barclays capital tuesday credit call 20 september 2011
TRANSCRIPT
Barclays Capital Tuesday Credit Call
Jeff MeliJigar PatelJustin Luther
September 20, 2011
Please see analyst certifications and important disclosures starting after slide 18.
The Fed may do the twist…will markets dance?
1
Agenda
Conference Call Information
Tuesday, 7:45am (EST)
Conference ID: 25800338
Dial-in:
+1-866-644-3260
+1-706-634-9973
Replay: Live.barcap.com
Credit
Conference Calls
Credit StrategyJeff Meli’s Piece
Credit ResearchJonathan Glionna – Head of Global Bank Credit Research
Corporate Bonds/CDS TradingAndrew Layng – Financials CashYoni Gorelov – Yankee Credit
Yana Bouchkanets – Barclays Capital Live
2
Last week, credit performance was mixed with CDS tighter and IG cash wider
CDX IG (9/12–9/19, bp) CDX IG and US Credit Index OAS (bp)
CDX HY and US HY Index OAS (bp)CDX HY (9/12–9/19, $)
___________________________Source: Bloomberg, Barclays Capital
380
480
580
680
780
880
Aug-09 Feb-10 Aug-10 Feb-11 Sep-11440
540
640
740
840
CDX HY US HY OAS (rhs)
75
85
95
105
115
125
135
Aug-09 Feb-10 Aug-10 Feb-11 Sep-11125
145
165
185
205
225
CDX IG US Credit OAS (rhs)
122.0124.0126.0128.0130.0132.0134.0136.0138.0140.0
9/12 9/13 9/14 9/15 9/16 9/19Intraday Range Close
89.0
90.0
91.0
92.0
93.0
94.0
95.0
9/12 9/13 9/14 9/15 9/16 9/19Intraday Range Close
w/w chg: +4bp
w/w chg: -6bp
w/w chg: -5bp
w/w chg: -67bp
w/w change in price
CDX HY: +$2.40
HY Index: -$0.32
Yest:
+2.25bp
From the wides on 9/12, IGs have tightened ~11.5bp
Yest:
-$0.25
3
5.35%
0%1%2%3%4%5%6%7%8%
TechConsDisc
IndFinS&PUtilMatTelcoEnergyHcareConsStp
Other risk assets performed well as equities rose sharply and volatility declined. Last week’s moves, however, were partially reversed yesterday amid renewed risk aversion
___________________________Source: Bloomberg, Barclays Capital
1.90
2.10
2.30
2.50
2.70
2.90
8/1 8/4 8/9 8/12 8/17 8/22 8/25 8/30 9/2 9/7 9/12 9/15
10y yield rose 13bp last week, but largely
reversed the move yesterday
15
20
25
30
35
40
45
50
8/1 8/4 8/9 8/12 8/17 8/22 8/25 8/30 9/2 9/8 9/13 9/16
VIX has continued to find support at the 30 level
OutperformedUnderperformed
S&P 500 Sectors (w/w Change) Global Equity Indices Performance
VIX Intraday (since Aug 1) 10y UST Yield Intraday (%, since Aug 1)
(4%)
(2%)
0%
2%
4%
6%
8%
S&P 500 DAX CAC 40 FTSE 100 NikkeiLast Week Yesterday
Last week’s strong performance was partially
reversed yesterday; France was a notable underperformer
4
4045505560657075808590
Jan-10 Aug-10 Mar-11Current Conditions Consumer Expectations
US macro data continue to point to a slowdown, and recent confidence surveys indicate a dampened outlook across both consumers and executives
___________________________Source: Commerce Department, Philadelphia Federal Reserve, NY Federal Reserve, University of Michigan/Thomson Reuters, Duke University/CFO Magazine, Haver Analytics, Bloomberg, Barclays Capital
(40)(30)(20)(10)
01020304050
Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11Philadelphia Fed Empire State Manufacturing
(1.0)
(0.5)
0.0
0.5
1.0
1.5
Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11Survey Actual
0
10
20
30
40
50
60
3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11
More Optimistic on US Economy More Optimistic on Own Firm
Advance Retail Sales (m/m, sa %) Regional Business Surveys
Duke/CFO Magazine Survey: % More OptimisticUniv of Michigan Consumer Confidence Survey
Surveys continued to indicate contraction
Retail sales were flat in Aug, and July was revised lower
While consumers’
assessment of current conditions rebounded, their expectations for 6
months from now hit the lowest level since 1980
5
In light of the weak data and persistently high unemployment, our economists expect the most likely outcome of the upcoming FOMC meeting will be a maturity extension of the Fed’s portfolio
The debate at this week’s 2-day FOMC meeting will likely hinge on the relative risks of long-term unemployment vs. inflation
Headline CPI inflation rose 3.8% y/y in August, boosted by a gain in gasoline prices. Our economists expect this factor to moderate, however core CPI still rose 2.0% y/yLong term unemployment as a percentage of total unemployment is high with nearly half of the unemployed having been unemployed for 27 weeks or longer. This poses a significant risk that this population could face a gradual erosion of marketable job skills
