weekly credit update - danske bank...hoist kredit ab sek 2016 sas ab sek 2017 teekay offshore...

27 October 2015

Weekly Credit Update

Important disclosures and certifications are contained from page 44 of this report

Analysts Mads Rosendal

+45 45 14 88 79 [email protected] Katrine Jensen +45 45 12 80 56 [email protected]

Investment Research www.danskebank.com/CI

mailto:[email protected]


2

- General credit market news and current themes

- Credit indicators

- Scandi Investment Grade

Contents

- Coverage universe, credit ratings and recommendations

- Scandi High Yield

3

Sources: Bloomberg, Danske Bank Markets (both charts)

What's on our mind - General credit market news

• With the reporting season well underway, last week saw a significant improvement in risk sentiment which came on the back of a supportive tone from the ECB and the Chinese central Bank.

• European credit indices closed significantly tighter with iTraxx Main tightening 10bp to close at 70bp, while iTraxx Crossover tightened almost 40bp to close at 292bp.

• Mario Draghi indicated that the ECB was preparing to extend its bond-buying programme in December, which will be supportive for the overall risk sentiment on European credit markets going forward.

• New issue activity in the Nordic region was relatively subdued overall but Verisure Holding AB (Sweden) came to the market with a multitranche EUR400m (8Y FRN), SEK2.8bn (8Y FRN) and EUR700m (7Y FIXED).

• The reporting season was kicked into gear last week with a slew of reports from Nordic Financials and Corporates. Overall, most reports have been solid with most misses coming from commodity-related sectors. For more details please see our HY and Investment Grade news section(s) in this report.

http://danskeresearch.danskebank.com/abo/WeeklyCreditUpdate300615/$file/WeeklyCreditUpdate_300615.pdf

http://danskeresearch.danskebank.com/abo/WeeklyCreditUpdate300615/$file/WeeklyCreditUpdate_300615.pdf

4

Scandi High Yield

Stena 2020 high yield switch ideas (published on 1 October 2015) On 31 August we changed our recommendation to ´Underweight` on Stena’s bonds. Please see

Stena Q2 15 Credit Update – Outlook dark in Drilling

Fundamentally, we see increased credit risk in Stena and recommend investors switch into names with same or stronger credit profiles, such as Volvo (hybrid) or TDC (hybrid). Please see the key details of proposed switches out of Stena 2020 on the following pages.

Source: Bloomberg, Moody’s, Danske Bank Markets

VLVY 4.2% 2075

TDCDC 3.5% 3015

Nordic BB

Nordic BB-

STENA 7.875% 2020

050

100150200250300350400450500550600650700750

0 1 2 3 4 5 6 7 8 9 10 11 12

Z-spd, EUR

Years to maturity

http://danskeresearch.danskebank.com/link/CreditUpdateStenaABQ215310815/$file/CreditUpdate_StenaAB_Q215_310815.pdf






Switch idea (1/2) Sell Stena 2020, Buy Volvo hybrid call 2020

(published on 1 October 2015) Add 0.2 years of Volvo exposure (to first call) and earn approx. the same yield/spread.

Lower credit risk in Volvo than in Stena.

S&P changed the outlook to stable (from negative) on Volvo’s ‘BBB’ corporate credit rating on 29 September. See also Volvo Q2 15 credit update: above expectations but outlook softening

SELL -

Stena 7.875% 2020

BUY –

Volvo 4.2% hybrid call 2020 Difference

Recommendation UNDERWEIGHT MARKETWEIGHT -

ISIN: XS0495219874 XS1150673892 -

Currency EUR EUR -

Credit ratings: ‘B2’ / ‘BB’ ‘Ba1’ / ‘NR’ +4 notches / n.a.

Type of instrument: Senior unsecured Hybrid instrument -

Coupon: 7.875% 4.200% -3.675pp

Maturity: March 15, 2020 1st call, June 10, 2020 (final legal maturity 2075)

+0.2year (measured to 1st call date)

Cash price: 110.50 (indicative, bid) 95.50 (indicative, ask) -15.00

Callable Yes, @ benchmark +50bps or at price of 101 in case of

change of control event.

Yes, @ price of100 from1st call date onwards.

-

YTM: 5.27% p.a. 5.30% p.a. +0.03% p.a.

Z-spread: +494bp +500bp +6bp

Source: Bloomberg, Danske Bank Markets.

http://danskeresearch.danskebank.com/link/CreditUpdateVolvoQ215170715/$file/CreditUpdate_Volvo_Q215_170715.pdf

Switch idea (2/2) Sell Stena 2020, Buy TDC hybrid call 2021 (published on

1 October 2015) Add one year of TDC exposure (to first call) and give up a yield of 0.21% per year.

Lower credit risk in TDC than in Stena.

Negative spread differential of around 27bp seems acceptable given TDC’s higher credit rating.

TDC aims at maintaining an investment grade corporate credit rating.

SELL -

STENA 7.875% 2020

BUY –TDC 3.5% hybrid call

2021 Difference

Recommendation UNDERWEIGHT MARKETWEIGHT -

ISIN: XS0495219874 XS1195581159 -

Currency EUR EUR -

Credit ratings: ‘B2’ / ‘BB’ ‘Ba2’ / ‘BB+’ +3 notches /+1 notch

Type of instrument: Senior unsecured Hybrid instrument -

Coupon: 7.875% 3.500% -4.375pp

Maturity: March 15, 2020 1st call, February 26, 2021 (final legal maturity 3015)

+1.0year (measured to 1st call date)

Cash price: 110.50 (indicative, bid) 92.75 (indicative, ask) -17.75

Callable Yes, @ benchmark +50bps or at price of 101 in case of

change of control event.

Yes, @ price of100 from1st call date onwards.

-

YTM: 5.27% p.a. 5.06% p.a. -0.21% p.a.

Z-spread: +494bps +467bps -27bps

Source: Bloomberg, Danske Bank Markets.

8

Source: Danske Bank Markets

Recent trade ideas (high yield)

See the end of this presentation for a list of our coverage including shadow ratings and recommendations

Recent ideas

Type Trade Idea

Opened 01 Oct 2015

Start spread -27

Opened 01 Oct 2015

Start spread 6

Opened 08 Sep 2015

Start spread 440

Opened 20 Aug 2015

Start spread 37

Opened 16 Jun 2015

Start spread 347

Opened 26 May 2015

Start spread 433

Opened 13 Apr 2015

Start spread 225

Opened 10 Mar 2015

Start spread -2

Opened 27 Feb 2015Start spread 470Opened 02 Feb 2015Start spread 664

Outright EGASDK '20 EGASDK '20's, which we see as 'B' indicatively trade way too cheap relative to the industrial 'B' curve

Outright Buy Tallink 2018. FRN Tallink 2018 in NOK trades cheap to a global median ‘BB-’ credit curve (converted into NOK).

Currency trade Close of trade SSAB Recent performance in the SSAB EUR bond has closed the earlier 19bps gap between the EUR and the SEK 2019 bonds.

