Issue Issue No. No. 276: 276: September September 16, 16, PIPER JAFFRAY DEBT CAPITAL MARKETS UPDATE Page 1 The Piper Jaffray Debt Capital Markets Update is published weekly and provides a summary and analysis of debt capital markets activity. To subscribe/unsubscribe, visit www.piperjaffray.com/dcmupdate MARKET COMMENTARY The high-yield market priced 28 bonds last week, bringing year-to-date issuance to more than $282 billion. The middle market launched seven new loan transactions last week for Furniture Brands International, HHI Group Holdings, NES Global Talent, Northern Star Generation, ProPetro Services, Safe Fleet Insurance and The Topps Company. Loan and high-yield funds saw $1.6 billion and $632 million in inflows, respectively. Year-to-date, loan funds have seen $41.2 billion in inflows, while outflows from high-yield funds total $7.0 billion. The secondary high-yield market was up this week, closing at 100.58% of par to yield 7.72%. Source: Piper Jaffray, S&P LCD, Bloomberg New Leveraged Loans In the Market Middle Market Facility Amt. ($MM) LIBOR Senior Total Floor Spread OID Lev. Lev. Date Lead Arranger Sponsor Company Focus Furniture Brands (TLB) $90.0 TBD TBD TBD NA NA Sep-13 NexBank Not Sponsored Home Furnishings DIP Furniture Brands (RC) $50.0 TBD TBD TBD NA NA Sep-13 NexBank Not Sponsored Home Furnishings DIP HHI Group Holdings (TLB) $100.0 1.25% L + 375 $99.5 NA' 4.0x Sep-13 GS American Securities Automotive Dividend Recap HHI Group Holdings (RC) $20.0 1.25% L + 375 $99.5 NA' 4.0x Sep-13 GS American Securities Automotive Dividend Recap NES Global Talent (TLB) $200.0 1.00% L + 500 $99.0 NA NA Sep-13 Credit Suisse AEA Investors Services Dividend Recap NES Global Talent (RC) $60.0 1.00% L + 500 $99.0 NA NA Sep-13 Credit Suisse AEA Investors Services Dividend Recap Northern Star Gen.(TLB) $56.0 1.25% L + 350 $98.5 NA NA Sep-13 BNP Paribas Not Sponsored Utilities Acquisition ProPetro Services (TLB) $220.0 1.00% L + 650 $99.0 NA NA Sep-13 DB Energy Capital Oil & Gas Refinancing ProPetro Services (RC) $40.0 1.00% L + 650 $99.0 NA NA Sep-13 DB Energy Capital Oil & Gas Refinancing Safe Fleet Insurance (TLB) $122.0 1.25% L + 425 $99.5 3.8x 5.3x Sep-13 BNP Paribas Sterling Capital Insurance LBO Safe Fleet Insurance (RC) $30.0 1.25% L + 350 $99.5 3.8x 5.3x Sep-13 BNP Paribas Sterling Capital Insurance LBO The Topps Company (TLB) $150.0 TBD TBD TBD NA NA Sep-13 DB Madison Dearborn Entertainment Refinancing Purpose
PIPER JAFFRAY DEBT CAPITAL MARKETS UPDATE Page 2 New Leveraged Loans In the Market Large Cap Facility Amt. ($MM) LIBOR Senior Total Floor Spread OID Lev. Lev. Date Lead Arranger Sponsor Company Focus Air Canada (TLB) $700.0 1.00% L + 450 $99.0 2.1x NA Sep-13 Citigroup Not Sponsored Transportation Refinancing Air Canada (RC) $100.0 1.00% L + 250 $99.0 2.1x NA Sep-13 Citigroup Not Sponsored Transportation Refinancing Albertson's (TLB) $300.0 1.00% L + 375 $99.0 NA NA Sep-13 Citigroup Cerberus Retail Food Acquisition Allegion (TLA) $500.0 0.75% L + 200 $99.8 NA NA Sep-13 JPM Not Sponsored Electronics Spinoff Allegion (TLB) $500.0 0.75% L + 275 $99.8 NA NA Sep-13 JPM Not Sponsored Electronics Spinoff Allegion (RC) $300.0 0.75% L + 200 $99.8 NA NA Sep-13 JPM Not Sponsored Electronics Spinoff Belden (TLB) $250.0 0.75% L + 275 $99.5 0.7x 2.5x Sep-13 JPM Not Sponsored Metals & Mining Refinancing Belden (RC) $400.0 0.75% L + 275 $99.5 0.7x 2.5x Sep-13 Wells Fargo Not Sponsored Metals & Mining Refinancing CPG International (1st) $625.0 1.00% L + 400 $99.0 4.5x 6.7x Sep-13 Barclays Ares Building Materials LBO CPG International (RC) $125.0 1.00% L + 250 $99.0 4.5x 6.7x Sep-13 Barclays Ares Building Materials LBO Dell (TLB) $4,000.0 1.00% L + 375 $99.0 2.0x 3.0x Sep-13 BOA Silver Lake Electronics LBO Dell (TLC) $1,500.0 1.00% L + 300 $99.5 2.0x 3.0x Sep-13 BOA Silver Lake Electronics LBO Dell (RC) $2,000.0 1.00% L + 300 $99.5 2.0x 3.0x Sep-13 BOA Silver Lake Electronics LBO DuPont Fabros Tech. (TLA) $600.0 TBD TBD TBD NA NA Sep-13 GS Not Sponsored Real Estate Refinancing Fieldwood Energy (1st) $900.0 1.00% L + 300 $99.0 NA NA Sep-13 Citigroup Riverstone Oil & Gas LBO Fieldwood Energy (2nd) $1,725.0 1.00% L + 625 $99.0 NA NA Sep-13 JPM Riverstone Oil & Gas LBO HUB International (TLB) $1,785.0 1.00% L + 400 $99.0 NA NA Sep-13 MS Hellman Friedman Insurance LBO HUB International (RC) $225.0 1.00% L + 400 $99.0 NA NA Sep-13 MS Hellman Friedman Insurance LBO Quikrete Holdings (1st) $1,230.0 1.00% L + 325 $99.0 NA NA Sep-13 Wells Fargo Not Sponsored Building Materials Acquisition Quikrete Holdings (2nd) $190.0 1.00% L + 700 $98.0 NA NA Sep-13 Wells Fargo Not Sponsored Building Materials Acquisition Quikrete Holdings (RC) $200.0 1.00% L + 325 $99.0 NA NA Sep-13 Wells Fargo Not Sponsored Building Materials Acquisition Spotless Group (1st) $825.0 1.00% L + 425 $99.0 3.5x 4.5x Sep-13 DB Pacific Equity Services Dividend Recap Spotless Group (2nd) $225.0 1.00% L + 800 $98.5 3.5x 4.5x Sep-13 DB Pacific Equity Services Dividend Recap Syniverse Technologies (TLB) $940.5 1.00% L + 300 $100.0 NA NA Sep-13 Barclays Carlyle Group Telecom Refinancing Valeant Pharma (TLC) $956.5 0.75% L + 300 $100.0 NA NA Sep-13 GS Not Sponsored Healthcare Refinancing Valeant Pharma (TLD) $1,243.5 0.75% L + 300 $100.0 NA NA Sep-13 GS Not Sponsored Healthcare Refinancing Purpose Benchmark Yields Previous Week Previous Year Benchmark Current (bps) (bps) 2 yr UST 0.47% 0.46% 1.0 0.25% 22.0 5 yr UST 1.72% 1.74% (2.0) 0.67% 105.0 10 yr UST 2.93% 2.90% 3.0 1.70% 123.0 30 yr UST 3.85% 3.56% 29.0 2.44% 141.0 3M LIBOR 0.25% 0.26% (1.0) 0.39% (14.0)