Our economists believe the most likely FOMC meeting outcome will be a maturity extension of the Fed’s portfolio, or “Operation Twist”. Another option would be to reduce the interest paid on excess reserves (IOER). However, we view this option as less likely due to its asymmetric risk/reward profile1
Cutting IOER from 25bp would be unlikely to have a significant stimulative effect as FDIC insurance already discourages US banks from stockpiling excess reservesWith short-term yields already low, cutting IOER could possibly destabilize the already stressed short term funding market
FOMC Meeting 9/20/11-9/21/11 Core and Overall CPI (% y/y)
Long Term Unemployed, % of Total Unemployed
___________________________1.
“Fed set to ease further despite firming inflation.”
Global Economics Weekly, September 16th, 2011.Source: Bloomberg, Barclays Capital
-3-2-10123456
2005 2006 2007 2008 2009 2010 20110
0.5
1
1.52
2.5
3
3.5
CPI Core CPI (rhs)
0%
10%
20%
30%
40%
50%
1951 1961 1971 1981 1991 2001 2011
6
Headlines out of the euro area continue to be a key driver of market activity, as mostly positive news supported the risk asset rally
On Wednesday, Moody’s downgraded the long-term debt rating of Societe Generale, citing funding and liquidity issues, and Credit Agricole, citing Greek exposure.
Following a conference call with Greek PM Papandreou, German Chancellor Merkel and French President Sarkozy announced they are “convinced”Greece will remain in the Euro area
The ECB announced in coordination with the Fed, BOE, BOJ, and SNB that it would conduct three USD liquidity operations with maturity of three monthson Oct 12, Nov 9, and Dec 7, in addition to the existing 1-week USD liquidity operations. Following the announcement, Euro basis swaps and the 3m Euribor-Eonia spread declined
Markets appeared hopeful ahead of the weekend’s ECOFIN meeting, However, the meeting yielded no new significant announcements
Last Week’s Key Events iTraxx Main and SnrFin w/w Change (bp)
MTD Change in 5y Sovereign CDS (bp)
___________________________Source: Bloomberg, Barclays Capital
-30
-20
-10
0
10
20
30
40
1-Apr 29-Apr 27-May 24-Jun 22-Jul 19-Aug 16-Sep
020406080
100120140160
31-Aug 4-Sep 8-Sep 12-Sep 16-Sep
Germany France Spain Italy
CDS moved wider yesterday across the core and periphery, reversing
some of last week’s tightening
Last week was the best week for European CDS
indices since July
Largely reversed
yest.
Last week
7
However, concerns around the Greek debt situation remain, and virtually every potential outcome or solution appears marginal at best
Event / Outcome Implication6th
tranche (€8bn) of 2010 bailout is released
Should provide enough funding for Greece into Dec; but only amounts to a near-term band aid
PSI is successful Would put Greece’s debt/GDP on a borderline sustainable path1; assumes Greece can meet fiscal targets in the future
PSI is not successful Would likely result in the collapse of the 2nd
bailout package and greater writedowns for the private sector; German Chancellor Merkel has said she would not let Greece go into “uncontrolled insolvency”
Orderly Default “Orderly”
assumes measures have been put in place to safeguard/recapitalize banks and stem contagion to Italy and Spain; no visibility on this yet
Disorderly default Difficult to quantify; could be characterized by a further (severe) risk asset sell-off, a sharp rise in funding costs for sovereigns that are perceived as stressed, bank runs, and increased fear of bank failures; presumably, the market panic would spur euro area officials to take action
___________________________1. See “Global Synthesis: Europe contemplates a “controlled insolvency”,“
Global Economics Weekly, September 16, 2011.Source: Bank of Greece, Bloomberg, Barclays Capital
Greek Government Bond Yields (%) Implications of Potential Greek Outcomes
Dom. Deposits Households & Businesses (€bn)
150
170
190
210
230
250
Sep-05 Feb-07 Jul-08 Dec-09 May-11
10
20
30
40
50
60
70
80
Jan-11 Mar-11 May-11 Jul-11 Sep-111012141618202224262830
2y 5y (rhs)
8
Within credit, our analysts have re-initiated coverage on European banks with an underweight. While capital ratios and financing sources have improved, questionable asset quality limits the potential upside
___________________________Source: SNL, Company Reports, Bloomberg, Barclays CapitalFor details, see “European Banks: Reinitiating Coverage –
Underweight,”
by Jonathan Glionna, Miguel Angel Hernandez, and Conor Pigott, September 13th
2011.