Outright Buy Akelius Residential 2019

in SEK

The Akelius Residential SEK 2019 FRN 3M Stibor+240bps trades wide relative to other similar unrated SEK bonds.

Outright Buy Destia 2019 In our view the Destia 2019 FRN trades at a fairly attractive spread when compared to our B+ indicative senior unsecured rating. This is in our view most likely a combination of low liquidity and Destia’s PE ownership.

Outright Buy Volvo 2075 Hybrid The Volvo 4.2% 2075 Hybrid currently trades at attractive levels, in our view, with a pick-up of around 20-25bp to the rating implied spread.

Currency trade Sell SSAB 2019 (SEK) and BUY

SSAB 2019 (EUR)

Outright Close of Trade Tallink NOK

2018.

Bonds trade tight to `BB-`curve and bonds no longer attractive. We take profit on trade initiated 27 February 2015 (TR: 3.9% / ann. TR 7.9%).

The spread between the SSAB 2019 (SEK) and SSAB (EUR) 2019 is too wide

Switch Sell Stena 2020, Buy Volvo

hybrid

Fundamentally, we see increased credit risk in Stena and recommend investors switch into names with same or stronger credit profiles such as Volvo (hybrid).

Switch Sell Stena 2020, Buy TDC

hybrid

Fundamentally, we see increased credit risk in Stena and recommend investors switch into names with same or stronger credit profiles such as TDC (hybrid).

9

Best and worst performers (Nordic coverage universe) - High yield

Source: Bloomberg, Danske Bank Markets (both charts)

1 month in local currencies YTD in local currencies

2,760

2,650

1,458

1,424

927

607

531

488

405

387

-51

-51

-56

-68

-95

-96

-101

-106

-164

-206

-500050010001500200025003000

Farstad Shipping ASA NOK 2017

Olympic Ship AS NOK 2017



Fred Olsen Energy ASA NOK 2019

Solstad Offshore ASA NOK 2019

Seadrill Ltd USD 2017


Seadrill Ltd NOK 2018

Teekay Offshore Partners LP/Teekay …

Beerenberg Holdco II AS NOK 2018

Meda AB SEK 2019

Nynas AB SEK 2018

Stockmann OYJ Abp EUR 2018

Prosafe SE NOK 2016

Hoist Kredit AB EUR 2017

Color Group AS NOK 2017

Hoist Kredit AB SEK 2016

SAS AB SEK 2017

Teekay Offshore Partners LP NOK 2016

Change in local currencies (bp)

1,370

386

270

203

179

159

106

95

94

92

-8

-11

-24

-38

-46

-61

-77

-80

-215

-335

-500050010001500





Teekay Offshore Partners LP/Teekay …

Seadrill Ltd SEK 2019

Seadrill Ltd USD 2017

North Atlantic Drilling Ltd USD 2019

Prosafe SE NOK 2017

Prosafe SE NOK 2016

Outokumpu OYJ EUR 2019

Stolt-Nielsen Ltd NOK 2021

BW Offshore Ltd NOK 2018

SAS AB SEK 2019

BW Offshore Ltd NOK 2019

Odfjell SE NOK 2018

Odfjell SE NOK 2017

Solstad Offshore ASA NOK 2016




10

Danske Bank Markets Nordic High-Yield Index Danske Bank Markets Nordic High-Yield Index

Source: Bloomberg, Danske Bank Markets [all tables and charts]

Index sector breakdown Key index statistics

• In tandem with a strong European credit market, we saw positive secondary Nordic High Yield markets during last week. Spreads tightened some 12bp over the week.

• The widening trend since the summer seems to have stopped in October, where the HY index spreads have remained range bound around the ASW +460 level.

• Last week we saw Verisure Holding AB (Sweden) issue EUR400m (8Y), SEK2.8bn (8Y) and EUR700m (7Y) in new high yield bonds .

Basic Materials

15%

Communications9%

Consumer, non-cycli.

10%

Energy16%

Diversified4%

Industrial15%

Consumer, Cyclical

6%

Utilities3%

Real estate13%

Technology2%

300

320

340

360

380

400

420

440

460

480

100.0100.5101.0101.5102.0102.5103.0103.5104.0104.5105.0105.5106.0

Dec-2014 Mar-2015 Jun-2015 Sep-2015

DBM Hedged NOK Nordic HY Index ValueDBM Hedged EUR Nordic HY Index ValueDBM Nordic HY Index, ASW-spread (bps). RHS

Index start Index end Change

Date 31-dec-2014 23-okt-2015

Yield 4.7%

ASW spread, bps 430 456 26

# Bonds 110

AVG credit rating BB

Avg duration 2.8

TR since start 3.1%

TR YTD 3.1%

TR MTD 0.6%

11


Recent Nordic high-yield issuance

Selected new issues (High Yield)

