High Yield Highlights - uge 44 Bombardier - Køb Kerling - Køb Danske Bank - Køb Numericable - Køb Q3'14 regnskab fra Bombardier viser fremgang i både omsætning og indtjening Vi fastholder Køb anbefalingen på Bombardiers EUR 6,125 %@21 udstedelse efter et solidt regnskab for Q3'14. Regnskabet viste en fremgang i omsætningen til USD 4,9 mia. mod USD 4,1 mia. i Q3'13, hvilket var en smule bedre end forventningerne i markedet. Fremgangen var størst i Aerospace med 28,7 %, mens Transport viste en omsætningsfremgang på 13,4 % i Q3'14. For årets første tre kvartaler viste begge segmenter en omsætningsfremgang på godt 1 %. EBIT før nedskrivninger var med USD 291 mio. også bedre end de ventede USD 267 mio. Klik her for at komme til analysen Lidt sløjt Q3'14 regnskab fra Kerling Vi fastholder Køb idet vi venter førtidsindfrielse 1. februar 215. Vi ser en tilbagegang i LTM EBITDA på 6 % hvilket giver en stigning i den finansielle gearing. Kvartalsregnskabet viser en faldende EBITDA på EUR 56 mio. mod EUR 67 mio. (år/år). Faldet skyldes til dels at enheden Compounds er blevet solgt fra i november 213. Målt på 12 måneders løbende EBITDA er indtjeningen faldet med 6 % til EUR 156 mio. mod EUR 166 mio. i andet kvartal. Baseret på en førtidsindfrielse kan investorer opnå en effektiv rente på 5,5 % og et afkast i den korte periode på 1,4 %. Klik her for at komme til analysen Danske Bank opjusterer i Q3'14 regnskab Vi fastholder anbefalingen Køb på Danske Bank Tier 1 udstedelser. - Regnskabet bekræfter vores holdning til selskabet, der kreditmæssigt bevæger sig i den rigtige retning. De samlede indtægter viste et fald på 4 % (kv/kv) til DKK 1,93 mia., hvilket primært skyldes et fald i handelsindtægterne på 31 %. Dette var forventet idet salget af Nets blev booket der. Korrigeret for denne post svarer det til en fremgang på 5 % (kv/kv). - De nordiske banker, herunder Danske Bank, klarer bankernes stresstest uden problemer. Ikke overraskende er det primært sydeuropæiske banker, der ikke består testen. Klik her for at komme til analysen Numericables Q3'14 regnskab viser stærk operationel performance Vi fastholder Køb efter et regnskab, der viste en stigning i omsætnigen med 4 % (år/år) til EUR 332 mio. og i EBITDA med 4,7 % til EUR 156 mio. - Den stærke operationelle performance er drevet af vækst i alle kundesegmenterne, et fald i churn raten samt et rekordhøjt ARPU niveau. Derudover voksede kundebasen med 2,5 % (år/år). Den særdeles positive udvikling bekræfter selskabets stærke konkurrencemæssige position på markedet. - De franske konkurrencemyndigheder godkender som forventet Numericables køb af SFR mod en række betingelser. Klik her for at komme til analysen Research team: Jens Houe Thomsen Bo Andersen Rasmus Justesen Disclaimer & Disclosure: Please see the last page +45 89 89 76 88 +45 89 89 76 87 +89 89 76 86 jht@jyskebank.dk boandersen@jyskebank.dk rasmus.justesen@jyskebank.dk 1 of 11