0%
1%
2%
3%
4%
5%
6%
Q1 11Q3 10Q1 10Q3 09Q1 09Q3 08Q1 081,700
1,750
1,800
1,850
1,900
1,950
2,000
GDP (euro 16, €bn) NPL Ratio (rhs)
0
1
2
3
4
5
6
7
2006H1 2007H1 2008H1 2009H1 2010H1 2011H11
1.05
1.1
1.15
1.2
Aggregate Deposits Loan / Deposit Ratio (rhs)
0%2%4%6%8%
10%12%14%16%18%
UB
SN
CS
GN
RB
S
HS
BA
DB
K
ISP
LLO
Y
CB
K
BN
P
GLE
SA
N
BB
VA
AC
A
UC
G
1H07 1H11
European Banks Core Tier 1 % Eur. Bank Deposits (€bn) and Loan/Deposit Ratio
Euro Area GDP and Non-Performing Loan RatioLoan / Deposit Ratio, Global ComparisonBank asset quality is the primary concern
European banks have decreased their reliance on
wholesale financing in favor of more stable deposit funding
50%
60%70%
80%90%
100%110%
120%
1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11
Europe Canada U.S. Japan
However, they remain reliant on wholesale financing relative to other regions
Core Tier 1 Ratios are improved across the
board vs. 1H07
9
Indeed, euro area banks continue to have significant sovereign debt exposure. This risk could potentially be mitigated using the EFSF, either through capital injections or debt guarantees
Recently, IMF Managing Director Christine Lagarde has called for capital injections to European banks, possibly via the EFSF1
A direct EFSF injection could position European banks to withstand large haircuts to SGIIP debt but would require ~€230bn and leave many SGIIP banks semi-nationalized
A guarantee would be less burdensome but would be riskier and might be too stressful on several individual countries
EFSF Options for Supporting Euro Banking
Potential EFSF Injections, % Core Tier 1
Exposure to SGIIP 50% Haircut, % Core Tier 1
Potential Commitments in a Guarantee, % GDP
___________________________1.
“Lagarde
sees global crisis of confidence.”
Financial Times, September 15, 2011.Source: ECB, Federal Reserve, Bloomberg, Barclays Capital Equity
ResearchFor details, see “Thinking the Thinkable?: What saving the euro means for European
banks.”
Barclays Capital European Banks Equity Research, September 15, 2011.
0%20%40%60%80%
100%120%140%
Gre
ece
Luxe
mbo
urg
Cyp
rus
Spa
inIta
lyP
ortu
gal
Bel
gium
Irela
ndG
erm
any
Fran
ceN
ethe
rland
sS
love
nia
Aus
tria
UK
Mal
taS
wed
enFi
nlan
dD
enm
ark
Hun
gary
Nor
way
Pol
and
Portugal / Ireland / Greece Italy / Spain Sector Aggregate
0%20%40%60%
80%100%120%
Gre
ece
Irela
ndS
pain
Italy
Por
tuga
lLu
xem
bour
gS
love
nia
Bel
gium
Ger
man
yA
ustri
aN
ethe
rland
sD
enm
ark
Finl
and
Fran
ce UK
Hun
gary
Mal
taN
orw
ayP
olan
dS
wed
en
Private ownership of several SGIIP banking systems would
be called into question following a direct injection
0%50%
100%150%200%250%300%350%
Icel
and,
'08
Irela
nd, '
10
Italy
Bel
gium
Ger
man
y
Fran
ce
Aus
tria
Mal
ta
Net
herla
nds
Cyp
rus
Spa
in
Finl
and
Slo
vaki
a
Slo
veni
a
Luxe
mbo
urg
Est
onia
Sovereign Debt Bank Term Debt Share of EFSF Guarantee
Potential liabilities in a guarantee could bring several nations’
liabilities close to levels of Ireland 2010 which required a bailout
10
In the UK, the ICB report was mixed for bondholders. Ring-fencing and loss absorption rules should allow banks to remain competitive, while depositor preference is a negative for unsecured bondholders
___________________________Source: ICB, Company Reports, Barclays CapitalFor details, see “European Banks: ICB Final Report –
Mixed for Bondholders,”
by Jonathan Glionna, Miguel Angel Hernandez, and Conor Pigott, September 15th, 2011.
