28 march 2014 weekly credit update - danske bankstatoil asa aa- stable aa2 stable jakob magnussen...

Important disclosures and certifications are contained from page 8 of this report. www.danskeresearch.com

Investment Research — General Market Conditions

Headlines

Another week of strong primary market activity.

Strong credit sentiment, despite increased geopolitical risk.

Market commentary

Despite the increased geopolitical risk (and the risk of repeating ourselves), the credit

markets continue to be dominated by strong bond issuance activity for both the high-yield

and investment-grade segment. The positive market sentiment has also dominated the

secondary market with no panic sellers in sight.

The iTraxx Crossover index tightened from 309bp to 298bp and the iTraxx Europe

investment-grade index tightened marginally from 80bp to 79bp during this week. The

iTraxx Europe sub-index iTraxx Financials tightened from 100.4bp to 97bp. The iTraxx

indices rolled on 20 March with major changes made to the Crossover index to the 21st

series, with 60 instead of 50 companies and a reduced average rating to B from B+. The

iTraxx Crossover index based on the 20th

series with a higher average rating also

tightened this week from 248bp to 239bp.

Although it is not evident from credit and equity markets, the geopolitical tension is

substantial at the moment. The current focus is on whether Russia’s activities will be

limited to the Crimea peninsula and whether additional sanctions will hurt trade and

growth. The EU has agreed with the US to reduce its energy import dependence on

Russia and NATO’s military co-operation with Ukraine has intensified as the Russian

troops increase along the Ukrainian border. Ukraine reached a preliminary deal with the

IMF to unlock USD27bn in international aid over a period of two years. According to

President Obama this is a ‘concrete signal of how the world is united with Ukraine’ – and

the president pointed out that (some) lessons have been learned from two world wars.

Bond markets continue to be characterised by strong investor demand searching for yield,

with oversubscribed order books with margins at the low end of pre-sounding processes.

Table 1. Selected new EUR issues

Name Rating (Bond issue) Coupon Tenor Spread Size (EURm)

Anglo American Baa2/BBB/BBB 3,3 % 9 MS + 165 750 Anglo American Baa2/BBB/BBB 1,8 % 4 MS + 105 750 Enagas Baa2/BBB/A- 2,5 % 8 MS + 105 750 Aldesa B2/B 7,3 % 7 B + 632 250 Belgacom A1/A 2,4 % 10 MS + 62 600 Anheuser-Busch Inbev A2/A/A 2,7 % 12 MS + 70 1000 Prologis Baa2/BBB 2,9 % 8 MS + 148 300 Glencore Finance Europe Baa2/BBB 3,8 % 12 MS + 178 500 Swisscom A2/A 1,9 % 7,5 MS + 58 500 Volkswagen A3/A-/A- 1,0 % 3,5 MS + 37 750 Volkswagen A3/A-/A- 2,1 % 8 MS + 67 750 IVS BB- 7,1 % 7 B + 517.2 250 Telefonica Baa2/BBB/BBB+ 5,9 % PC10 MS + 405.1 1000 Telefonica Baa2/BBB/BBB+ 5,0 % PC6 MS + 380.4 750

Source: Danske Bank Markets, PC10 = Perpetual with call in 10 years

28 March 2014

Weekly Credit Update

Contents

Market commentary 1

Selected charts 2

Recently published research 4

Official and shadow ratings 5

Analyst Åse Haagensen +47 22 86 13 22 [email protected]

iTraxx Europe (investment grade)

Source: Bloomberg, Danske Bank Markets

iTraxx Crossover (high yield)

Source: Bloomberg, Danske Bank Markets

mailto:[email protected]

2 | 28 March 2014 www.danskeresearch.com

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EUR investment grade cash spreads (ASW) EUR high yield cash spreads (ASW)

Source: Danske Bank Markets Source: Danske Bank Markets

iTraxx (Europe) vs CDX (US) iTraxx curve spreads


Nordic corporates vs iTraxx Nordic banks 5y CDS spreads



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Corporate BBB bond yield vs EuroSTOXX dividend yield 3m Libor OIS spreads


Financials spread vs non-financials (Industrials), A-rated

Source: Danske Bank Markets


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Recently published research

Sector update - Nordic Telecom Operators

Earlier this week, Danske Bank Markets credit research published an update on the