Date Issuer Coupon CCY Volume Maturity S&P / Mdy / Fitch ASW/DM

21/10/2015 Verisure Holding Ab STIB3M +725bps SEK 2 816 m Oct/23 B / Caa1e / 725

21/10/2015 Verisure Holding Ab EUR003M +725bps EUR 400 m Oct/23 B / Caa1e / 725

15/10/2015 Verisure Holding Ab 6% EUR 700 m Nov/22 B / (P)B1 / 591

01/10/2015 Finnair Oyj (Hybrid) 7.875% EUR 200 m PERP / / 500

16/09/2015 Akelius Residential Ab 3.375% EUR 300 m Sep/20 BB+ / / 300

03/09/2015 Lock As 7% EUR 30 m Aug/21 B+ / B2 / 505

03/09/2015 Lock As 5.5% EUR 200 m Aug/20 B+ / B2 / 550

03/09/2015 Np3 Fastigheter STIB3M +490bps SEK 300 m Oct/18 / / 490

02/09/2015 Sagax Ab EUR006M +350bps EUR 30 m Sep/20 / / 350

13/07/2015 Boa Offshore As NIBOR3M +1000bps NOK 150 m Dec/18 / / 1000

06/07/2015 Gripship As NIBOR3M +650bps NOK 210 m Jul/18 / / 650

03/07/2015 Digiplex Norway As NIBOR3M +375bps NOK 575 m Jul/19 / / 375

26/06/2015 Fastighets Gronlandet So STIB3M +275bps SEK 425 m Jun/21 / / 275

24/06/2015 Solteq Oyj 6% EUR 27 m Jul/20 / / 535

22/06/2015 Uppfinnaren 1 Ab 10% SEK 175 m PERP / / 775

10/06/2015 Sagax Ab STIB3M +320bps SEK 300 m Jun/20 / / 320

17/06/2015 Func Food Group EUR003M +900bps EUR 38 m Jun/19 / / 900

03/06/2015 Bw Offshore Ltd NIBOR3M +425bps NOK 900 m Jun/20 / / 425

28/05/2015 Hoegh Lng Holdings US0003M +500bps USD 130 m Jun/20 / / 500

25/03/2015 Corem Property Grp Ab STIB3M +350bps SEK 750 m Apr/18 / / 350

22/05/2015 Nelja Energia As EUR006M +650bps EUR 50 m Jun/21 / / 650

21/05/2015 Color Group Asa NIBOR3M +485bps NOK 700 m Jun/20 / / 485

21/05/2015 Technopolis Plc 3.75% EUR 150 m May/20 / / 340

12/05/2015 Norwegian Air Shuttle As NIBOR3M +575bps NOK 1 000 m May/18 / / 575

12


Company news from the past week (high yield) Name News Implication

Outokumpu

Outokumpu (DBM:'B' / NO): Somewhat surprisingly to us, Oukokumpu has announced a CEO change. Roeland Baan will step up to replace the current CEO Mika Seitovirta. Baan is currently the Executive Vice President and CEO of Aleris Europe and Asia. Aleris is a global leader in aluminum rolled products. Before joining Aleris, Baan was the Executive Vice President and CEO of Mittal Steel Europe and subsequently Executive Vice President and a member of the Management Committee of the combined Arcelor Mittal Group. Overall, the new CEO seems highly credible with multiple years of industry expertise and experience in driving turnarounds. However, to us the negative performance of Outokumpu this year is most likely not a result of wrong decision-making by the current CEO but more due to adverse market conditions beyond the control of management, such as falling nickel pricing, ever-increasing Chinese steel exports and production problems, i.e. the new CEO will have his work cut out and as long as the market is as weak as it is now, we don’t expect to see an immediate turnaround in financial results. At best, we believe this should improve sentiment on Outokumpu until the Q3 results in ten days time.

Credit neutral

EG

EG (B) announces that it will not do a tab issue of its current DKK1.1bn outstanding bond. Instead, EG will raise senior unsecured funding through a bank loan. The funds will be used to redeem debt at the newly acquired Silkeborg Data. This development is credit positive for the existing outstanding bonds, as there will be no primary issuance supply to weigh on secondary spreads. So in summary, the aftermath from the Silkeborg acquisition ends up being a net positive for EG's current bondholders, as business risk and financial risk will be slightly improved and because there will be no new primary supply (in the short term at least).

Credit positive

Stora Enso

Stora Enso (MW): Stora came out with Q3 results. No big surprises, as the result had already been preannounced some two weeks ago, but nonetheless a very strong result. Sales increased about 5% ex. paper and were flat including paper. The strength of the report was an increase in the EBITDA of around 17% compared to last year on the back of favourable currency effects combined with a ramp up of the newly inaugurated Montes del Plata pulp mill in South America. Reported net debt to EBITDA declined to around 2.5x vs. 2.8x in the previous quarter. Overall, we view this as a credit neutral result due to the pre-announcement and we do not expect to see any impact on spreads.

Credit neutral

13


Company news from the past week (high yield)

PGS

PGS: Q3 numbers in line, revenues 13% behind consensus, EBITDA 2% behind. Covenants on the RCF renegotiated from 2.75x to 4x, with outstanding remaining at USD500m, creating more financial headroom. Outlook very negative with Q4 Q1 margins to be adversely impacted by weakening market with FY15 EBITDA expected to be USD500m, in line with consensus. As expected, the new build due to be delivered in Q3 16 is agreed to be pushed out to Q1 17. PGS is taking over the Sanco Sword and Saco Swift vessel charters from Dolphin, very negative for Dolphin. PGS will stack to V –class vessels at delivery of the Sanco vessels in Q1 16 to keep the market balance stable. Order book at USD245m, slightly down from Q2, with 85% booked for Q4 and 50% booked for Q1. All in all, we see this as a positive report for PGS, as more financial headroom and the move to take out further capacity outweighs the negative outlook with FY EBITDA expected to be in line with consensus.

Credit positive

Dolphin Credit negative that PGS is taking over two of its vessels charters in Q1 16, putting Dolphin’s fleet below critical mass at only three seismic vessels

Credit negative

Corem

Corem (DBM: BB-) reported a fairly uneventful quarter with the exception of the bid for Tribona (which, as expected, it withdrew on Thursday evening following Klövern’s announcement that it has sold its shares in Tribona to Catena). Rental income decreased slightly due to somewhat higher vacancies compared to last year. Positively, the occupancy rate increased by one percentage point to 90% at the end of Q3. Margins remain high with NOI margin at 79%. Cash flow was negative by SEK280m following net repayment of loans by SEK154m, acquisitions of properties of SEK122m and capex of SEK122m. All in all, this resulted in an unchanged net LTV of 73% and including the preference shares 81% (not adjusted for the SEK1.3bn stake in Klövern). The LTM EBITDA/interest coverage was also unchanged at 1.8x (including preference shares 1.1x). In our view, a credit neutral report for Corem. As pointed out in our SEK Credit Market Trends published this week, we find good value in the short Corem 17 bonds.

Credit neutral

14



Norwegian

Norwegian (BB-/NO; B+/NO) reported a significant improvement y/y in Q3 15. EBITDA was NOK1.5bn vs. NOK0.7bn in Q3 14. The report demonstrates a strong underlying business improvement and increases the belief in its ability to prosper on its long-haul operations (Q3 14 was impacted by start-up problems on long haul). The EBITDA-margin was 20.4% v.s 11.5% in Q3 14. Net profit was NOK833m vs. cons. of NOK897m. However, in the volatile airline industry not too much should be put into this, in our view. Unit cost ex fuel was up 15% y/y to NOK0.30 – however, adjusted for the depreciation of NOK against USD and EUR affects unit cost by 10% y/y - and adjusted for currency and the rise in passengers Norwegian claims that unit cost ex fuel decreased by 2%. Norwegian guides for production growth of 5% y/y in 2015 and 18% y/y in 2016 due to the fleet expansion. Norwegian has hedged 31% of expected fuel consumption in Q4 15 and 36% of expected fuel consumption in 2016 (9% for 2017). Net debt rose to NOK15.5bn at end-Q3 15 from NOK11.3bn at end-2014 due to the sizeable fleet expansion, which left the equity ratio of 11% - up from 9% end-2014. Norwegian guides for capex of NOK5.5bn in 2015 and NOK8.4 for 2016. This will keep metrics subdued. We expect adj. net debt of EBITDA of 7x for 2016 (based on reported EBITDA of NOK2.6bn 2016E) - and further deleveraging depends on the level of EBITDA-generation possible, which remains to be seen. Over the past two-three quarters, Norwegian has fared well operationally, which gives rise to some optimism regarding the company's ability to deleverage to be commensurate with our BB- (corporate) and B+ (bond) shadow rating - but the stretched financial metrics (although mitigated by state guaranteed funding from Boeing) is the reason why we keep our Negative Outlook on our shadow ratings. Overall, a credit neutral report from Norwegian, in our view.