0
100
200
300
400
500
600
700
800
Without depositor preference With depositor preference
Bank deposits, repos, CP/CD Covered bonds, securitisationsCustomer deposits Senior unsec. & cust. depositsSenior unsecured bonds Subordinated liabilitiesEquity
7.00% 7.00%
3.00% 2.50%
1.50%1.50%
2.00%2.00%
6.50% 7.00%
0%
5%
10%
15%
20%
Ring-fenced bank Bank groupBasel III T1 Common Ring-Fence BufferG-SIFI Buffer Basel III T1 Non-CommonBasel III Tier 2 Bail-In Bonds
Depositor preference, when implemented, will place senior
unsecured bondholders behind depositors
Under the ICB recommendations, capital requirements for the bank and group are similar
Depositor preference is a credit negative for unsecured bondholders
Lloyds illustrative priority of claims£bn
11
When comparing US banks to European banks, it is interesting to note that sub-senior spreads in US banks have compressed, while spreads in European banks have widened
___________________________Source: Barclays Capital
0100200300400500600700800900
DB RBS ISPIMSenior LT2
0
100
200
300
400
500
600
BAC C GSSenior Sub Holdco
US Banks, 1/01/2009, OAS (bp)
Euro Banks, 1/01/2009, OAS (bp)Average Sub-Senior
Spread: 216bp
Average Sub-Senior Spread: 91bp
0
100
200
300
400
500
600
BAC C GS
Senior Sub Holdco
US Banks, 9/16/2011, OAS (bp)
Euro Banks, 9/16/2011, OAS (bp)
0100200300400500600700800900
DB RBS ISPIM
Senior LT2
Average Sub-Senior Spread: 301bp
Average Sub-Senior Spread: 54bp
Narrower spreads reflect the limited benefit of seniority under Dodd-Frank
12
In the US, GDP growth expectations for 2011 have fallen, yet IG revenue expectations have not. However, this is not unusual, especially when viewed in a historical context
There is an inherent selection bias in a given IG credit index population reflecting the strength of those firms relative to the economy as a whole
IG constituents estimate revenue growth as a nominal dollar series, so inflation can influence revenue growth vs. real GDP growth
IG constituents also derive revenues from overseas. In a declining dollar environment, this should cause revenue growth to outpace nominal GDP growth
Factors Influencing IG Revenue Growth
Composition of Rev Growth
Historical Revenue Growth vs. GDP Growth
2012E Revenue Growth vs. GDP Growth
___________________________Source: Factset, Capital IQ, Bloomberg, Barclays CapitalFor details see: “Investment Grade: Revenue and GDP: More Than Meets the Eye,”
US Credit Alpha, September 16, 2011.
0%
1%
2%
3%
4%
5%
6%
7%
Sep-10 Dec-10 Mar-11 Jun-11 Sep-11Excess Growth Nominal GDP Est. W. Avg. Revenue Growth
5.7% 6.6%4.0% 3.5%
6.4%
11.1%
6.2%
-12.3%
0.0% -0.2%
-15%
-10%
-5%
0%
5%
10%
15%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
IG Rev. Growth - Nominal GDP Growth Average
Average excess revenue growth for IG firms vs.
nominal GDP growth is 2.9%
0%
2%
4%
6%
8%
10%
12%
1Q11 2Q11 3Q11E 4Q11EReal GDP Growth Inflation FX Excess Growth
2012 revenue growth expectations are tracking much more closely with GDP
growth expectations than in 2011
13
In addition, given the strength of corporate fundamentals, it appears spread levels are not reflecting the current state, but rather appear to be indicating an increasingly binary outcome for IG credit
___________________________Source: Capital IQ, Barclays CapitalFor details, see “Focus: Beginning or End of the Sell-Off?,”
US Credit Alpha, September 9, 2011.
