High Yield Highlights - uge 7. Bombardier - EUR 2016 Hold, EUR 2021 Sælg

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1 High Yield Highlights - uge 7 Bombardier - EUR 216 Hold, EUR 221 Sælg Skuffende regnskab for Q4 13 Vi fastholder Sælg på selskabets EUR 221 udstedelse og Hold på EUR 216 udstedelsen. Bombardier skuffede i Q4 13 med EBIT-marginen, der fortsat er under pres. EBIT og EBITDA marginerne falder til henholdsvis 3,5 % og 5,5 %, hvor især EBIT-marginen for Transportation viser en negativ udvikling, idet denne falder til 3,8 % fra 6, % i Q3 13. Selskabet sænker derudover også guidance for marginer og ser stigende capex, relateret til CSeries. Moody s og S&P har efterfølgende (også som vi har forventet) nedjusteret selskabets rating fra henholdsvis BB2 til BB3 og BB til BB-. Det positive er selskabets store ordrebog på USD 69,7 mia., en omsætning i Q4 13 over konsensus i markedet med 5,3 mia., solidt operationelt cash flow på USD 1,5 mia. og et frit cash flow på USD 84 mio. Bombardier forventer 2 % flere leveringer i 214. Klik her for at komme til analysen Ineos - Køb Ny udstedelse med udløb i 219 Vi indleder dækningen af EUR 5,75 % 219 udstedelsen med en Køb anbefaling. Provenuet fra nyudstedelsen anvender Ineos til indfrielse af EUR 7,875 % 216 udstedelsen, hvilket er positivt for selskabets kreditprofil, da renteomkostningerne nedbringes og gælden nu først forfalder 3 år senere. Den nye udstedelse giver 5,75 % i kuponrente og udløber d med tidligst callmulighed i 216 til kurs 12,875. Derudover har Moody s d opjusteret Ineos selskabsrating fra B2 til B1 og samtlige udstedelser er blevet opjusteret et niveau. Både EUR 219 og EUR 218 udstedelsen rates B3/B-, hvilket er et udtryk for en reduceret default risiko. Vi dropper dermed dækningen af EUR 7,875 % 216 udstedelsen på grund af den annoncerede indfrielse. Vi anbefaler investorer at holde EUR 216 udstedelsen til udløb d Kion - Hold Klik her for at komme til analysen Gode tal fra Kion Tallene ændrer ikke på vores Hold anbefaling på obligationsudstedelserne Kion har her til morgen offentliggjort foreløbige tal for Q4 13, der viser en omsætning på EUR 1,18 mia., EBIT på EUR 116 mio. og dermed en EBIT-margin på 9,8 %. Samtidig fik Kion i løbet af kvartalet nye ordrer for EUR 1,2 mia. Kion ser derudover en stigende efterspørgsel, specielt i Europa der så en vækst på 1 % (år/år) i Q4. Kion annoncerer det endelige regnskab d. 2. februar 214. Reseach team: Jens Houe Thomsen Bo Andersen Rasmus Justesen Disclaimer & Disclosure: Please see the last page jht@jyskebank.dk boandersen@jyskebank.dk rasmus.justesen@jyskebank.dk

2 Spread Developments Change Change Spread/Rate 1 Week 1 Month 3 Month Ytd Spread/Rate 1 Week 1 Month 3 Month Ytd EUR High Yield non. Fin (HEAD) 371 bp. -12 bp. 2 bp bp. US High Yield non. Fin (HNF) 419 bp. -13 bp. 15 bp. -32 bp. 8 bp. EUR High Yield (HE) 352 bp. -11 bp. -2 bp. -87 bp. -4 bp. US High Yield (HA) 47 bp. -13 bp. 15 bp. -34 bp. 7 bp. itraxx Xover (Generic) 283 bp. -11 bp. -4 bp. -61 bp. -5 bp. CDX High Yield 18 bp. bp. bp. 1 bp. -1 bp. EUR Invest. Grade non. Fin. (EN) 111 bp. -2 bp. 6 bp. -9 bp. 5 bp. US Invest. Grade non. Fin. (CFX) 128 bp. -3 bp. 1 bp. -2 bp. -2 bp. EUR Invest. Grade (ER) 119 bp. -2 bp. 4 bp. -12 bp. 3 bp. US Invest. Grade (CA) 126 bp. -3 bp. 2 bp. -2 bp. -1 bp. itraxx Europe Invest. Grade 75 bp. -2 bp. 3 bp. -8 bp. 4 bp. CDX Invest. Grade 65 bp. -3 bp. bp. -7 bp. 1 bp. itraxx Sr Financial 91 bp. -3 bp. 4 bp. -19 bp. 6 bp. US 1Y 2.73% 5 bp. -14 bp. 4 bp. -26 bp. itraxx Sub Financial 137 bp. -5 bp. 3 bp. -22 bp. 9 bp. German 1Y 1.67%. 1 bp. -15 bp. -3 bp. -27 bp. bp 2,5 2, 1,5 1, 5 EUR HY vs. US HY Spread development Difference (rhs) EUR HY (HEAD) US HY (HNF) bp bp EUR IG vs. US IG Spread development Difference (rhs) EUR HG (EN) US HG (CFX) bp Source: Bloomberg & Merrill Lynch & Jyske Bank