PIPER JAFFRAY DEBT CAPITAL MARKETS UPDATE Page 3 Weekly Corporate New Issue Activity (1) Investment Grade (2) Week of 9/9/ Ratings Amt Company Moody s S&P Industry ($MM) Maturity Spread Coupon Yield Transaction Type KFW Aaa AAA Financial $3,000 10/1/20 + 41 2.750% 2.8% Sr. Unsecured Providence Health Aa2 N/A Human Resources $252 10/1/23 + 149 4.379% 4.4% Sr. Unsecured Providence Health Aa2 N/A Human Resources $100 10/1/16 + 80 FRN FRN Sr. Unsecured Providence Health Aa2 N/A Human Resources $100 10/1/17 + 95 FRN FRN Sr. Unsecured Export-Import Bank of Korea Aa3 A+ Financial $500 9/17/16 + 85 FRN FRN Sr. Unsecured MidAmerican Energy Aa3 A Utilities $350 3/15/19 + 70 2.400% 2.4% Sr. Unsecured MidAmerican Energy Aa3 A Utilities $350 9/15/43 + 95 4.800% 4.8% Sr. Unsecured MidAmerican Energy Aa3 A Utilities $250 9/15/23 + 83 3.700% 3.7% Sr. Unsecured Korea Development Bank Aa3 N/A Financial $750 3/17/19 + 140 3.000% 3.2% Sr. Unsecured Sumitomo Mitsui A1 A+ Financial $500 9/16/16 + 78 FRN FRN Sr. Unsecured Sumitomo Mitsui A1 A+ Financial $500 9/14/18 + 128 2.950% 3.0% Sr. Unsecured Public Service Electric & Gas A1 A Utilities $350 9/15/18 + 60 2.300% 2.3% Sr. Unsecured Public Service Electric & Gas A1 A Utilities $250 3/15/24 + 85 3.750% 3.8% Sr. Unsecured North Shore Long Island A3 N/A Healthcare Facilities $250 11/1/43 + 225 6.150% 6.2% Sr. Unsecured American International Group Baa1 A- Financial $25 9/18/23 + 100 FRN FRN Sr. Unsecured PTT Exploration Baa1 BBB+ Energy $500 9/16/18 + 200 3.707% 3.7% Sr. Unsecured Sumitomo Life Insurance Baa1 BBB+ Financial $1,000 9/20/73 + 362 FRN FRN Sr. Unsecured Verizon Communications Baa1 BBB+ Communications $15,000 9/15/43 + 265 6.550% 6.6% Sr. Unsecured Verizon Communications Baa1 BBB+ Communications $11,000 9/15/23 + 225 5.150% 5.2% Sr. Unsecured Verizon Communications Baa1 BBB+ Communications $6,000 9/15/33 + 250 6.400% 6.4% Sr. Unsecured Verizon Communications Baa1 BBB+ Communications $4,750 9/14/18 + 190 3.650% 3.7% Sr. Unsecured Verizon Communications Baa1 BBB+ Communications $4,250 9/15/16 + 165 2.500% 2.5% Sr. Unsecured Verizon Communications Baa1 BBB+ Communications $4,000 9/15/20 + 215 4.500% 4.5% Sr. Unsecured Verizon Communications Baa1 BBB+ Communications $2,250 9/15/16 + 153 FRN FRN Sr. Unsecured Verizon Communications Baa1 BBB+ Communications $1,750 9/14/18 + 175 FRN FRN Sr. Unsecured Dayton Power & Light Baa1 N/A Utilities $445 9/15/16 + 110 1.875% 1.9% Sr. Unsecured Ecopetrol Baa2 BBB Energy $1,300 9/18/23 + 305 5.875% 6.0% Sr. Unsecured Ecopetrol Baa2 BBB Energy $850 9/18/43 + 350 7.375% 7.4% Sr. Unsecured Ecopetrol Baa2 BBB Energy $350 9/18/18 + 260 4.250% 4.3% Sr. Unsecured International Game Technology Baa2 BBB Gaming $500 10/15/23 + 250 5.350% 5.4% Sr. Unsecured Oneok Partners Baa2 BBB Energy $425 9/15/18 + 150 3.200% 3.2% Sr. Unsecured Oneok Partners Baa2 BBB Energy $425 9/15/23 + 210 5.000% 5.0% Sr. Unsecured Oneok Partners Baa2 BBB Energy $400 9/15/43 + 235 6.200% 6.2% Sr. Unsecured Reynolds American Baa2 BBB- Tobacco $550 9/15/23 + 195 4.850% 4.9% Sr. Unsecured Reynolds American Baa2 BBB- Tobacco $550 9/15/43 + 230 6.150% 6.2% Sr. Unsecured Global Bank Corporation Baa3 BBB Financial $300 10/5/17 + 439 4.750% 5.1% Sr. Unsecured Corporate Office Properties Baa3 BBB- Financial $250 2/15/24 + 250 5.250% 5.4% Sr. Unsecured Weyerhaeuser Baa3 BBB- Financial $500 9/15/23 + 175 4.625% 4.6% Sr. Unsecured Citigroup Baa3 N/A Financial $1,420 9/13/25 + 262 5.500% 5.5% Sr. Unsecured Citigroup Baa3 N/A Financial $1,000 9/13/43 + 281 6.675% 6.7% Sr. Unsecured Energy Transfer Partners Baa3 N/A Energy $700 10/1/20 + 185 4.150% 4.2% Sr. Unsecured Energy Transfer Partners Baa3 N/A Energy $350 2/1/24 + 210 4.900% 5.0% Sr. Unsecured BTG Investments N/A N/A Financial $32 3/17/14 + 123 1.500% 1.5% Sr. Unsecured BTG Investments N/A N/A Financial $10 12/2/13 + 70 0.950% 0.9% Sr. Unsecured Export-Import Bank of Korea N/A N/A Financial $500 9/17/18 + 128 2.875% 3.0% Sr. Unsecured (1) Bold transactions denote Piper Jaffray underwriting participation. Does not include Supranational, Foreign Denominations, Sovereign, Special Purpose Entities or Piper Jaffray issues. (2) Includes all split-rated issues Source: Piper Jaffray, Bloomberg
PIPER JAFFRAY DEBT CAPITAL MARKETS UPDATE Page 4 Weekly Corporate New Issue Activity High Yield Week of 9/9/ Ratings Amt Company Moody s S&P Industry ($MM) Maturity Spread Coupon Yield Transaction Type Dupont Fabros Ba1 BB Financial $600 9/15/21 + 328 5.875% 5.9% Sr. Unsecured Activision Blizzard Ba2 BB+ Technology $1,500 9/15/21 + 308 5.625% 5.6% Sr. Unsecured Activision Blizzard Ba2 BB+ Technology $750 9/15/23 + 325 6.125% 6.1% Sr. Unsecured Whiting Petroleum Ba2 BB+ Energy $1,100 3/15/19 + 311 5.000% 5.0% Sr. Unsecured Whiting Petroleum Ba2 BB+ Energy $800 3/15/21 + 334 5.750% 5.8% Sr. Unsecured Commerzbank Ba2 N/A Financial $1,000 9/19/23 + 523 8.125% 8.1% Sr. Unsecured Inkia Energy Ba3 BB Energy $450 4/4/21 + 502 8.375% 8.5% Sr. Unsecured Tenet Healthcare Ba3 B+ Healthcare Facilities $1,800 10/1/20 + 367 6.000% 6.0% Sr. Secured Marfrig Holdings Europe B2 N/A Packaged Foods $400 9/20/21 + 862 11.250% 11.5% Sr. Unsecured NXP B3 B+ Technology $500 9/15/16 + 262 3.500% 3.5% Sr. Unsecured Natural Resource Partners B3 B Energy $300 10/1/18 + 768 9.125% 9.4% Sr. Unsecured Tenet Healthcare B3 CCC+ Healthcare Facilities $2,800 4/1/22 + 543 8.125% 8.1% Sr. Unsecured Oasis Petroleum B3 B /*+ Energy $1,000 3/15/22 + 412 6.875% 6.9% Sr. Unsecured Ancestry.com Caa1 CCC+ Communications $300 10/15/18 + 818 FRN FRN Sr. Unsecured Diamondback Energy Caa1 CCC+ Energy $450 10/1/21 + 503 7.625% 7.6% Sr. Unsecured Sanchez Energy Caa1 CCC+ Energy $600 6/15/21 + 593 7.750% 7.8% Sr. Unsecured Building Materials Holdings Caa1 N/A Building Products $250 9/15/18 + 742 9.000% 9.1% Sr. Secured Pinnacle Operating Caa1 N/A Oil & Gas $300 11/15/20 + 666 9.000% 9.0% Sr. Secured National Savings Bank N/A B+ Financial $750 9/18/18 + 718 8.875% 8.9% Sr. Unsecured Credit Agricole N/A N/A Financial $1,000 9/19/33 + 643 FRN FRN Sr. Unsecured Credit Agricole N/A N/A Financial $1,000 9/19/33 + 643 FRN FRN Sr. Unsecured DRSN Real Estate Group N/A N/A Financial $5 12/1/27 + 724 10.125% 10.1% Sr. Unsecured DRSN Real Estate Group N/A N/A Financial $2 12/1/22 + 712 10.000% 10.0% Sr. Unsecured DRSN Real Estate Group N/A N/A