80
180
280
380
480
580
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11
Current spread levels do not reflect IG fundamentals, but rather
appear to be indicating an increasingly binary outcome: either the debt crisis is resolved and spreads tighten to reflect fundamentals,
or the situation worsens and US credit trades wider with Europe
Feb 22, ’07
82bp
US IG Corporate Index Fundamentals
US IG Corp Index OAS (bp)
Summer 20112008
Credit Crisis2001/2002
Credit DownturnStart Date of Comparable Sell-off 7/26/11 6/17/08 6/21/02
Spread At Sell-off Start 152 237 172Spread 30d After Sell-off Start 213 283 201
Subsequent Wide Spread in Credit Cycle NA 618 266
Net Leverage at Sell-off Start 1.2x 1.2x 1.9x
Peak Net Leverage (ex. Financials) NA 1.6x 1.9xCash / ST Debt 5.1x 3.4x 3.1x
Cash / Total Debt 32.0% 10.7% 14.0%
Upgrade / Downgrade Ratio 1.87 1.18 0.67
Jan 18, ‘08
219bp
Mar 18, ‘08
298bp
Dec 3, ‘08
618bp
Jun 16, 09
303bp
Apr 15, ’10 139bp
Jun 10, 10
198bp
Apr 11, ’11 136bp
Sep 16, 11
220bp
14
100
120
140
160
180
200
220
240
260
280
300
1000 1050 1100 1150 1200 1250 1300 1350 1400
S&P 500
2010 Jan 2011 - July 2011 Aug 2011 - Present
IG Corp OAS (bp)
Notably, cash has underperformed both CDS and equities in the current sell-off
___________________________1.
Basis defined as CDX IG OTR spread minus US IG Corp OAS.Source: Bloomberg, Barclays Capital
125
135
145
155
165
175
185
195
205
215
225
Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11(100)
(90)
(80)
(70)
(60)
(50)
(40)
(30)
IG Corp OAS Cash-CDS Basis (rhs)
Basis is the most negative it’s been since Jan ‘10
US IG Corp OAS vs. IG Cash-CDS Basis(1)
(bp) US IG Corp OAS vs. S&P 500
Relative to historic performance over the past
two years, IG cash has significantly
underperformed equities
May 2nd
Sep 16th
Apr 23rd, 2010
15
One potential explanation for the underperformance is that IG supply has been robust and new issue concessions have risen
IG and HY Weekly Supply ($bn) HPQ Outstanding vs. New Issue Spread (9/13,bp)
___________________________Source: Barclays Capital
0
5
10
15
20
25
30
35
40
45
7-Jan 11-Feb 18-Mar 22-Apr 27-May 1-Jul 5-Aug 9-Sep
HY IG
While the primary markets have been effectively closed for HY, IG supply
remains robust
0
50
100
150
200
250
300
1.55
% '1
4
2.35
% '1
5
2.65
% '1
6
3.00
% '1
6
4.3%
'21
4.37
5% '2
1
Oustanding New Issue
New issue concessions have risen and have contributed to
the widening of secondary spreads
16
Industrial47%
Utility10%
Financial43%
Financials22%
Tech15%
Energy10%Healthcare
12%
Consumer Staples
9%
Consumer Discr11%
Industrials11%
Other10%
Financials14%
Tech20%
Energy12%Healthcare
12%
Consumer Staples
11%
Consumer Discr11%
Industrials10%
Other10%
Industrial54%
Utility11%
Financial35%
Another potential explanation is that the cash index continues to have a significant financial weighting, especially when compared to equities
US IG Corp Index Sector Weightings (%) S&P 500 Index Sector Weightings (%)
Jan 2007
Sep 2011
Jan 2007
Sep 2011
___________________________Source: Bloomberg, Barclays Capital
While the weighting of financials in the IG
Corp Index has declined by ~19% since
Jan ’07…
…the decline in the equity weighting has
been even greater (~39%)
17
Last week, IG cash underperformed the broad risk asset rally as both CDX IG and the S&P experienced their best week since the beginning of July
Macro data in the US continue to support the notion of a slowdown as August retail sales were flat, July retail sales were revised lower, and both the Empire State and Philly Fed surveys indicated contraction
Risk asset performance continues to be dictated by news out of the euro area. A somewhat better tone to the headlines supported positive performance last week
Our base case continues to be that there will be an orderly resolution of the European sovereign debt crisis. However, given the lack of clarity around a concrete plan to address contagion and questions around the level of political will to address the crisis, our conviction level remains low
The situation appears increasingly binary, were either we will avoid a near-term major systemic event and spreads will rally strongly, or we will see something akin to the fall of 2008 before officials step in decisively. We recommend investors focus on areas of the market where the upside-downside is appealing
In Summary
18
Date:
Thursday, 13 October 2011 at 4:30pm EST
Venue:
Barclays Capital 745 Seventh Avenue, New York City
Agenda:
4:30pm-4:35pm Opening Remarks (Paul Degen, Co-Head of US Credit Sales)
4:35pm-4:55pm Market Outlook
(Larry Kantor, Global Head of Research)
4:55pm-5:40pm Barclays Capital Live Demonstration
(Yana Bouchkanets, Barclays Capital Live Sales)