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) 423 bp. bp. 17 bp. 47 bp. 54 bp. US High Yield non. Fin (HNF) 447 bp. -3 bp. -9 bp. 1 bp. 36 bp. EUR High Yield (HE) 46 bp. -2 bp. 11 bp. 39 bp. 5 bp. US High Yield (HA) 435 bp. -3 bp. -1 bp. 1 bp. 35 bp. itraxx Xover (Generic) 365 bp. 14 bp. 17 bp. 9 bp. 77 bp. CDX High Yield 351 bp. 6 bp. -4 bp. -2 bp. 39 bp. EUR Invest. Grade non. Fin. (EN) 9 bp. -1 bp. -1 bp. -5 bp. -16 bp. US Invest. Grade non. Fin. (CFX) 129 bp. -1 bp. 6 bp. 16 bp. -1 bp. EUR Invest. Grade (ER) 95 bp. -2 bp. -3 bp. -7 bp. -21 bp. US Invest. Grade (CA) 127 bp. bp. 6 bp. 15 bp. bp. itraxx Europe Invest. Grade 68 bp. 1 bp. 5 bp. 1 bp. -3 bp. CDX Invest. Grade 66 bp. 1 bp. 1 bp. -1 bp. 2 bp. itraxx Sr Financial 7 bp. 2 bp. 7 bp. -6 bp. -16 bp. US 1Y 2.31% 4 bp. -8 bp. -19 bp. -68 bp. itraxx Sub Financial 163 bp. 13 bp. 73 bp. 56 bp. 35 bp. German 1Y.85%. -5 bp. -6 bp. -29 bp. -11 bp. bp 2,5 2, 1,5 1, 5 EUR HY vs. US HY Spread development 7-28 7-29 7-21 7-211 7-212 7-213 7-214 Difference (rhs) EUR HY (HEAD) US HY (HNF) bp 35 3 25 2 15 1 5-5 -1-15 bp 7 6 5 4 3 2 1 EUR IG vs. US IG Spread development 7-28 7-29 7-21 Difference (rhs) 7-211 7-212 EUR HG (EN) 7-213 7-214 US HG (CFX) bp 5-5 -1-15 -2-25 -3 Source: Bloomberg & Merrill Lynch & Jyske Bank 2 of 11
High Yield Bond Outperformers and Underperformers - Spread to Worst 1 Week Outperformers 1 Month Outperformers Issue Rating Price STW Change Issue Rating Price STW Change INFOR US INC 1% 219 CCC1 111.5 47-686 NEW WORLD RESOURCES NV 7.875% 221 D 8. 13,542-28,88 CONVATEC HEALTHCARE 1.875% 218 B3 16. 585-238 EDCON HOLDINGS PTY LTD 13.375% 219 CCC2 48.5 3,737-436 BOARDRIDERS SA 8.875% 217 B3 92. 1,23-81 VIRIDIAN GROUP FUNDCO II 11.125% 217 B1 17.3 573-182 HEIDELBERGER DRUCKMASCHI 9.25% 218 CCC1 12. 835-75 HECKLER & KOCH GMBH 9.5% 218 CCC2 75. 1,961-176 TELENET FINANCE III LUX 6.625% 221 BB3 16.68 384-52 NARA CABLE FUNDING II LT 8.5% 22 BB1 119.48 6-172 GALAPAGOS HOLDING SA 7% 222 CCC1 95. 735-51 NEW WORLD RESOURCES NV 7.875% 218 CCC3 54.24 3,273-138 EMPARK FUNDING SA 6.75% 219 B1 16.51 5-51 INFOR US INC 1% 219 CCC1 111.5 47-133 TELENET FINANCE LUX 6.375% 22 BB3 15.75 377-5 Nyrstar Netherlands Hold 8.5% 219 B3 99.8 859-123 SPCM SA 5.5% 22 BB1 16.5 36-48 FINANCIERE GAILLON 8 SAS 7% 219 B3 95.95 787-116 GATEGROUP FINANCE LUX SA 6.75% 219 B1 13. 