Credit neutral

Victoria Park

At first glance an ok Q3 report from Victoria Park (DBM: BB-; bonds B+). Due to earlier acquisitions, rental income is up by 100% to SEK168m with operating net result of SEK94m (vs SEK43m in Q3 2014). Loan to value ratio stood at 58.6% at end September, before the acquisition of SEK531m of properties in the city of Borås. Still, leverage remains well in line with the newly communicated lower financial policy leverage target of 65% LTV. Victoria Park has deemed that it has both the capacity to maintain a leverage of 65% vs earlier 70%, to continue to grow, and to also pay some dividend (25% of the result vs earlier no dividends). In Q3, VP managed to achieve a rental increase of 3% in Malmö which will come through gradually in the coming quarters. All in all, we are comfortable with our BB-/B+ ratings on Victoria Park and its bonds and the 2018 bond remains one of our top picks in the SEK property universe.

Credit neutral

15



SSAB

SSAB (BB-): SSAB released its Q3 results, which missed expectations with earnings (EBIT) of -SEK191m vs. Bloomberg consensus of SEK15m. The quarter was adversely affected by negative currency effects of around SEK200m. Compared with the second quarter of 2015, operating profit/loss was down by SEK492m. Lower fixed and variable costs (SEK550m) impacted positively on earnings, whereas lower volumes (SEK570m), lower prices SEK250m), currency effects (SEK150m) and lower capacity utilisation (SEK80m) impacted negatively on earnings. SSAB expects demand for steel to remain strong in 2016; however, given the overcapacity and high exports from China (monthly exports reached an all time high in September) profitability is expected to remain muted. Net debt increased by SEK796m during Q3 and there is limited scope for further deleveraging towards year-end given the weak outlook for profitability. Overall, a credit negative report from SSAB which shows that they also are not immune to the immense pressure from Chinese steel producers. We would expect some spread widening on the back of this report.

Credit negative

Akelius

Akelius acquires 279 apartments in Washington. The acquisition is Akelius’s first in Washington, price SEK468m. After the acquisition, Akelius owns 15 residential properties with 1,485 apartments in the US.

Credit neutral

Meda

With regard to Swedish specialty pharma company Meda (DBM: BB-/Stable) - it may be worth keeping an eye on Canadian industry peer Valeant (BB-/Ba3). The company has over the years pursued an aggressive M&A strategy favoured by the equity market. However, following a combination of comments from US politicians that pharma companies have been raising prices too much (putting the spotlight especially on Valeant), and claims that Valeant is pursuing an aggressive way of accounting for acquired companies, its shares have dropped some 55%, while the CDS has moved from the +200 level to now roughly 450bp. While Meda only has a limited presence in the US (some 13-14% of total revenues), all the above may create some nervousness towards the whole specialty pharma sector.

Credit negative

Wihlborgs

Strong Q3 report from Wihlborgs. Rental income up by 3% and operating result by 11%. Economic occupancy rate unchanged at 91%. Property value of SEK27bn at end September, with a slight decline in loan to value to 57%, which gives some headroom in our 'BB+' credit view (with BB on the bonds). Wihlborg SEK bond trades at a tight level vs sector peers.

Credit positive

Fastpartner

FastPatner presents a strong Q3 report. Rental income up by a whopping 23%, mainly due to earlier acquisitions. Operating net up by 29%, and a further slight increase in property values. Interest coverage up to 3.2x from 2.7x in 2014, and a slight improvement in solidity. We see no reason to change our 'BB'/Stable credit view on the company (with bonds at 'BB-'). FastPartners SEK bonds look fairly priced relative to sector peers in the 'BB' category.

Credit positive

16



Heimstaden

Swedish real estate company Heimstaden (DBM: BB; bonds BB-) announced it is selling all its properties in the city of Trelleborg, consisting of 688 apartments with 58,000 square metres to Nordhalla. Sales price not disclosed. Heimstaden owns 40% of Nordhalla. At end Q2, Heimstaden had a net LTV of 51%, i.e. with some financial headroom within our 'BB' rating. We see today's announcement as broadly credit neutral as we think Heimstaden may still carry out further acquisitions, but within the company's communicated financial policy. Heimstaden remains one of our favoured companies in the Swedish property sector. SEK bonds now look fairly valued vs peers.

Credit neutral

Corem

Catena has acquired Klövern’s Tribona shares (which Corem had placed a bid on). Klövern will be paid in cash (about SEK600m). Corem is now out of the picture regarding the Tribona acquisition and hence there will be no financial effects for the company.

Credit neutral

Akelius Akelius (Corp level BBB-, bonds BB+) acquires 279 apartments in Boston. Two central properties built in 2014 and the acquisitions are Akelius’s first in Boston. Total purchase price SEK1,385m.

Credit neutral

17

Scandi Investment Grade

18

Overweight – Vestas EUR 2.75% 2022 IG credit profile but priced as HY (first published on 19 August)

Source: Bloomberg, Moody’s, Danske Bank Markets

• On 19 August, Vestas delivered strong and credit positive Q2 15 results, with a robust globally spread order intake, a record order backlog, healthy cash flows and very strong credit metrics.

• Given the volatile global wind turbine markets, the high credit quality of some competitors (GE, Siemens), the recent very harsh restructuring of the company and the prudent financial targets introduced (e.g. maximum target net debt/EBITDA < 1x ), we do not expect the group to accelerate future re-leveraging aggressively in an unbalanced way.

• The key risk factor for this name remains political. The global wind turbine industry is likely to be dependent on subsidies for years to come, although less and less so as the turbine produced cost per MWh is reduced. This is a strategic priority for Vestas.

• Given our view of Vestas as a ‘BBB-’ credit, we

reiterate that we regard the current pricing of the

2.75% 2022 as attractive at an ASW of +270bp.

• In our view, a ‘fair’ credit spread for this type of bond

would be in the range of 125-150bp, reflecting a ‘political/volatility’ spread add-on of 40-65bp to the ‘BBB-’ curve.

VWSDC '22 (NR/NR)

0102030405060708090

100110120130140150160170180190200210220230240250260270280290

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Indicative ASW offer

(bps)

Corporates: BBB-

See Vestas Q2 15: Strong performance – bonds

attractively priced, 19 August.

http://danskeanalyse.danskebank.dk/abo/CreditUpdateVestasQ215190815/$file/CreditUpdate_Vestas_Q215_190815.pdf

http://danskeresearch.danskebank.com/abo/CreditUpdateVestasQ215190815/$file/CreditUpdate_Vestas_Q215_190815.pdf





19


Recent trade ideas (investment grade)

See the end of this presentation for a list of our coverage including shadow ratings and recommendations

Recent ideas

Type Trade Idea

Opened 24 Aug 2015Start spread 270Opened 10 Aug 2015Start spread 511

Opened 10 Aug 2015

Start spread 361

Opened 03 Jun 2015

Start spread 32

Sector spread Switch from Securitas 2018 to

ISS Global A/S 2020

We recommend to buy the ISS Global A/S 2020 as we believe valuation is attractive compared to ISS Global A/S’ BBB-/Positive Outlook from S&P as the bond is currently trading close to the ‘BBB-’ curve.