A cocktail reception will be held after the Demonstration
RSVP: Yana Bouchkanets, at +1 212 526 5537 or email [email protected]
by Friday, 23 September 2011.
We look forward to seeing you there.
19
Analysts Certifications and Important Disclosures
Analyst Certification(s)We, Jeff Meli, Jigar Patel and Justin Luther hereby certify (1) that the views expressed in this research report accurately reflect our personal views about any or all of the subject securities or issuers referred to in this research report and (2) no part of our compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report.
Important DisclosuresFor current important disclosures regarding companies that are the subject of this research report, please send a written request to: Barclays Capital Research Compliance, 745 Seventh Avenue, 17th Floor, New York, NY 10019 or refer to https://ecommerce.barcap.com/research/cgi-bin/all/disclosuresSearch.pl or call 212-526-1072.Barclays Capital does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that Barclays Capital may have a conflict of interest that could affect the objectivity of this report. Any reference to Barclays Capital includes its affiliates. Barclays Capital and/or an affiliate thereof (the “firm”) regularly trades, generally deals as principal and generally provides liquidity (as market maker or otherwise) in the debt securities that are the subject of this research report (and related derivatives thereof). The firm's proprietary trading accounts may have either a long and/or short
position in such securities and/or derivative instruments, which may pose a conflict with the interests of investing customers. Where permitted and subject to appropriate information barrier restrictions,
the firm’s fixed income research analysts regularly interact with its trading desk personnel to determine current prices of fixed income securities. The firm's fixed income research analyst(s) receive compensation based on various factors including, but not limited to, the quality of their work, the overall performance of the firm (including the profitability of the investment banking department), the profitability and revenues of the Fixed Income Division and the outstanding principal amount and trading
value of, the profitability of, and the potential interest of the firms investing clients in research with respect to, the asset class covered by the analyst. To the extent that any historical pricing information was obtained from Barclays Capital trading desks, the firm makes no representation that it is accurate or complete. All levels, prices and spreads are historical and do not represent current market levels, prices or
spreads, some or all of which may have changed since the publication of this document. Barclays Capital produces a variety of research products including, but not limited to, fundamental analysis, equity-linked analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ from recommendations contained in other types of research products, whether as a result of differing time horizons, methodologies, or otherwise.
20
Disclaimer
This publication has been prepared by Barclays Capital, the investment banking division of Barclays Bank PLC, and/or one or more
of its affiliates as provided below. It is provided to our clients for information purposes only, and Barclays Capital makes no express or implied warranties, and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to any data
included in this publication. Barclays Capital will not treat unauthorized recipients of this report as its clients. Prices shown are indicative and Barclays Capital is not offering
to buy or sell or soliciting offers to buy or sell any financial instrument. Without limiting any of the foregoing and to the extent permitted by law, in no event shall Barclays Capital, nor any affiliate, nor any of their respective officers, directors, partners, or employees have any liability for (a) any special, punitive, indirect, or consequential damages; or (b) any lost profits, lost revenue, loss of anticipated savings or
loss of opportunity or other financial loss, even if notified of the possibility of such damages, arising from any use of this publication or its contents. Other than disclosures relating to Barclays Capital, the information contained in this publication has been obtained from sources that Barclays
Capital believes to be reliable, but Barclays Capital does not represent or warrant that it is accurate or complete. The views in this publication are those of Barclays Capital and are subject to change, and Barclays Capital has no obligation to update its opinions or the information in this publication.
