-325-2025. Private Placements Market Market Commentary: The Private Placement Market is off to a slower start in year-to-date 2013 due to rising U.S. Treasuries and modest transactional activity. After one of the slowest quarterly volumes of $10 billion issued in 1Q13, volume picked up to $14 billion in 2Q13. Over 110 private placement debt offerings totaling $24 billion were issued in 1H13, representing an 18% decline over the same prior year period. Domestic volume declined 20%+ over the same period. Much of the same issuer-friendly trends continue in the market, including: Investor demand is outpacing deal supply, helping drive favorable pricing/terms; Despite U.S. Treasuries rising recently, coupons remain low; There has been a pick-up in delayed fundings and construction/project financings; and Private Placement Spreads to U.S. Treasury NAIC Rating 5-Year (bps) 7-Year (bps) 10-Year (bps) 1 125-175 125-150 125-150 2 150-275 175-250 190-250 3 500-625 500-625 500-625 (if available) (if available) (if available) Source: Private Placement Monitor (as of June 2013) Please note that actual pricing will be sector and issuer specific. Given this and the market s volatility; drastic spread changes could occur at anytime. Please contact Terry Martin at (646) 935-4581 to review and discuss potential individual basis. Investors appear particularly eager to invest in domestic issues since cross-border issuance continues to dominate the market. Utility U.S. Bancorp Investments served as Joint Lead Placement Agent on the $85 million private placement offering for a utility. The offering included the following tranches: (i) $30.0 million 10-year bullet senior notes priced at Treasuries (T)+95bps for a 3.09% coupon; (ii) $15.0 million 13-year bullet senior notes priced at T+115bps for a 3.29% coupon; (iii) $20.0 million 30-year bullet senior notes priced at T+110bps for a 4.42% coupon; (iv) $20.0 million 35-year bullet senior notes priced at T+115bps for a 4.47% coupon. The 35-year tranche represents the longest tenor issued in the private placement market in YTD 2013. In total, 4 investors participated in the transaction. U.S. Bancorp Investments successfullyraised68%oftheofferingandbroughtin3ofthe4 investors. The transaction includes a 3-month delayed funding, which was available free of charge. Public Debt Market High Grade Market Commentary (for the week ended July 26, 2013) The new issue market posted its third consecutive week of brisk supply, boosted as much by the relatively stable market conditions of the last couple of weeks as it was suppressed during the volatile days of late May and June. Of the $28 billion in supply, financials dominated yet again, accounting for 60% of the total, capitalizing on the window created by most corporates being in the midst of earnings blackout. In banks, Bank of New York and Wells Fargo took advantage of the demand for front end paper, while PNC and JPM boosted capital with a 10 year subordinated bank and Perpetual/NC10 trade, respectively. Over 65% of this week s issuance was 5 years or shorter, in part due to the presence of so many financials in the market, which tend to prefer the front end, but also due to issuers looking to capitalize on the strong bid for floater paper (28% of issuance). 