Nordic Telecom operators, emphasising that migration towards 4G is not necessarily the

earnings saviour. Industry dynamics are continually evolving, challenging telecom

operators to remain highly innovative in order to counter the current underlying earnings

pressure arising from a mounting price pressure, particularly on voice. Moreover,

operating in a capital-intensive industry characterised by rapid commoditisation of fast-

changing technologies requires continuous high investments. Combined with a

diminishing cost reduction potential and committed high dividend distributions this limits

operators’ debt reduction capabilities, posing a risk to credit metrics in the near-to-

medium term. This prompts us to believe that consolidation is the most likely driver of

near-term earnings enhancements, also assuming regulatory headwinds beginning to ease.

Credit update – Electricity Supply Board

Electricity Supply Board (ESB) delivered year-end results for 2013 and continued its

positive trend. Earnings were supported by better generation margins and by continued

high cost focus in the group. ESB’s adjusted credit metrics continue their improving trend

and should be comfortably positioned within current ratings. Asset sales are continuing

but the subsequent dividend requirements from the Irish government continue to be

tempered so that ESB can maintain a ‘BBB+’ rating from S&P, Fitch and Moody’s.


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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 Kasper F. Larsen 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 Pos 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- Kasper F. Larsen 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 AspeliOlympic Shipping As B+ Stable B Åse HaagensenOutokumpu Oyj B- Pos Mads RosendalOrkla Asa BBB+ Pos Nils AspeliPohjola Bank Plc AA- Aa3 Stable A+ Stable 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


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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 HOLDSuomen 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 Kasper F. Larsen BUYTeekay Offshore Partners Lp BB- Stable B+ Kasper F. LarsenTele2 Ab BBB Stable Kasper F. LarsenTelefonaktiebolaget Lm Ericsson BBB+ Neg A3 Neg BBB+ Neg Kasper F. Larsen HOLDTelenor Asa A- Pos A3 Stable Kasper F. Larsen HOLDTeliasonera Ab A- Stable A3 Stable A- Stable Kasper F. Larsen 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 BBB- Pos Kasper F. Larsen BUYVolvo Ab BBB Neg Baa2 Neg BBB Stable Mads Rosendal BUYWilh Wilhelmsen Asa BBB- Stable Bjørn Kristian RøedYit Oyj BB Neg Louis Landeman

Recomm.Danske Bank S&P Moody's Fitch


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Henrik René Andresen

Credit Portfolios (+45) 45 13 33 27 [email protected]

Brian Børsting

Industrials (+45) 45 12 85 19 [email protected]

Mads Rosendal

Industrials, Pulp & Paper (+45) 45 14 88 79 [email protected]

Lars Holm

Financials (+45) 45 12 80 41 [email protected]

Jakob Magnussen

Utilities, Energy (+45) 45 12 85 03 [email protected]

Åse Haagensen

High Yield, Industrials (+47) 22 86 13 22 [email protected]

Fixed Income Credit Research

Louis Landeman

TMT, Industrials (+46) 8 568 80524 [email protected]

Thomas Hovard

Head of Credit Research (+45) 45 12 85 05

[email protected]

Find the latest Credit Research

Danske Bank Markets: Bloomberg: http://www.danskebank.com/danskemarketsresearch DRCR<GO>

Gabriel Bergin

Strategy, Industrials (+46) 8 568 80602 [email protected]

Kasper From Larsen

High Yield, TMT (+45) 45 12 80 47 [email protected]

Bjørn Kristian Røed

Shipping (+47) 85 40 70 72 [email protected]

Nils Henrik Aspeli

Real Estate, Industrials (+47) 85408433 [email protected]

Wiveca Swarting

Real Estate, Construction (+46) 8 568 80617 [email protected]

Sondre Dale Stormyr

Offshore rigs (+47) 85 40 70 70 [email protected]









http://www.danskebank.com/danskemarketsresearch








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Disclosures This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S (‘Danske

Bank’). The author of this research report is Åse Haagensen, Analyst.

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28 march 2014 weekly credit update - danske bankstatoil asa aa- stable aa2 stable jakob magnussen...

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