The analyst recommendations in this publication reflect solely and exclusively those of the author(s), and such opinions were prepared independently of any other interests, including those of Barclays Capital and/or its affiliates. This publication does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the clients who receive it. The securities discussed herein may not be suitable for all investors. Barclays Capital recommends that investors independently evaluate each issuer, security or instrument discussed herein and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results.
This communication is being made available in the UK and Europe primarily to persons who are investment professionals as that term is defined in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion Order) 2005. It is directed at, and therefore should only be relied upon by, persons who have professional experience in matters relating to investments. The investments to which it relates are available only to such persons and will be entered into
only with such persons. Barclays Capital is authorized and regulated by the Financial Services Authority ('FSA') and member of the London Stock Exchange.
Barclays Capital Inc., U.S. registered broker/dealer and member of FINRA (www.finra.org), is distributing this material in the United States and, in connection therewith accepts responsibility for its contents. Any U.S. person wishing
to effect a transaction in any security discussed herein should
do so only by contacting a representative of Barclays Capital Inc. in the U.S. at 745 Seventh Avenue, New York, New York 10019.
Non-U.S. persons should contact and execute transactions through a Barclays Bank PLC branch or affiliate in their home jurisdiction unless local regulations permit otherwise.
This material is distributed in Canada by Barclays Capital Canada Inc., a registered investment dealer and member of IIROC (www.iiroc.ca). To access Barclays Capital policy on the dissemination of research reports, please go to http://www.barcap.com/Client+offering/Research/Research+Policy. Subject to the conditions of this publication as set out above, Absa Capital, the Investment Banking Division of Absa
Bank Limited, an authorised
financial services provider (Registration No.: 1986/004794/06),
is distributing this material in South Africa. Absa Bank Limited is regulated by
the South African Reserve Bank. This publication is not, nor is
it intended to be, advice as defined and/or contemplated in the (South African) Financial Advisory and Intermediary Services Act, 37 of 2002, or any other financial, investment, trading, tax, legal, accounting, retirement, actuarial or other professional advice or service whatsoever. Any South African person or entity wishing to effect a transaction
in any security discussed herein should do so only by contacting a representative of Absa Capital in South Africa, 15 Alice Lane, Sandton, Johannesburg, Gauteng 2196. Absa Capital is an affiliate of Barclays Capital. In Japan, foreign exchange research reports are prepared and distributed by Barclays Bank PLC Tokyo Branch. Other research reports are distributed to institutional investors in Japan by Barclays Capital Japan Limited. Barclays Capital Japan Limited is a joint-stock company incorporated in Japan with registered office of 6-10-1 Roppongi, Minato-ku, Tokyo 106-6131, Japan. It is a subsidiary of Barclays Bank PLC and a registered financial instruments firm regulated by the Financial Services Agency of Japan. Registered Number: Kanto Zaimukyokucho
(kinsho) No. 143.