3 High Yield Bond Outperformers and Underperformers - Spread to Worst 1 Week Outperformers 1 Month Outperformers Ticker Coupon Maturity Rating Price STW Change Ticker Coupon Maturity Rating Price STW Change PAJFP B , PAJFP B , ARGID CCC ARGID CCC PTSAC CCC CEMEX B LUXGEO CCC WINDIM B NSINO CCC , TNETBB BB AGROK B ZIGGO BB BEZINC B COFP BB TNETBB BB LUXGEO CCC NSINO CCC , IDEABB CC , STYRO B KPERST CCC BORMIO B TPORT CCC SISTP B LUXGEO B Week Underperformers 1 Month Underperformers Ticker Coupon Maturity Rating Price STW Change Ticker Coupon Maturity Rating Price STW Change NWORLD CCC , NWORLD CCC ,45 2,85 KERLIN CCC NWORLD CCC , CEMEX B INEGRP CCC ISSDC B CPSPW BB NWORLD CCC , ECOBAT B CETV B ICECR CCC SUNCOM BB KIONGR BB INEGRP CCC CIRSA B PTIPL BB PTSAC CCC NOVASP CC 48. 4,45 46 BOPRLN B LOXAM B CETV B HDDGR CCC ALBALN B Source: Merrill Lynch & Jyske Bank

4 High Yield Bond Outperformers and Underperformers - Price 1 Week Outperformers 1 Month Outperformers Ticker Coupon Maturity Rating STW Price Change Ticker Coupon Maturity Rating STW Price Change PAJFP B3 1, PAJFP B3 1, EDCON CCC2 1, FROSTB CCC3 1, EIRCMF B PEUGOT BB NSINO CCC3 2, IDEABB CC 2, PORTEL BB FNCIM BB EDCON B PEUGOT BB EDCON B EIRCMF B ABGSM B BBAOLX CCC PEUGOT BB PORTEL BB NSINO CCC3 2, SNAIM B BBAOLX CCC FNCIM BB PFOURS B SNAIM CCC Week Underperformers 1 Month Underperformers Ticker Coupon Maturity Rating STW Price Change Ticker Coupon Maturity Rating STW Price Change NWORLD CCC3 5, NWORLD CCC3 5, CETV B NWORLD CCC1 2, NWORLD CCC1 2, ALBALN B ISSDC B TAKKO B3 1, HDDGR CCC EDCON CCC2 1, FAENNZ CCC CETV B ONOSM B ORGAU BB TAKKO B3 1, MDMFP B UNITY B CIRSA B ASTIM B STTESE CCC2 1, KPERST CCC HDDGR CCC UNITY B ASTIM B Source: Merrill Lynch & Jyske Bank

5 Issuance - EUR bn. 6 Issuance EUR High Yield ex. fin. No. 16 No. Issues EUR High Yield ex. Fin Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec bn. Issuance EUR High Yield incl. fin Jan Feb Mar Apr Maj Jun Jul Aug Sep Okt Nov Dec % 7% 6% 5% 4% 3% 2% 1% % EUR High Yield Rating distribution Issuance BB1 BB2 BB3 B1 B2 B3 CCC1 CCC Source: Merrill Lynch & Jyske Bank

6 European Issuance - EUR, USD & GBP bn EUR issuances excl. fin. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec No No. of EUR issuances excl. fin. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec bn. LTM Issuances in EUR, GBP & USD excl. fin USD GBP EUR No No. of issuances on rating excl. fin. BB1 BB2 BB3 B1 B2 B3 CCC1 CCC2 CC D Source: Merrill Lynch & Jyske Bank