Outright Buy Nykredit T2 CoCo first call

2021 (dated)

Nykredit has issued a tier 2 bond as a CoCo with a 7% trigger.We believe the T2 CoCo trades with a discount to peers because of the CoCo feature.

Outright Buy Nykredit AT1 (perpetual) Nykredit has issued an AT1 with a 7.125% trigger.This hybrid trade attractive to Nordic peers.

Outright Buy Vestas 2022 (revisited). The Vestas EUR 2.75% 2022 trades cheap to a EUR corporate BBB. curve.

20

Best and worst performers (Nordic coverage universe) - Investment grade

Source: Bloomberg, Danske Bank Markets (both charts)

1 week in local currencies 1 month in local currencies

23

20

20

18

16

15

14

14

14

14

-6

-6

-6

-6

-6

-8

-9

-9

-13

-14

-20-100102030

Fortum OYJ EUR 2016

Neste Oyj EUR 2016

Vattenfall AB EUR 2024

TeliaSonera AB EUR 2017




Svenska Cellulosa AB SCA EUR 2016



Fingrid OYJ EUR 2024

Pohjola Bank Oyj EUR 2018

Skandinaviska Enskilda Banken AB EUR …


Statoil ASA EUR 2025


Nordea Bank AB EUR 2022

Carlsberg Breweries A/S EUR 2019

Nordea Bank AB EUR 2025



7

7

4

4

3

3

2

2

2

2

-5

-6

-6

-6

-6

-6

-6

-7

-7

-7

-10-50510

Fortum OYJ EUR 2016

Neste Oyj EUR 2016

Svenska Cellulosa AB SCA EUR 2016

Danske Bank A/S SEK 2019

Lansforsakringar Bank AB SEK 2020


DONG Energy A/S EUR 2016

SBAB Bank AB SEK 2018


Sampo Oyj EUR 2017


Telenor ASA EUR 2020


Investor AB EUR 2023








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Selected new investment-grade issues

Date Issuer Coupon CCY Volume Maturity S&P / Mdy / Fitch ASW/DM

21/10/2015 Eika Boligkreditt As 0.625% EUR 500 m Oct/21 / Aa1e / 22

20/10/2015 Dongfeng Motor Hong Kong 1.6% EUR 500 m Oct/18 / A1 / Ae 150

19/10/2015 Aktia Bank Plc STIB3M +95bps SEK 800 m Oct/18 A- / A3 / WD 95

19/10/2015 Wells Fargo & Company 2% EUR 1 500 m Apr/26 A+ / A2 / AA- 103

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Company news from the past week (investment grade) Name News Implication

Nordea

Nordea (UW): the Polish regulator tells the largest Polish banks to set aside more capital to help cope with Swiss-franc loan portfolios, according to Reuters. Nordea still sits on the majority of the risk from the Polish mortgage loans it sold off to PKO in June 2013 due to a loss guarantee running until April 2018, in which Nordea will have to cover half of the loan losses above 0.4% per annum. The Polish Lower House just recently decided that 90% of the loss from converting CHF loans back to PLN will have to be covered by the banks. The law is not final yet and may be amended. Nordea has cEUR3bn of Polish mortgage loans, which means that this could potentially cost the bank some hundred millions EUR in a bad scenario, we estimate. Not enough to rock the boat, but a reminder of why we believe Nordea's large diversification is hitting the bank from several sides these years (Russian exposure, Norway due to oil, Finland due to low economic activity and now also Poland). This could mean that a solution for the Polish mortgage loans in CHF could be near and hence the loss guarantee from Nordea be effective.

Credit negative

Securitas

Securitas (MW) has announced the acquisition of Diebold Inc. Electronic Security Business in the US. The purchase price is approx. SEK2.9bn (EV), which equates to approx. 11x EBITDA for 2015 (Securitas trades 9x). This high-tech security company's services include intrusion alarms, fire alarms and monitoring of elevators with more than 55,000 monitored customer locations. We are not surprised by this acquisition, as Securitas lacks scale in the higher-margin high-tech security business to mitigate fierce price pressure in manned guarding – hence, in this respect we believe that the acquisition will improve Securitas’s overall business risk profile somewhat. However, we believe that due to the acquisition adj. net debt to EBITDA will increase to c. 3.2x from the 2.7x reported in Q2 15 (Q3 15 to be reported on 4.Nov) and we believe that S&P will remove the Positive Outlook on its BBB rating for Securitas. However, we believe that Securitas will be able to maintain its BBB rating, as we think S&P will give Securitas time to deleverage over the coming 18-24 months (according to Securitas ,the acquisition will be EPS enhancing from 2016). Overall, we maintain our MW recommendation on Securitas and expect spreads to widen some15bp on this announcement due to the higher leverage, integration risk and potential removal of Positive Outlook from S&P.

Credit negative

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Vattenfall

Vattenfall (MW) has confirmed that 1GW out of its total installed capacity of 7.8GW of German lignite will likely be included in the newly German proposed capacity scheme. Vattenfall’s board has yet to make a final decision. Vattenfall mentions that the rest of the capacity will be running as previously. The 1GW of capacity will be running for around four years after it has been put in reserve (within the next couple of years). The whole industry will receive around EUR230m / year and Vattenfall comprises roughly 37% of this. This is broadly in line with expectations and previous unconfirmed reports. Slightly positive in the sense that we now have some more clarity on the German regulatory regime around lignite, which should make it easier for Vattenfall to sell these assets.

Credit positive

APMM

APMM (MW): Maersk Oil cuts 10-12% of its current workforce, aiming to reduce operating costs by 20% by end of 2016, as the company responds to changed market conditions. This should not come as a surprise, as APMM already flagged this in connection with the Q2 15 report. APMM will release Q3 15 on 6 November – however, steam bas already been taken off due to profit warning last Friday.

Credit neutral

LKAB

LKAB posted a weak result for Q3, where net sales declined by 16% and the underlying operating margin fell from 22% to 19%. Due to the persistently low global iron ore prices and an expectation that market dynamics will not reverse any time soon LKAB decided to recognise impairment losses of SEK7.1bn related to property, plant and equipment. Importantly, this impairment does effect equity but not the company's cash flow. In fact, the Q3 operating cash flow was positive SEK813m. This can be compared to investments of SEK1.4bn during the quarter. Hence, leverage rose somewhat further but LKAB's balance sheet remains very strong with a gross cash position of SEK15.2bn and net debt of SEK1.8bn (including provisions for the urban transformation of SEK12bn in the debt calculation). Focus is now with the new CEO on cost reductions, and the production growth volume target of 37m tonnes has been deferred. We moved to a Negative outlook on our BBB+ credit view on LKAB following Q2 results and intend to take a fresh look at this credit view after today's announcement. The company's SEK bonds continue to trade at a tight level relative to peers in the BBB category.