21
Disclaimer (cont’d)
Barclays Bank PLC, Hong Kong Branch is distributing this material in Hong Kong as an authorised
institution regulated by the Hong Kong Monetary Authority. Registered Office: 41/F, Cheung Kong Center, 2 Queen's Road Central, Hong Kong. This material is issued in Taiwan by Barclays Capital Securities Taiwan Limited. This material on securities not traded in Taiwan is not to be construed as 'recommendation' in Taiwan. Barclays Capital Securities Taiwan Limited
does not accept orders from clients to trade in such securities. This material may not be distributed to the public media or used by the public media without prior written consent of Barclays Capital. All equity research material is distributed in India by Barclays Securities (India) Private Limited (SEBI Registration No: INB/INF 231292732 (NSE), INB/INF 011292738 (BSE), Registered Office: 208 | Ceejay
House | Dr. Annie Besant Road | Shivsagar
Estate | Worli
| Mumbai -
400 018 | India, Phone: + 91 22 67196363). Other research reports are distributed in India by Barclays Bank PLC, India Branch. Barclays Bank PLC Frankfurt Branch distributes this material in Germany under the supervision of Bundesanstalt
für
Finanzdienstleistungsaufsicht
(BaFin). This material is distributed in Malaysia by Barclays Capital Markets Malaysia Sdn
Bhd. This material is distributed in Brazil by Banco
Barclays S.A. This material is distributed in Mexico by Barclays
Bank Mexico, S.A. Barclays Bank PLC in the Dubai International Financial Centre (Registered No. 0060) is regulated by the Dubai Financial Services Authority (DFSA). Barclays Bank PLC-DIFC Branch, may only undertake the financial services activities that fall within the scope of its existing DFSA licence. Barclays Bank PLC in the UAE is regulated by the Central Bank of the UAE and is licensed to conduct business activities as a branch of a commercial bank incorporated outside the UAE in Dubai (Licence
No.: 13/1844/2008, Registered Office: Building No. 6, Burj
Dubai Business Hub, Sheikh Zayed
Road, Dubai City) and Abu Dhabi (Licence
No.: 13/952/2008, Registered Office: Al Jazira
Towers, Hamdan
Street, PO Box 2734, Abu Dhabi). Barclays Bank PLC in the Qatar
Financial Centre (Registered No. 00018) is authorised
by the Qatar Financial Centre Regulatory Authority (QFCRA). Barclays Bank PLC-QFC Branch may only undertake the regulated activities that fall within the scope of its existing QFCRA licence. Principal place of business in Qatar: Qatar Financial Centre, Office 1002, 10th Floor, QFC Tower, Diplomatic Area, West Bay, PO Box 15891, Doha, Qatar. This material is distributed in Dubai, the UAE and Qatar by Barclays Bank PLC. Related financial products or services are only available to Professional Clients as defined by the DFSA, and Business Customers as defined by the QFCRA. This material is distributed in Saudi Arabia by Barclays Saudi Arabia ('BSA'). It is not the intention of the Publication to be
used or deemed as recommendation, option or advice for any action (s) that may take place in future. Barclays Saudi Arabia is a Closed Joint Stock Company, (CMA License No. 09141-37). Registered office Al Faisaliah
Tower | Level 18 | Riyadh 11311 | Kingdom of Saudi Arabia. Authorised
and regulated by the Capital Market Authority, Commercial Registration Number: 1010283024. This material is distributed in Russia by OOO Barclays Capital, affiliated company of Barclays Bank PLC, registered and regulated in Russia by the FSFM. Broker License #177-11850-100000; Dealer License #177-11855-010000. Registered address in Russia: 125047 Moscow, 1st Tverskaya-Yamskaya
str. 21. This material is distributed in Singapore by the Singapore branch of Barclays Bank PLC, a bank licensed in Singapore by the Monetary Authority of Singapore. For matters in connection with this report, recipients in Singapore may contact the Singapore branch of Barclays Bank PLC, whose registered address is One Raffles Quay Level 28, South Tower, Singapore 048583. Barclays Bank PLC, Australia Branch (ARBN 062 449 585, AFSL 246617) is distributing this material in Australia. It is directed at 'wholesale clients' as defined by Australian Corporations Act 2001.
IRS Circular 230 Prepared Materials Disclaimer: Barclays Capital
and its affiliates do not provide tax advice and nothing contained herein should be construed to be tax advice. Please be advised that any discussion of U.S. tax matters contained herein (including any attachments) (i) is not intended or written to be used, and cannot be used, by you for the purpose of avoiding U.S. tax-related penalties; and (ii) was written to support the promotion
or marketing of the transactions or other matters addressed herein. Accordingly, you should seek advice based on your particular circumstances from an independent tax advisor.
Barclays Capital is not responsible for, and makes no warranties
whatsoever as to, the content of any third-party web site accessed via a hyperlink in this publication and such information is not incorporated by reference.
©
Copyright Barclays Bank PLC (2011). All rights reserved. No part of this publication may be reproduced in any manner without the prior written permission of Barclays Capital or any of its affiliates. Barclays Bank PLC is registered in England No. 1026167. Registered office 1 Churchill Place, London, E14 5HP. Additional information regarding this publication will be furnished upon request.
AS5621