30-year deals, while fewer in number, outperformed on a relative basis, with Nucor ($1.0bn 10s/30s), Travelers ($500mm 30s), and ING ($400mm 30s) all seeing strong execution and minimal concessions. Concessions more broadly remain reasonable, and order books strong, though there did appear to be some FIG (Financial Institution Group) fatigue later in the week, having seen so much issuance in such a short period. As we move in to next week, with over half the S&P having reported, the potential for industrial issuance should increase, though next week will see a limited window with the Fed, payrolls, and GDP all on tap, which should lead to a busy Monday and Tuesday and quiet balance of the week. Secondary performance was mixed, CDS is now only a few bps away from its May 7th tights, but will end the week +2bps, while cash outperformed, more or less unchanged week over week. Cash lagged the synthetics in the initial stages of the spread rally, but has begun to catch up of late, and we expect positive technicals to continue to push spreads tighter, though much will depend on what emerges out of the Fed on Wednesday. Most expect that the meeting will not lead to any new policy bias, and for the taper to begin as early as the September meeting. July now stands at $64.5 billion, well above the $40 billion estimates, and a sign of just how far the market has come since June. Look for $15 billion in supply in the final week of the month as July attempts to break its all-time record issuance total of $72 billion. High Yield Market Commentary (for the week ended July 26, 2013) It was a busy week in the high yield new issue market with 15 issuers tapping the market for over $6.2 billion in volume. This is the second week in a row that we have seen $6+ billion weeks, which has helped to push July's volume to over $14 billion. Year-to-date we stand at $183 billion. While an improvement from June, this is still only the second month this year that we have seen sub $20 billion in volume. However, we are still above last year's volume during the same time period, which stood at just over $160 billion a the end of July. We continue to see improvement in deal performance. That majority of deals priced at or tight to guidance, a number were upsized and we saw the return of PIK toggle notes**. Michael Stores (Caa1/CCC+) issued $800 million of 5-year non-call 1-year senior PIK toggle notes. The deal was upsized from $700 million and priced at 7.5% cash pay/8.25% PIK at par, from 7.5%-7.75% price talk. While PIK toggles are considered risky structures, these latest ones are viewed as less aggressive as they come with a cash contingent clause, meaning that interest is required to be paid in cash to the extent that operating company restricted payments are available. The PIK toggle notes this week are the first to hit the market since early June. We saw another large inflow into high-yield funds. $3.3 billion flowed into the sector the past week, the second largest on record, and this is following a$2.7 billion inflow the prior week. The four week trailing average is currently $1.6 billion, and year-to-date we stand at a net outflow of just under $3 billion. The turnaround in inflows has changed the dynamic of the new issue market, and as long as we see Treasury rates remain stable, we will continue to see investors stay involved. A healthy pipeline has returned to the market as well. There are eight deals in the market scheduled to price next week for just under $2.5 billion in volume. Market commentary is provided by U.S. Bancorp Investments * While the National Association of Insurance Commissioners (NAIC) rates the private placements, it does not endorse, indemnify, or guarantee the business practices, selling methods, the class or type of securities offered, or any specific security. **See note on page 5 3