Credit negative

Neste

Strong Q3 15 result from Neste (MW). Revenues fell 21% due to weaker liquids prices y/y. More importantly, Group comparable EBITDA improved 35%, reflecting a very strong refinery margin in traditional fuels and also better earnings in Neste’s renewable division. Neste’s result landed ahead of market expectations. Neste’s credit metrics improved on the back of a strong Free Cash Flow, taking adj. net debt to LTM EBITDA to 1.6x from 2x. Neste maintains its FY outlook, and we remain comfortable with our ‘BBB-‘ indicative rating, reflecting a strong leverage level currently, but also darker skies ahead due to weaker refinery margins.

Credit positive

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Electrolux

Electrolux (MW) reported a solid set of Q3 15 figures with operating profit of SEK1.5bn (SEK1.3bn consensus) which represents an 8% increase compared to Q3 14 based on flat margins. Revenue increased by 9% y/y primarily driven by currency (6%) as organic growth was only 2% vs. 3% in H1 15. Organic growth was solid in Europe (5%) and North America (7%) whereas Latin America (-5%) and Asia (-13%) were weak. Adj. net debt to LTM EBITDA declined to 1.6x from 2.0x Q3 14 - and slightly up from 1.4x in Q2 15. Despite the solid result, we regard the Q3 15 report as credit neutral. All eyes continue to be on the potential GE Appliances acquisition - Electrolux expects to close the acquisition in 2015. We maintain our MW recommendation on Electrolux.

Credit neutral

APMM

APMM (MW): Measured over the past 12 months, Maersk Line has accounted for 49% of APMM Group operating cash flow – hence, a potential further prolonged weakening going into 2016 (the container market is structurally oversupplied) in Maersk Line could make the Group more hesitant in pursuing very large scale M&A in the oil segment. Should APMM pursue very large scale M&A in the Oil industry at the same time as the container market is in limbo, it could raise investor concerns regarding the Group’s commitment to the BBB+ rating. In this respect, it is our very clear belief that APMM is committed to maintaining the BBB+ rating, as it has used the past years to build up credibility around this and has stated this ambition many times in both financial reports and CMDs.

Credit neutral

Sandvik

Sandvik (MW): Sandvik released Q3 results. At first glance, results look weak with sales some 7% behind BBG consensus. Also, the EBIT declined by 7% y/y and the operating margin was 11.2% vs. 11.9% y/y. The result was weaker, as FX and ongoing cost savings could not offset the decline in volumes. Organically, sales fell 8% y/y, which is worse than what we saw at SKF last weak. Before the report Sandvik announced its intention to divest its mining systems business (about 25% of the Sandvik Mining segment) but the Q3 report did not contain further updates on this, i.e. Sandvik has not found a buyer just yet. Despite the soft result, cash flows were still strong and the overall reported net debt fell by some SEK2.5bn. We see adj. net debt to EBITDA at around 2.5x and we expect Sandvik to maintain its rating over the coming quarter, especially if Sandvik manages to find a buyer (and get a decent price) for MS. We maintain our Marketweight recommendation on what we view as a decent spread on the EUR denominated Sandvik 2026s.

Credit negative

25



APMM

APMM (MW): Profit warning released. The profit warning was 100% related to Maersk Line, which is being pressured by the low freight rates. APMM previously expected net profit of USD4.0bn based on an underlying result contribution from Maersk Line above USD2.2bn. The Group's new expectation is an underlying result of around USD3.4bn based on an underlying result in Maersk Line of around USD1.6bn (hence a downgrade of net profit in Maersk Line of USD0.6bn). From a credit perspective this is not a significant event and credit metrics will still be strong for the current BBB+ rating. However, the weakness in Maersk Line and the container market is likely to expand into 2016. In our view, this could make it less likely that APMM will pursue very significant M&A in the Oil segment and more likely that APMM goes for smaller bolt on acquisitions in the oil segment (although these could also be quite big) - which we would see as credit positive. Overall, we continue to see APMM as a high quality name in the BBB+ space. We maintain our Marketweight recommendation, as we struggle to see much upside at current valuation.

Credit negative

Volvo

Volvo (MW): Volvo released its Q3 report on Friday morning; a very decent report at first glance. Adj. EBIT at SEK5.4bn was 15% ahead of consensus with currency having a positive effect of SEK830m. The ebit margin excluding restructuring was 6.9% excl. restructuring charges vs. 4.3% for the same period last year. Order intakes were a tad below expectations (4%), which was mainly due to a very weak Latin America and North America, which were down 54% and 40%, respectively. Europe, on the other hand, was strong with orders increasing 11% y/y and Volvo has upgraded its FY truck order forecast for the region. Positively, the CE credit provisions in China increased by SEK50m less than expected (SEK293m vs. SEK350m cons.). Following the report, we still see adj. net debt to EBITDA at around 2x, which is commensurate with the current BBB rating. Overall, a slightly credit positive report but we view pricing of the Volvo senior curve to be inline with the rating. For more value we advise investors to look at the recently issued Volvo hybrids.

Credit positive

Kemira

Kemira (DBM:BBB-): Results were out Friday, looked to be in line with consensus on EBITDA while beating slightly on revenues. Sales grew 15% y/y mainly on the back of the Akzo Nobel acquisition in the pulp and paper chemicals segment. Organically, sales were roughly flat y/y. The oil and mining business was not untouched by the lower US shale oil activity, but the decline has not been as bad as feared. Leverage is still slightly elevated at around 3x times following the acquisition but we still expect leverage to decline to about 2.8x by year-end 2015. Overall, a credit neutral result and we keep out BBB- shadow rating on the name.

Credit neutral

26



SAAB

Saab presented a mixed report with sales above expectations while profitability remains weak. Organic growth surprised on the positive side and increased by 11% and the outlook for 2015 was again reiterated, leaving us with high expectations for the fourth quarter. We expect profitability to be high on the agenda after the deal with Brazil regarding 36 Gripen NG was signed in the quarter. Credit metrics strengthened slightly due to improved cash flow and released working capital. Our current rating assumes the company deleverages during the coming quarters to bring credit metrics to a level consistent with our ‘BBB+ ’credit view.

Credit neutral

DNB

Once again, the oil plunge caused no direct loan losses for DNB and generally speaking the Q3 results were in line with expectations. Capital requirements were upped by the Norwegian FSA, forcing DNB to continue its focus on building capital. We are pleased with this, but continue to believe the uncertainty around future loan losses is too high for us to turn more positive. Underweight recommendation maintained.

Credit positive

Swedbank

Swedbank reported solid Q3 results reflected in very strong financial ratios, return on equity of 13.5%, a loan loss ratio of 4bp, CET1 ratio of 23% and cost-income ratio of 43%. As Swedbank trades very tight, especially in the senior space, we believe that its fundamental strength is already reflected in the pricing of its bonds and therefore we maintain our Marketweight recommendation.

