Important disclosures and certifications are contained from page 9 of this report. www.danskeresearch.com Investment Research — General Market Conditions Headlines Emerging market turbulence continues adding to the gloom. DONG Energy equity sale and capital injection approved. Good start to 2014 with healthy levels of new issue volumes. Market commentary Risk aversion continued to be at the top of investors’ minds this week as emerging market jitters continued late this week with a USD10bn Fed tapering and disappointing Chinese PMI falling below the important 50 mark. Scandi credit markets were hit by investors offloading longer maturity corporate bonds, in particular, having entered 2014 with too long exposure. However, credit indices tightened towards the end of the week with the iTraxx Europe trending back towards the 80bp level. Also, the Crossover index tightened albeit under high volatility. Still, risk appetite remains high and new issue spreads remain tight. New issuance volumes stayed at a healthy level with new EUR-denominated corporate issues in January 2014 of EUR27.6bn largely unchanged relative to January 2013. The long-awaited equity sale of part of the Danish utility DONG Energy to Goldman Sachs and Danish pension funds ATP and PFA was approved by parliament only after an intense political row resulting in the Socialist People’s Party dropping out of government. While the utility is now set to bolster its balance sheet, credit investors were broadly surprised by the political turmoil caused by the transaction. Issuance activity continued at a healthy pace this week across financials and corporate as liquidity and investor appetite remains high. French telecom operator Orange issued a EUR1.0bn perpetual and in the high-yield segment the ‘BB+’ rated healthcare company Fresenius placed a EUR300m 4% fixed rate 10-year bond at an issue spread of 232bp. Also, National Grid and Volkswagen tapped primary markets, with the latter issuing both a SEK1.0bn bond and a EUR50m short-term note. Selected new issues during the week Name Rating Coupon* Maturity Currency Size Spread/YTM Orange Baa3 Perp - EUR 1.0bn - Fresenius FIN Ba1/BB+ Fixed 10Y EUR 300m 232bp CEZ NR/BB Zero 4Y EUR 470m - National Grid Baa1/A- Fixed 5Y EUR 300m 94bp Volkswagen A3/A- FRN 3Y SEK 1.0bn - Volkswagen A3/A- FRN 1Y EUR 50m - Notes: Ratings are Moody’s and Standard & Poor’s corporate/bank ratings (i.e. not issue ratings, which can be lower); mid-swaps for fixed, discount margin for floating * Spread over government reference rate Source: Informa Global Markets, Bloomberg, Danske Bank Markets 31 January 2014 Analyst Kasper From Larsen +45 45 12 80 47 [email protected]Weekly Credit Update iTraxx Europe (investment grade) Source: Bloomberg, Danske Bank Markets iTraxx Crossover (high yield) Source: Bloomberg, Danske Bank Markets
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Important disclosures and certifications are contained from page 9 of this report. www.danskeresearch.com
Investment Research — General Market Conditions
Headlines
Emerging market turbulence continues adding to the gloom.
DONG Energy equity sale and capital injection approved.
Good start to 2014 with healthy levels of new issue volumes.
Market commentary
Risk aversion continued to be at the top of investors’ minds this week as emerging market
jitters continued late this week with a USD10bn Fed tapering and disappointing Chinese
PMI falling below the important 50 mark. Scandi credit markets were hit by investors
offloading longer maturity corporate bonds, in particular, having entered 2014 with too long
exposure. However, credit indices tightened towards the end of the week with the iTraxx
Europe trending back towards the 80bp level. Also, the Crossover index tightened albeit
under high volatility. Still, risk appetite remains high and new issue spreads remain tight.
New issuance volumes stayed at a healthy level with new EUR-denominated corporate
issues in January 2014 of EUR27.6bn largely unchanged relative to January 2013.
The long-awaited equity sale of part of the Danish utility DONG Energy to Goldman
Sachs and Danish pension funds ATP and PFA was approved by parliament only after an
intense political row resulting in the Socialist People’s Party dropping out of government.
While the utility is now set to bolster its balance sheet, credit investors were broadly
surprised by the political turmoil caused by the transaction.
Issuance activity continued at a healthy pace this week across financials and corporate as
liquidity and investor appetite remains high. French telecom operator Orange issued a
EUR1.0bn perpetual and in the high-yield segment the ‘BB+’ rated healthcare company
Fresenius placed a EUR300m 4% fixed rate 10-year bond at an issue spread of 232bp.