Terry Martin, Managing Director 646-935-4581 Violet Grecu, Vice President 877-673-2289 David Wood, Managing Director 312-325-8745 Charles P. Carpenter, Managing Director 612-336-7629 Amanda Lamberti, Vice President 314-325-2025. Public Debt Market Recent High Grade New Issues Date Issuer Industry YKE / DMS Amount Securities Maturity Coupon Price Yield Spread Mdy S&P 7/25/2013 General Electric Capital Corp. (Re-Open) Finance Domestic $150.0 Senior Notes 7/12/2016 3mL+65 100.093 3mL+62 62 A1 AA+ 7/25/2013 AngloGold Ashanti Holdings plc Industrial Yankee $1,250.0 Senior Notes 7/30/2020 8.500% 100.000 8.500% 656 Baa3 BB+ 7/25/2013 PepsiCo Inc. Food & Beverage Domestic $850.0 Senior Notes 7/30/2015 3mL+20 100.000 3mL+20 20 A1 A- 7/25/2013 PepsiCo Inc. Food & Beverage Domestic $850.0 Senior Notes 1/17/2019 2.250% 99.889 2.272% 90 A1 A- 7/25/2013 Bank of New York Mellon Corp Bank Domestic $600.0 Senior Notes 8/1/2018 2.100% 100.000 2.100% 75 Aa3 A+ 7/25/2013 Bank of New York Mellon Corp Bank Domestic $500.0 Senior Notes 8/1/2018 3mL+56 100.000 3mL+56 56 Aa3 A+ 7/25/2013 The Travelers Companies Inc Insurance Domestic $500.0 Senior Notes 8/1/2043 4.600% 99.742 4.616% 95 A2 A 7/24/2013 Daimler Finance North America LLC Industrial Yankee $750.0 Senior Notes 8/1/2016 1.450% 99.895 1.486% 85 A3 A- 7/24/2013 Daimler Finance North America LLC Industrial Yankee $750.0 Senior Notes 8/1/2016 3mL+68 100.000 3mL+68 68 A3 A- 7/24/2013 Daimler Finance North America LLC Industrial Yankee $1,250.0 Senior Notes 8/1/2018 2.375% 99.752 105 A3 A- 7/24/2013 Daimler Finance North America LLC Industrial Yankee $250.0 Senior Notes 8/1/2018 3mL+86 100.000 3mL+86 86 A3 A- 7/24/2013 Royal Bank of Canada Bank Yankee $2,000.0 Senior Notes 7/27/2018 2.200% 100.000 2.200% 83 Aa3 AA- 7/24/2013 American Express Credit Corporation Finance Domestic $1,200.0 Senior Notes 7/29/2016 3mL+51 100.000 3mL+51 51 A2 A- 7/24/2013 American Express Credit Corporation Finance Domestic $1,000.0 Senior Notes 7/29/2016 1.300% 99.977 1.308% 68 A2 A- 7/24/2013 American Express Credit Corporation Finance Domestic $800.0 Senior Notes 7/27/2018 2.125% 99.896 2.147% 78 A2 A- 7/24/2013 American Airlines 2013-2A Transportation Domestic $1,408.1 Pass Thru Certs 7/15/2024 4.950% 100.000 4.950% N/A NR BBB- 7/24/2013 NYU Hospitals Center University Domestic $350.0 Senior Notes 7/1/2043 5.750% 100.000 5.750% 210 A3 A- 7/24/2013 Westpac Banking Corp. Bank Yankee $650.0 Senior Notes 7/30/2018 3mL+74 100.000 3mL+74 74 Aa2 AA- 7/24/2013 Westpac Banking Corp. Bank Yankee $750.0 Senior Notes 7/30/2018 2.250% 99.704 2.313% 93 Aa2 AA- 7/24/2013 Nucor Corp Industrial Domestic $500.0 Senior Notes 8/1/2023 4.000% 99.926 4.009% 140 Baa1 A 7/24/2013 Nucor Corp Industrial Domestic $500.0 Senior Notes 9/1/1943 5.200% 99.894 5.207% 155 Baa1 A 7/23/2013 John Deere Capital Finance Domestic $500.0 Senior Notes 6/15/2015 3mL+12 100.000 3mL+12 12 A2 A 7/23/2013 Transelec S.A. Utility Yankee $300.0 Senior Notes 7/25/2023 4.625% 99.336 4.709% 220 Baa1 NR 7/23/2013 ING U.S., Inc. Insurance Domestic $400.0 Senior Notes 7/15/2043 5.700% 99.646 5.725% 215 Baa3 BBB- 7/22/2013 Wells Fargo Bank N.A. Bank Domestic $2,000.0 Senior Notes 7/20/2015 3mL+28 100.000 3mL+28 28 Aa3 AA- 7/22/2013 Wells Fargo Bank N.A. Bank Domestic $500.0 Senior Notes 7/20/2015 0.750% 99.965 0.768% 47 Aa3 AA- 7/22/2013 Wells Fargo & Co. Bank Domestic $800.0 Senior Notes 7/20/2016 3mL+53 100.000 3mL+53 53 A2 A+ 7/22/2013 Wells Fargo & Co. Bank Domestic $1,700.0 Senior Notes 7/20/2016 1.250% 99.904 1.283% 70 A2 A+ 7/22/2013 JP Morgan & Chase Bank Domestic $1,500.0 Pfd Shares Perp 6.000% 100.000 6.000% N/A Ba1 BBB 7/22/2013 PNC Bank N.A. Bank Domestic $750.0 Sub Notes 7/25/2023 3.800% 99.720 3.834% 135 A3 A- 7/22/2013 The Charles Schw ab Corp Broker Dealer Domestic $275.0 Senior Notes 7/25/2018 2.200% 99.972 2.206% 90 A2 A 7/22/2013 Korea Gas Corporation Utility Yankee $500.0 Senior Notes 7/29/2018 2.875% 99.479 2.988% 168 A1 A+ 7/18/2013 Citigroup Inc. Bank Domestic $1,500.0 Senior Notes 7/25/2016 1.700% 99.953 1.716% 112 Baa2 A- 7/18/2013 Citigroup Inc. Bank Domestic $1,000.0 Senior Notes 7/25/2016 3mL+96 100.000 3mL+96 96 Baa2 A- 7/18/2013 Bank of America Bank Domestic $2,000.0 Senior Notes 7/24/2013 4.100% 99.919 4.110% 157 Baa2 A- 7/18/2013 The Kroger Co. Retail Domestic $600.0 Senior Notes 8/1/2023 3.850% 99.958 3.855% 132.5 Baa2 BBB 7/18/2013 The Kroger