Credit positive

Nordea

Nordea UW): The Q3 results gave no reason to be concerned as loan losses remained low, while capitalisation increased despite earnings being hit by weak financial markets. That said, we continue to be cautious about the period ahead given Nordea's relatively large exposure to oil, Russia and Finland. Thus, we continue to believe its bonds are too expensive and reiterate our Underweight recommendation.

Credit neutral

SEB

Low commissions hit SEB hard in Q3 as the bank is relatively dependent on fee income. Consequently, the operating profit was 6% below expectations but otherwise a robust report. We maintain our Overweight recommendation on SEB.

Credit neutral

Handelsbanken

Handelsbanken (MW) disappointed on NII and followed its peers by reporting weak trading income in its Q3 results. However, fundamentals remained strong and, as uncertainty is rising around some of its peers mainly due to oil exposure (direct or indirect), Handelsbanken could once again be a safe alternative. We thus maintain our Marketweight recommendation despite tight price levels.

Credit negative

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Fortum

Fortum’s (UW) Q3 15 result was weak and slightly behind market expectations. Group revenues are down 23% y/y on lower power prices in the Nordics, lower earnings in Russia and also lower heat earnings due to colder than normal weather. Group clean EBITDA falls 49% y/y. Results were weighed by a EUR761m write down of the Oskarhamn nuclear units 1 and 2. Fortum remains net cash following the network divestment and it remains unclear what the cash proceeds will be used for. Fortum delays its earnings target in Russia, which is a negative surprise. Overall a slightly negative report from Fortum at first glance.

Credit negative

Metso

Metso (MW): Q3 results out from Metso missed expectations on both sales and earnings. Sales were EUR680m vs. Bloomberg consensus of EUR723m, while the EBITDA was about EUR10m below consensus. Needless to say, the weakness was driven by low commodity prices affecting both the mining and oil and gas industries which Metso supplies. Also, Metso is beginning to see mine closures which now affect the service demand, which has otherwise been Metso's leg to fall back on. Surprisingly to us, Metso has decided to keep its FY outlook for 2015, which could be seen as the main positive to take out from the report. We continue to see leverage adj. net debt to EBITDA to be in line with the rating and the group should be able to maintain its BBB rating over the interim. Spreads on the Metso 2019's have widened recently and trade on the 'BBB-' rating implied EUR curve, hence the bond offers good carry for the rating and downside is low should Metso be downgraded. Despite attractive valuation we expect further negative newsflow over the interim and we keep our Marketweight recommendation on the name.

Credit negative

SBAB

SBAB (MW): reported Q3 results on par with Q2 adjusted for the fair value adj. of financial instruments. Loan losses still insignificant at SEK3m for the quarter. RoE after tax of 10.5%. CET1 was 25.6% vs. minimum requirement of c.22%, so reasonable buffer. CEO says that "The situation in the Swedish housing market is highly distressing. Soaring housing prices increase the risk level for our customers, for us as a company and for the economy and society at large. This trend is not sustainable in the long term. The housing shortage is becoming increasingly pressing as housing prices continue to skyrocket. In some areas of Sweden, housing prices are increasing at a rate that in all likelihood, extends far beyond any long-term realism." We tend to agree with that, at least we also believe the largest risk for the Swedish banks currently is the housing market. However, a correction will likely hit the consumption and i.e. the SME sector and hence not the mortgage sector. So SBAB is likely to be sheltered from this despite the CEO's worry. All in all a rather uneventful quarter.

Credit neutral

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Nordax Bank

Nordax Bank (BBB- shadow by Danske): pre-provision profit on level with Q2 as the 3% growth in the NII (positive) is neutralised by large trading income loss (SEK17m). Loan losses increased to SEK44m or 1.7% in loan loss ratio, which was higher than the 1.2% reported for FY2014. This is of course a bit negative, but the growth in problem loans of 9% YTD is not that worrying as it grew 18% in 2014. Coverage ratio was unchanged 54%. ROE remained high at 20.4%, which gives a good first line of defence and ability to build up capital, if needed. CET1 at 12.7% vs. 12.3% year-end. Capital req. is c.8% including impact from 1.5% countercyclical buffer from next year. To conclude: Nordax is still a highly profitable bank with good capitalisation. Increasing loan losses is a bit worrying and something to watch, but coverage ratio remains reasonably high. Norway has become the largest market for Nordax, so a worsening situation here could become a challenge in the future. However, we expect Nordax credit models to show their robustness like they did in 2008-09.

Credit negative

Hemsö

Hemsö reported solid results, with a rental increase of 1.4% q/q but a decrease of 4% y/y due to divestments. Leverage was unchanged while margins remained healthy. The replacement of the shareholder loan with common equity changes the characteristics of the cash flow, with stronger operating cash flow but overall neutral cash flow effects. The property portfolio contributed with positive revaluation effects, while financial derivatives burdened the result in the quarter. Available and undrawn credit facilities remain very strong. We consider Hemö’s bonds to trade in line with other A-rated real estate names.

Credit neutral

Volvo and Scania

Volvo (MW) and Scania (MW): Scania out with an update on new truck orders. Demand remained strong in Europe while emerging markets is still exhibiting weakness, especially Russia and Brazil. Overall, the bullish wording regarding Europe should be a positive readthrough to Volvo, which has the majority of its exposure to Europe.

Credit positive

Avinor

Avinor (MW): According to a government website, Norway will not increase airport fees for 2016 - which is in-line with expectations. Over the past five years, the main driver of revenues has clearly been sales and rental income, whereas passenger charges, takeoff charges have only contributed on a minor scale. We continue to believe that the Norwegian government - which owns 100% of Avinor through the Ministry of Transport - will be a very strong supporter of Avinor. Also note that outstanding bonds are subject to a change of control that is triggered if there are any changes to the government’s 100% ownership of Avinor. We consider the news credit neutral and maintain our MW on Avinor.

Credit neutral

29



Tele2

Tele2 reported a strong set of Q3 15 numbers that beat consensus estimates. Revenues increased by 3% y/y and EBITDA was down slightly y/y primarily due to the Dutch operations. Credit metrics remained more or less unchanged from last quarter and we maintain our BBB credit rating on Tele2; however, we expect the credit metrics to slightly worsen in 2016 due to ongoing investments in the Netherlands.

Credit positive

Husqvarna

Husqvarna presented a stable report operationally with increased operating margins and good cash flow. Credit metrics continued to strengthen in the seasonally weak third quarter. According to the company, realistically it will no longer be able to reach the target of a 10% EBIT margin in 2016 due to unfavourable FX hedges. We retain our BBB- rating with positive outlook. We could raise this if the margin recovery is sustainable and increases towards the 10% area, cash flow remains.

Credit negative

Atlas Copco

Atlas Copco (UW) Q3 15 overall inline with expectations - demand seen to remain at current level. Due to poor SKF report and the fact that Atlas generates close to 25% of EBIT in the Mining industry - the market had feared worse, so this report is a relief. Operating profit of SEK.5.3bn was record high and in-line with consensus - up 28% y/y. Reported net debt to EBITDA declined to 0.7x in Q3 15 from 0.8x Q2 15. Overall, a credit neutral report but due to low expectations the market reaction could be positive. We maintain our UW recommendation due to the tight pricing of the bonds. Although Atlas has proven its very high quality over many industrial cycles, we believe valuation is rich at current levels. Due to higher shareholder focus we do not expect rating agencies to change the current "A" rating near-mid term. Furthermore, the end-market weakness is creating uncertainty going into 2016.