Financial $2 12/1/28 + 737 10.250% 10.3% Sr. Unsecured Energy Transfer Partners N/A N/A Energy $450 10/1/43 + 225 5.950% 6.1% Sr. Unsecured Office Depot De Mexico N/A N/A Retail $350 9/20/20 + 482 6.875% 7.1% Sr. Unsecured Offshore Drilling Holdings N/A N/A Industrial $950 9/20/20 + 619 8.375% 8.5% Sr. Unsecured Providence Health N/A N/A Human Resources $125 10/1/15 + 65 FRN FRN Sr. Unsecured Total Bond Volume Week of 9/9/ YTD 2012 YTD YOY Change $MM # $MM # $MM # $MM # Investment Grade $68,884 45 $758,580 979 $712,120 910 +6.5% +7.6% High-Yield $19,534 28 $282,017 549 $258,849 469 +9.0% +17.1% Total Corporates $88,418 73 $1,040,597 1,528 $970,969 1,379 +7.2% +10.8% Source: Piper Jaffray, Bloomberg
PIPER JAFFRAY DEBT CAPITAL MARKETS UPDATE Page 5 LOAN & BOND VOLUME Leveraged Loan & HY Volume Middle Market Loan Volume $600 $500 Leveraged Loans High-Yield Bonds $50 $40 $ In Billions $400 $300 $200 $ In Billions $30 $20 $100 $10 $0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: S&P LCD HIGH-YIELD INDEX SPREADS Moody s Rating: Ba2 + 600 Moody s Rating: B2 + 800 + 500 + 700 Spread To Worst + 400 + 300 + 200 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 Low: +304 5/10/ May-13 High: +395 6/27/ Jun-13 Jul-13 Aug-13 Current: +347 Sep-13 Spread To Worst + 600 + 500 + 400 Sep-12 Oct-12 High: +615 11/16/2012 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Low: +433 5/8/ Jun-13 Jul-13 Aug-13 Current: +475 Sep-13 Theodore Christianson Head of Equity Private Placements & Debt Capital Markets 612 303-6282 theodore.j.christianson@pjc.com James Chiarelli Managing Director 312 267-5122 james.d.chiarelli@pjc.com Information contained in this publication is based on data obtained from sources we deem to be reliable, however, it is not guaranteed as to accuracy and does not purport to be complete. Nothing contained in this publication is intended to be a recommendation of a specific security or company nor is any of the information contained herein intended to constitute an analysis of any company or security reasonably sufficient to form the basis for any investment decision. PIPER JAFFRAY IS A LEADING INVESTMENT BANK AND ASSET MANAGEMENT FIRM. Piper Jaffray Companies is an investment bank and asset management firm headquartered in Minneapolis with offices across the U.S. and in London, Hong Kong* and Zurich. Securities brokerage and investment banking services are offered in the United States through Piper Jaffray & Co., member NYSE and SIPC, and in Europe through Piper Jaffray Ltd., authorized and regulated by the Financial Conduct Authority. Asset management products and services are offered through three separate investment advisory affiliates registered with the U.S. Securities and Exchange Commission: Advisory Research Inc., Piper Jaffray Investment Management LLC and PJC Capital Partners LLC. Piper Jaffray Companies 800 Nicollet Mall, Minneapolis, Minnesota 55402-1702 Additional information is available upon request. www.piperjaffray.com