Co. Retail Domestic $400.0 Senior Notes 8/1/2043 5.150% 99.665 5.172% 155 Baa2 BBB 7/18/2013 ERAC USA Finance LLC Finance Domestic $500.0 Senior Notes 11/1/2018 2.800% 99.852 2.831% 150 Baa1 BBB+ 7/18/2013 Russian Agricultural Bank Bank Yankee $800.0 Senior Notes 7/25/2018 5.100% 100.000 5.100% 376.3 Baa3 NR 7/18/2013 National Australia Bank Bank Yankee $500.0 Senior Notes 7/25/2016 1.300% 99.953 1.136% 72 Aa2 AA- 7/18/2013 National Australia Bank Bank Yankee $1,350.0 Senior Notes 7/25/2016 3mL+55 100.000 3mL+55 55 Aa2 AA- 7/18/2013 National Australia Bank Bank Yankee $750.0 Senior Notes 7/25/2018 2.300% 99.948 2.311% 98 Aa2 AA- 7/16/2013 Howard Hughes Medical Institute Medical Domestic $1,200.0 Senior Notes 9/1/2023 3.500% 99.793 3.524% 100 Aaa AAA 7/16/2013 New York Life Global Funding Insurance Domestic $600.0 FA-Backed Notes 5/23/2016 3mL+35 100.000 3mL+35 35 Aaa AA+ 7/16/2013 The Goldman Sachs Group, Inc. Bank Domestic $2,500.0 Senior Notes 7/19/2018 2.900% 99.917 2.918% 155 A3 A- 7/16/2013 Japan Tobacco Inc. Consumer Products Yankee $500.0 Senior Notes 7/23/2018 2.100% 99.891 2.120% 75 Aa3 AA- 7/16/2013 Naspers Ltd (Myriad Intl Holdings BV) (Re-Open) Media Yankee $250.0 Senior Notes 7/18/2020 6.000% 101.000 5.824% 387.2 Baa3 BBB- 7/16/2013 Royal Bank of Canada Bank Yankee $1,750.0 Covered 7/22/2016 1.125% 99.950 1.142% MS+35 Aaa AAA 7/15/2013 Canadian Imperial Bank of Commerce Bank Yankee $750.0 Senior Notes 7/18/2016 3mL+52 100.000 3mL+52 52 Aa3 A+ 7/15/2013 Canadian Imperial Bank of Commerce Bank Yankee $750.0 Senior Notes 7/18/2016 1.350% 99.938 1.371% 72 Aa3 A+ 7/15/2013 Wells Fargo & Co. Bank Domestic $1,500.0 Pfd Shares Perp 5.850% 25.000 5.850% N/A Baa3 BBB+ 7/11/2013 Petroleos Mexicanos Energy Yankee $1,000.0 Senior Notes 7/18/2018 3.500% 99.542 3.601% 220 Baa1 BBB 7/11/2013 Petroleos Mexicanos Energy Yankee $500.0 Senior Notes 7/18/2018 3mL+202 100.000 3mL+202 202 Baa1 BBB 7/11/2013 Petroleos Mexicanos Energy Yankee $1,000.0 Senior Notes 1/18/2024 4.875% 99.481 4.939% 235 Baa1 BBB 7/11/2013 Petroleos Mexicanos (Re-open) Energy Yankee $500.0 Senior Notes 6/20/2041 6.500% 99.556 6.534% 290 Baa1 BBB 7/11/2013 Naspers Ltd (Myriad Intl Holdings BV) Media Yankee $750.0 Senior Notes 7/18/2020 6.000% 100.000 6.000% 401.6 Baa3 BBB- 7/11/2013 LYB International Finance B.V. Industrial Yankee $750.0 Senior Notes 7/15/2023 4.000% 98.678 4.163% 160 Baa2 BBB- 7/11/2013 LYB International Finance B.V. Industrial Yankee $750.0 Senior Notes 7/15/2043 5.250% 97.004 5.454% 185 Baa2 BBB- 7/11/2013 Sumitomo Mitsui Trust Bank Ltd Bank Yankee $300.0 Senior Notes 7/19/2016 3mL+67 100.000 3mL+67 67 Aa3 A+ 7/11/2013 Sumitomo Mitsui Trust Bank Ltd Bank Yankee $500.0 Senior Notes 7/19/2016 1.450% 99.977 1.458% 85 Aa3 A+ 7/11/2013 Sumitomo Mitsui Trust Bank Ltd Bank Yankee $500.0 Senior Notes 7/19/2018 2.500% 99.836 2.536% 115 Aa3 A+ 7/11/2013 Sumitomo Mitsui Trust Bank Ltd Bank Yankee $700.0 Senior Notes 7/19/2023 3.950% 99.869 3.966% 140 Aa3 A+ 7/11/2013 American Honda Finance Corp Finance Domestic $500.0 Senior Notes 7/17/2014 3mL+2 100.000 3mL+2 2 A1 A+ 7/11/2013 Bank of Montreal Bank Yankee $1,000.0 Senior Notes 7/15/2016 3mL+52 100.000 3mL+52 52 Aa3 A+ 7/11/2013 Bank of Montreal Bank Yankee $1,000.0 Senior Notes 7/15/2016 1.300% 99.909 1.331% 72 Aa3 A+ 7/11/2013 Best Buy Co Consumer Products Domestic $500.0 Senior Notes 8/1/2018 5.000% 99.997 5.000% 359.9 Baa2 BB Shaded transactions represent those in which U.S. Bancorp Investments, Inc. played a role Source: Bloomberg as of 7/25/2013 Market commentary is provided by U.S. Bancorp Investments 4