7 Spread vs. GDP US GDP Growth & High Yield Spread bp. % -1 2,1-8 1, , High Yield Spread (HA) US GDP YoY (rhs, inverted) Bloomberg consensus EUR High Yield Spread vs. GDP Growth bp. % -6 2,1-4 1,6-2 1, High Yield Spread (HEAD) Euro GDP YoY (rhs, inverted) bp. 2, 1,5 GDP Growth & High Yield (since 25) y = e -.11x R² =.3546 bp. 2,5 2, High Yield vs. GDP Growth next Quarter (since 25) y = e -.177x R² =.479 1, 1,5 1, % 8 % 6 % 4 % 2 % % 2 % 4 % 6 % 8 % US GDP YoY Q4'13E GDP Growth Q2'13 GDP Growth 6 % 4 % 2 % % 2 % 4 % 6 % Euro GDP YoY Q1'14E GDP growth Q3'13 GDP Growth Source: Bloomberg, Merrill Lynch & Jyske Bank

8 Rating Drift High Yield Rating Drift US & EUR 6% 4% 2% % -2% -4% -6% -8% -1% Europe US EUR High Yield and High Grade Rating Drift 4% 2% % -2% -4% -6% -8% -1% High Grade High Yield EUR High Yield Rating Drift vs. Default Rate 4% -1% -6% -11% -16% % 5% 1% 15% 2% Moody's High Yield Rating Drift (lhs) European Default Rate High Yield Rating Drift vs. PMI PMI Output Index (lhs) EUR HY RATING DRIFT 5M Lag (rhs) 15% -5% -25% -45% -65% -85% Source: Moodys & Jyske Bank

9 Disclaimer & Disclosure Jyske Bank s corporate bond recommendations current breakdown Jyske Bank is supervised by the Danish Financial Supervisory Authority. The research report is based on information which Jyske Bank finds reliable, but Jyske Bank does not assume any responsibility for the correctness of the material nor any liability for transactions made on the basis of the information or the estimates of the report. The estimates and recommendations of the research report may be changed without notice. The report is for the personal use of Jyske Bank's customers and may not be copied. This report is an investment research report. Conflicts of interest Jyske Bank has prepared procedures to prevent and preclude conflicts of interest thus ensuring that research reports are being prepared in an objective manner. These procedures have been incorporated in the business procedures covering the research activities of Jyske Markets, a business unit of Jyske Bank. Jyske Bank's corporate-bond analysts may not hold positions in the instruments for which they prepare research reports. If an analyst takes over for the responsible analyst in connection with illness, business travels, etc. this analyst cannot trade in the relevant corporate bond on the day of publication of the research report and the following day. Jyske Bank may, however, hold positions, have interests in or business relations with the companies that are analysed. The research report has not been presented to the company prior to its release. Analysts receive no payment from persons interested in individual research reports. Read more about Jyske bank's policy on conflicts of interest at Jyske Bank's corporate bond recommendations - current breakdown Breakdown of recomendations, corporate bonds (number) STRONG BUY BUY HOLD SELL

10 Financial models Jyske Bank models the expected development of the analysed company s income statement and balance sheet. A number of key figures for the company is calculated on the basis of these models, and the key figures are compared with those of comparable companies and the company s past performance. From this we infer the spread at which the bonds will trade for the period ahead. The recommendation and the price target are moreover adjusted for the expected news flow and the market sentiment based on knowledge of the industry and company-specific circumstances. Jyske Bank s recommendations take into account the expected development in the corporate-bond market, the various sectors and company-specific circumstances. Risk Investment in this corporate bond is associated with risk. The risk can be measured directly via the spread at which the bond trades relative to a risk free investment with the same maturity. The spread reflects the probability of default, the recovery rate, and the liquidity of the corporate bond. Movements in the credit market, the sector and/or news flows, etc. regarding the company may affect the price of the bond. See the front page of the research report for our view of the risk associated with the corporate bond. The risk on the corporate bond is stated as Very Low, Low, Medium, High or Very High and is relative to the high-yield market for corporate bonds. The risk factors stated and/or calculations of sensitivities in the research report are not to be considered all-encompassing. If the corporate bond is denominated in a currency other than the investor s base currency, the investor accepts an FX risk. Update of the research report The planned update of the report will be prepared immediately upon the release of the company s financial statements. In addition, there may be prepared research reports on special themes specifically for the company or research reports where the company is part of the special theme. These research reports are published on an ad-hoc basis. See the front page for the initial date of publication of the report. The prices stated are the latest prices quoted by Jyske Bank before the publication of the research report, unless otherwise stated. Recommendation concepts Our recommendations are based on market developments and an assessment of the expected return within the next twelve months. A BUY recommendation or a Strong BUY recommendation is based on expectations that investment in the bond will generate a return above that of the general corporate-bond market. On the other hand, a SELL recommendation implies that we expect investment in the bond to generate a return below that of the general corporate-bond market.

11 Contacts for Institutional Customers Nicolaj Brask Christiansen Senior Sales Manager, Corporate Bonds Sales René Søndergaard Vinther Sales Manager, Corporate Bonds Sales