576-45 LECTA SA 8.875% 219 B2 15.36 713-92 TEAMSYSTEM HLDG SPA 7.375% 22 B3 13.41 628-44 CAMPOFRIO FOOD SA 8.25% 216 BB3 12.55 177-87 STORA ENSO OYJ 5% 218 BB2 18.5 235-44 CEGEDIM SA 6.75% 22 B1 18.5 46-81 1 Week Underperformers 1 Month Underperformers Issue Rating Price STW Change Issue Rating Price STW Change GEO DEBT FINANCE SCA 7.5% 218 B3 74.78 1,68 422 NORSKE SKOGINDUSTRIER 11.75% 216 CCC3 73. 3,483 1,3 GEO TRAVEL FINANCE 1.375% 219 CCC1 6. 2,585 49 GEO TRAVEL FINANCE 1.375% 219 CCC1 6. 2,585 817 GAMENET SPA 7.25% 218 B1 84. 1,268 391 TAKKO LUX 2 SCA 9.875% 219 B3 7. 2,35 612 TAKKO LUX 2 SCA 9.875% 219 B3 7. 2,35 352 GEO DEBT FINANCE SCA 7.5% 218 B3 74.78 1,68 597 NEW WORLD RESOURCES NV 7.875% 221 D 8. 13,542 273 ZIGGO BOND CO 8% 218 BB3 13.75 1,49 587 SISAL GROUP SPA 7.25% 217 B2 94. 966 221 GAMENET SPA 7.25% 218 B1 84. 1,268 581 NORSKE SKOGINDUSTRIER 11.75% 216 CCC3 73. 3,483 168 HEMA BONDCO II BV 8.5% 219 B3 7.9 1,711 572 DEUTSCHE ANN FIN BV 4.625% 219 BB1 12.13 396 164 CONVATEC HEALTHCARE 1.875% 218 B3 16. 585 59 SNAI SPA 12% 218 CCC2 11.1 1,161 147 LEVI STRAUSS & CO 7.75% 218 BB3 13.68 96 492 AG SPRING FINANCE II LTD 9.5% 219 CCC1 81.52 1,513 16 SNAI SPA 12% 218 CCC2 11.1 1,161 386 SNAI SPA 7.625% 218 B2 98. 826 99 SPIE BONDCO 3 SCA 11% 219 CCC1 19.8 514 295 CIRSA FUNDING LUXEMBOURG 8.75% 218 B2 11.26 79 94 MANUTENCOOP FACILITY 8.5% 22 B2 87. 1,14 279 Source: Merrill Lynch & Jyske Bank 3 of 11
High Yield Bond Outperformers and Underperformers - Price 1 Week Outperformers 1 Month Outperformers Issue Rating STW Price Change Issue Rating STW Price Change INFOR US INC 1% 219 CCC1 47 111.5 3.5 EDCON HOLDINGS PTY LTD 13.375% 219 CCC2 3,737 48.5 5.1 GALAPAGOS HOLDING SA 7% 222 CCC1 735 95. 2.9 NEW WORLD RESOURCES NV 7.875% 221 D 13,542 8. 5. EMPARK FUNDING SA 6.75% 219 B1 5 16.51 2.2 Nyrstar Netherlands Hold 8.5% 219 B3 859 99.8 4.7 BOARDRIDERS SA 8.875% 217 B3 1,23 92. 1.9 FINANCIERE GAILLON 8 SAS 7% 219 B3 787 95.95 4.5 PIAGGIO & C SPA 4.625% 221 BB3 416 11.5 1.7 HECKLER & KOCH GMBH 9.5% 218 CCC2 1,961 75. 3.8 HEIDELBERGER DRUCKMASCHI 9.25% 218 CCC1 835 12. 1.6 NEW WORLD RESOURCES NV 7.875% 218 CCC3 3,273 54.24 3. BUT SAS 7.375% 219 B2 95 93. 1.5 LECTA SA 8.875% 219 B2 713 15.36 2.7 STORA ENSO OYJ 5% 218 BB2 235 18.5 1.5 BOPARAN FINANCE PLC 4.375% 221 B1 534 92.51 2.5 VIVACOM 6.625% 218 B1 687 99. 1.5 LABEYRIE FINE FOODS SAS 5.625% 221 B2 535 1.75 2. TELECOM ITALIA FIN SA 7.75% 233 BB1 358 129.14 1.4 BUT SAS 7.375% 219 B2 95 93. 2. GATEGROUP FINANCE LUX SA 6.75% 219 B1 576 13. 1.4 DARTY FINANCEMENT SAS 5.875% 221 BB3 489 13.5 2. FIAT FINANCE & TRADE 7.375% 218 B1 332 113.68 1.4 GALAPAGOS HOLDING SA 7% 222 CCC1 735 95. 2. 