Investment products and services are: NOT A DEPOSIT NOT FDIC INSURED NOT GUARANTEED BY THE BANK NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY MAY LOSE VALUE This commentary was prepared on July 30, 2013 and all referenced time periods mentioned are based from this date. This material is based on data obtained from sources we consider to be reliable. It is not guaranteed as to accuracy and does not purport to be complete. This information is not intended to be used as the primary basis of investment decisions. Because of individual client requirements, it should not be construed as advice designed to meet the particular investment needs of any investor. Before investing, carefully consider the investment objectives, risks, charges and expenses. It is not a representation by us or an offer or the solicitation of an offer to sell or buy any security. Further, a security described in this publication may not be eligible for solicitation in the states in which the client resides. Past performance is no guarantee of future results. All performance data, while deemed obtained from reliable sources, are not guaranteed for accuracy. Indexes shown are unmanaged and are not available for investment. The S&P/LSTA Leveraged Loan Index represents a weekly total return index that tracks the current outstanding balance and spread over LIBOR (L) for fully funded term loans. LIBOR (L) stands for the London Interbank Offered Rate and is the rate of interest at which banks borrow funds from other banks, in marketable size, in the London interbank market. The S&P 500 Index is an unmanaged, capitalization-weighted index of 500 widely traded stocks that are considered to represent the performance of the stock market in general. Equity securities are subject to stock market fluctuations that occur in response to economic and business developments. International investing involves special risks, including foreign taxation, currency risks, risks associated with possible difference in financial standards and other risks associated with future political and economic developments. Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility. Investing in fixed income securities are subject to various risks, including changes in interest rates, credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. Investment in debt securities typically decrease in value when interest rates rise. The risk is usually greater for longer term debt securities. Investments in lower rated and non-rated securities present a greater risk of loss to principal and interest than higher rated securities. Investments in highyield bonds offer the potential for high current income and attractive total return, but involve certain risks. Changes in economic conditions or other circumstances may adversely affect a bond issuer s ability to make principal and interest payments. Investments in real estate securities can be subject to fluctuations in the value of the underlying properties, the effect of economic conditions on real estate values, changes in interest rates, and risks related to renting properties (such as rental defaults). **PIK toggle note - A payment-in-kind bond, where the issuer has the option to defer an interest payment by agreeing to pay an increased coupon in the future. With toggle notes, all deferred payments must be settled by the bond's maturity. U.S. Bancorp Investments, Inc. and U.S. Bank are not affiliated with the organizations or entities named in this publication. For U.S. Bank: U.S. Bank is not responsible for and does not guarantee the products, services, or performance of affiliates or third parties. For U.S. Bancorp Investments, Inc.: Investment products and services are available through U.S. Bancorp Investments, the marketing name for U.S. Bancorp Investments, Inc., member FINRA and SIPC, an investment adviser and a brokerage subsidiary of U.S. Bancorp and affiliate of U.S. Bank. This material contains the current opinions of the author but not necessarily those of U.S. Bancorp Investments and such opinions are subject to change without notice. 5