Also, National Grid and Volkswagen tapped primary markets, with the latter issuing both
a SEK1.0bn bond and a EUR50m short-term note.
Selected new issues during the week
Name Rating Coupon* Maturity Currency Size Spread/YTM
Ratings from Standard & Poor’s, Moody’s and Fitch and Danske Bank Markets’ shadow ratings
Source: Standard & Poor’s, Moody’s, Fitch, Danske Bank Markets
Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings
Analyst(s)
Company Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating OutlookAkelius Fastigheter Ab BB+ Pos BB Louis LandemanAmbu A/S BBB- Stable Jakob MagnussenAp Moeller - Maersk A/S BBB+ Stable Baa1 Stable Brian Børsting BUYArla Foods Amba BBB+ Stable Mads RosendalAtlas Copco Ab A Stable A2 Stable Mads Rosendal SELLAvinor As AA- Stable A1 Stable Åse Haagensen HOLDBwg Homes Asa BB Stable BB- Nils AspeliCarlsberg Breweries A/S Baa2 Stable BBB Stable Brian Børsting SELLColor Group As BB- Stable B+ Kasper F. LarsenDanske Bank A/S A- Stable Baa1 Pos A StableDlg Finance As BB- Stable Mads RosendalDfds A/S BB+ Stable Kasper F. LarsenDna Ltd BBB- Stable Kasper F. LarsenDnb Bank Asa A+ Stable A1 Stable T. Hovard / L. Holm HOLDDong Energy A/S BBB+ Neg Baa1 Stable BBB+ Neg Jakob Magnussen BUYDsv A/S BBB Stable Brian BørstingEg Holding B Stable Jakob MagnussenElectrolux Ab BBB+ Neg Wr WD Brian Børsting HOLDElisa Oyj BBB Stable Baa2 Stable Louis Landeman BUYFinnair Oyj BB Stable Brian BørstingFingrid Oyj AA- Stable A1 Stable A+ Stable Jakob Magnussen BUYFortum Oyj A- Neg A2 Neg A- Neg Jakob Magnussen SELLFred Olsen Energy Asa BB+ Stable Åse HaagensenG4S Plc BBB- Stable Brian Børsting BUYGetinge Ab BBB- Stable Louis LandemanHemso Fastighets Ab BBB+ Stable Wiveca SwartingHusqvarna Ab BBB- Stable Louis LandemanInvestor Ab AA- Stable A1 Stable Brian Børsting BUYIss A/S BB Pos B1 Pos Brian Børsting HOLDJernhusen Ab A- Stable Gabriel BerginJ Lauritzen A/S B Stable B- Åse HaagensenJyske Bank A/S A- Stable Baa1 Stable Thomas M. Hovard BUYKesko Oyj BBB Stable Mads RosendalMeda Ab BB Stable Louis LandemanMetso Oyj BBB Stable Baa2 Neg Mads Rosendal BUYMjolby-Svartadalen Energi Ab BBB+ Watch Louis LandemanNcc Ab BBB- Stable Louis LandemanNeste Oil Oyj BBB- Stable Jakob Magnussen HOLDNokia Oyj B+ B1 Develop BB- Louis Landeman HOLDNokia Siemens Networks Finance Bv B1 Louis Landeman HOLDNokian Renkaat Oyj A Stable Jakob MagnussenNordea Bank Ab AA- Neg Aa3 Stable AA- Stable T. Hovard / L. Holm SELLNorth Atlantic Drilling Ltd BB Stable BB- Åse HaagensenNorwegian Property Asa BBB- Stable Nils AspeliNykredit Bank A/S A+ Neg Baa2U Neg A Stable T. Hovard / L. Holm BUYOdfjell Se B+ Stable B Bjørn Kristian RøedOlav Thon Eiendomsselskap Asa BBB+ Stable Nils AspeliOutokumpu Oyj B- Pos Mads RosendalOrkla Asa BBB+ Pos Nils AspeliPohjola Bank Plc AA- Neg Aa3 Stable A+ T. Hovard / L. Holm SELLPostnord Ab BBB+ Stable Gabriel BerginProsafe Se BB Stable Åse HaagensenRamirent Oyj BB+ Stable Brian BørstingSaab Ab BBB+ Stable Wr Wiveca SwartingSampo Baa2 Stable T. Hovard / L. Holm