1 Week Underperformers 1 Month Underperformers Issue Rating STW Price Change Issue Rating STW Price Change GAMENET SPA 7.25% 218 B1 1,268 84. -1.8 GAMENET SPA 7.25% 218 B1 1,268 84. -16.8 GEO DEBT FINANCE SCA 7.5% 218 B3 1,68 74.78-1.1 HEMA BONDCO II BV 8.5% 219 B3 1,711 7.9-16.7 TAKKO LUX 2 SCA 9.875% 219 B3 2,35 7. -7.9 GEO TRAVEL FINANCE 1.375% 219 CCC1 2,585 6. -16.2 GEO TRAVEL FINANCE 1.375% 219 CCC1 2,585 6. -7.5 GEO DEBT FINANCE SCA 7.5% 218 B3 1,68 74.78-14.7 SISAL GROUP SPA 7.25% 217 B2 966 94. -5.5 TAKKO LUX 2 SCA 9.875% 219 B3 2,35 7. -14.6 SNAI SPA 12% 218 CCC2 1,161 11.1-3.8 MANUTENCOOP FACILITY 8.5% 22 B2 1,14 87. -11.1 SELECTA GROUP BV 6.5% 22 B2 786 92.9-3. SNAI SPA 12% 218 CCC2 1,161 11.1-9.8 LOXAM SAS 7% 222 B2 798 91.5-3. NORSKE SKOGINDUSTRIER 11.75% 216 CCC3 3,483 73. -9.6 SNAI SPA 7.625% 218 B2 826 98. -2.9 AG SPRING FINANCE II LTD 9.5% 219 CCC1 1,513 81.52-6.7 CGG SA 5.875% 22 B1 912 85.25-2.9 SISAL GROUP SPA 7.25% 217 B2 966 94. -6.6 AG SPRING FINANCE II LTD 9.5% 219 CCC1 1,513 81.52-2.9 SNAI SPA 7.625% 218 B2 826 98. -6.6 SAFARI HOLDING VERWALTUN 8.25% 221 B2 789 11.1-2.5 FRIGOGLASS FINANCE BV 8.25% 218 B2 995 95. -5.6 Source: Merrill Lynch & Jyske Bank 4 of 11
Issuance - EUR Source: Merrill Lynch & Jyske Bank 5 of 11
European Issuance - EUR, USD & GBP Source: Merrill Lynch & Jyske Bank 6 of 11
Spread vs. GDP US GDP Growth & High Yield Spread bp. % -1 2,1-8 1,6-6 -4 1,1-2 6 2 4 1 6 12-21 9-24 6-27 3-21 12-212 9-215 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 1,1 6 1 2 4 12-21 9-24 6-27 3-21 12-212 9-215 High Yield Spread (HEAD) Euro GDP YoY (rhs, inverted) bp. 2, 1,5 GDP Growth & High Yield (since 25) y = 65.7e -.94x R² =.3256 bp. 2,5 2, High Yield vs. GDP Growth next Quarter (since 25) y = 633.4e -.18x R² =.5539 1, 1,5 1, 5 5 1 % 8 % 6 % 4 % 2 % % 2 % 4 % 6 % 8 % US GDP YoY Q3'14E GDP Growth Q2'14 GDP Growth 6 % 4 % 2 % % 2 % 4 % 6 % Euro GDP YoY Q3'14E GDP growth Q2'14 GDP Growth Source: Bloomberg, Merrill Lynch & Jyske Bank 7 of 11
Rating Drift Source: Moodys & Jyske Bank 8 of 11
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 www.jyskebank.dk/terms. Jyske Bank's corporate bond recommendations - current breakdown Breakdown of recomendations, corporate bonds (number) 25 2 15 1 5 STRONG BUY BUY HOLD SELL 9 of 11
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. Since our recommendations are relative and risk-adjusted, it is possible to compare our recommendations across sectors and risk categories. In addition, the potential is stated in absolute terms via our return target. 1 of 11
Contacts for Institutional Customers Ulrik Øllegaard Bøg Hansen Head of Corporate Bonds Sales, Vice President +45 89 89 76 78 Ulrik.Hansen@jyskebank.dk Nicolaj Brask Christiansen +45 89 89 76 77 NBC@jyskebank.dk Senior Sales Manager, Corporate Bonds Sales René Søndergaard Vinther Sales Manager, Corporate Bonds Sales +45 89 89 76 74 Rene.Vinther@jyskebank.dk 11 of 11