HOLDSandnes Sparebank BBB+ Stable T. Hovard / L. Holm HOLDSandvik Ab BBB Mads Rosendal HOLDSas Ab B- Stable Wr Pos Brian BørstingSbab Bank Ab A Neg A2 T. Hovard / L. Holm HOLDScania Ab A- Pos Mads Rosendal HOLDSchibsted Asa BBB Stable Nils AspeliSeadrill Ltd BB+ Stable BB Åse HaagensenSecuritas Ab BBB Stable Wr Brian Børsting HOLDSkandinaviska Enskilda Banken Ab A+ Neg A1 Stable A+ Stable T. Hovard / L. Holm BUYSkanska Ab BBB+ Stable Louis LandemanSkf Ab BBB+ Stable Baa1 Stable Mads Rosendal BUYSparebank 1 Nord Norge A2 Stable A Stable T. Hovard / L. Holm HOLDSparebank 1 Smn A2 Stable A- Stable T. Hovard / L. Holm HOLDSparebank 1 Sr Bank Asa A2 Stable A- Stable T. Hovard / L. Holm HOLDSpar Nord Bank A/S BBB+ Stable T. Hovard / L. HolmSponda Oyj BBB- Stable Louis LandemanStatkraft Sf A- Stable Aaa Stable Jakob Magnussen BUYStatnett Sf A+ Stable Wr Stable Jakob Magnussen HOLDStatoil Asa AA- Stable Aa2 Stable Jakob Magnussen SELL
Recomm.S&P Moody's FitchDanske Bank
7 | 31 January 2014 www.danskeresearch.com
Weekly C
redit U
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Weekly Credit Update
Ratings from Standard & Poor’s, Moody’s and Fitch and Danske Bank Markets’ shadow ratings
Source: Standard & Poor’s, Moody’s, Fitch, Danske Bank Markets
Ratings from S&P/Moody's/Fitch and Danske Bank Markets shadow ratings
Analyst(s)
Company Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating OutlookStena Ab BB Stable B2 Stable Brian Børsting BUYStockmann Oyj Abp BB- Stable Mads RosendalStolt-Nielsen Ltd BB+ Stable BB Bjørn Kristian RøedStora Enso Oyj BB Stable Ba2 Neg BB- Stable Mads Rosendal SELLSuomen Hypoteekkiyhdistys A- Stable T. Hovard / L. HolmSwedavia Ab A- Stable Gabriel BerginSwedbank Ab A+ Stable A1 Stable A+ Stable T. Hovard / L. Holm BUYSwedish Match Ab BBB Stable Baa2 Stable Brian Børsting HOLDSvenska Cellulosa Ab Sca BBB+ Pos Baa1 Stable Mads Rosendal SELLSvensk Fastighetsfinansiering Ab BBB Stable Louis LandemanSvenska Handelsbanken Ab AA- Neg Aa3 Stable AA- Stable T. Hovard / L. Holm HOLDSydbank A/S Baa1 Stable T. Hovard / L. Holm HOLDTallink Group As BB Stable BB- Jakob MagnussenTalvivaara Mining Co Plc C Mads RosendalTdc A/S BBB Pos Baa2 Stable BBB Stable Louis Landeman BUYTeekay Offshore Partners Lp BB- Stable B+ Kasper F. LarsenTele2 Ab BBB Stable Louis LandemanTelefonaktiebolaget Lm Ericsson BBB+ Neg A3 Neg BBB+ Neg Louis Landeman HOLDTelenor Asa A- Pos A3 Stable Louis Landeman HOLDTeliasonera Ab A- Stable A3 Stable A- Stable Louis Landeman SELLTeollisuuden Voima Oyj BBB Stable Wr BBB Stable Jakob Magnussen BUYThon Holding As BBB+ Stable Nils AspeliUpm-Kymmene Oyj BB Stable Ba1 Stable BB Stable Mads Rosendal HOLDVasakronan Ab BBB+ Stable Louis LandemanVattenfall Ab A- Stable A3 Stable A- Neg Jakob Magnussen HOLDVestas Wind Systems A/S BB+ Pos Kasper F. Larsen BUYVolvo Ab BBB Neg Baa2 Neg BBB Stable Mads Rosendal SELLWilh Wilhelmsen Asa BBB- Stable Bjørn Kristian RøedYit Oyj BB+ Neg Louis Landeman
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