Credit neutral

TVO

TVO delivered a Q3 15 report with no major news. It demonstrated an impressive performance with load factors clearly in excess of 90% on its OL1 and OL2 reactors and with no outages, which we find comforting from a credit perspective. Group revenues were slightly down due to lower power production on the Meri-Pori coal station. Subsequently, Group revenues fell 7% y/y. TVO’s earnings are irrelevant, though, as it is a not-for-profit company with its fixed costs TVO did not offer any news on the ongoing arbitration with Areva/Siemens about a damages payment for the delayed OL3 reactor. Overall, it was a credit neutral result and we maintain our Overweight recommendation. A downgrade to High Yield is not our core scenario and as such we think that bonds trade at cheap levels.

Credit neutral

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Credit Indicators

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Chart pack: euro spreads and returns Euro IG ASW, iBoxx indices

Source: Macrobond Financial, Danske Bank Markets [all charts]

Euro HY ASW, Merrill Lynch indices

IG total return, iBoxx indices, 2014-01=100

HY total return, Merrill Lynch indices, 2014-01=100

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Chart pack: relative value iTraxx vs iBoxx

Source: Bloomberg, Macrobond Financial, Danske Bank Markets [all charts]

Euro vs US CDS indices - IG (Markit)

EUR CDS spreads – Nordic banks

Euro vs US HY bond indices (Merrill Lynch)

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Chart pack: general market development European swap and government yields

Source: Macrobond Financial , Danske Bank Markets [all charts]

Euro swap curve spread

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Source: Bloomberg, Danske Bank Markets [all charts]

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Chart pack: fund flows Europe, net sales


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Chart pack: macro GDP y/y growth, calendar adjusted


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Coverage universe, credit ratings

and recommendations

38

Our coverage and shadow ratings 1 of 5

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 OutlookAhlstrom Oyj BB- Stable M. Rosendal / J. MagnussenAkelius Residential Property Ab BBB- Stable E. Hjalmarsson / L. LandemanAmbu A/S BBB- Stable J. Magnussen / M. RosendalAp Moeller - Maersk A/S BBB+ Stable Baa1 Pos B. Børsting/J. Magnussen MARKETWEIGHTArla Foods Amba BBB Stable M. Rosendal / B. BørstingAtlas Copco Ab A Stable A2 Stable M. Rosendal / E. Hjalmarsson UNDERWEIGHTAvinor As AA- Stable A1 Stable O. Heldal/B. Børsting MARKETWEIGHTBank 1 Oslo Akershus As BBB+ Stable L. Holm / K. JensenBank Norwegian As BBB Stable L. Holm / K. JensenBeerenberg Holdco Ii As B Stable Ø. MossigeBillerudkorsnas Ab BBB- Stable M. Rosendal / L. LandemanBw Offshore BB+ Stable Ø. MossigeCargotec Oyj BBB- Stable M. Rosendal / E. HjalmarssonCarlsberg Breweries A/S Baa2 Neg BBB Stable B. Børsting / M. Rosendal MARKETWEIGHTCermaq Asa BB Stable K. BakkenCitycon Oyj BBB Stable Baa2 Stable E. Hjalmarsson / L. Landeman OVERWEIGHTColor Group As BB- Stable B+ N. Ripa / B. BørstingCom Hem Holding Ab BB- Pos O. Heldal / L. LandemanCorem Property Group Ab BB- Stable B+ E. Hjalmarsson / L. LandemanDanfoss A/S BBB Stable J. Magnussen / B. BørstingDanske Bank A/S A Stable A2 Stable A StableDeep Sea Supply B- Neg I. Båtvik / Ø. MossigeDfds A/S BBB- Stable N. Ripa / B. BørstingDlg Finance As BB- Stable M. Rosendal / B. BørstingDna Ltd BBB- Stable O. Heldal / L. LandemanDnb Bank Asa A+ Neg Aa3 Stable L. Holm / K. Jensen UNDERWEIGHTDof Asa B+ Neg I. Båtvik/Ø. MossigeDof Subsea B+ Neg I. Båtvik/Ø. MossigeDolphin Geophysical I. BåtvikDong Energy A/S BBB+ Stable Baa1 Stable BBB+ Stable J. Magnussen / L. Landeman MARKETWEIGHTDsv A/S BBB Stable B. Børsting / M. RosendalEg Holding B Stable J. Magnussen / N. Ripa

Recomm.Danske Bank S&P Moody's Fitch

39



Analyst(s)

Company Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating OutlookEidesvik B Neg I. Båtvik / Ø. MossigeEika Boligkreditt As A- Stable L. Holm / K. JensenEika Gruppen As BBB Stable L. Holm / K. JensenEksportfinans Asa BBB- Pos Ba3 Stable L. Holm / K. JensenElectrolux Ab BBB Stable Wr WD B. Børsting / M. Rosendal MARKETWEIGHTElenia Oy J. Magnussen / L. Landeman OVERWEIGHTElisa Oyj BBB+ Stable Baa2 Stable O. Heldal / L. Landeman OVERWEIGHTEntra Eiendom As A- Stable O. Heldal / L. LandemanFarstad Shipping Asa BB Neg BB- I. Båtvik / Ø. MossigeFastpartner Ab BB Stable BB- L. Landeman / E. HjalmarssonFingrid Oyj A+ Stable A1 Stable A+ Stable J. Magnussen / L. Landeman MARKETWEIGHTFinnair Oyj BB Stable B. Børsting / M. RosendalFortum Oyj BBB+ Stable Baa1 Stable A- Neg J. Magnussen / L. Landeman UNDERWEIGHTFortum Varme Holding Samagt Med Stockholms Stad Ab BBB+ Stable J. Magnussen / L. LandemanFred Olsen Energy Asa BB- Stable B+ S. Stormyr / B.K. RøedG4S Plc BBB- Stable B. Børsting / M. Rosendal MARKETWEIGHTGetinge Ab BB+ Neg L. Landeman / E. HjalmarssonGolar Lng Partners Lp BB Stable BB- B.K. Røed / J. MeyerGolden Close Maritime Corp Ltd B- S. Stormyr / B.K. RøedHavila CCC+ Neg I. Båtvik / Ø. MossigeHeimstaden Ab BB Stable BB- L. Landeman / E. HjalmarssonHemso Fastighets Ab A- Stable E. Hjalmarsson / L. LandemanHkscan Oyj BB Stable B. Børsting / M. Rosendal MARKETWEIGHTHoegh Lng Holdings Ltd BB- Stable B+ B.K. Røed / J. MeyerHoist Kredit Ab BB- Stable B+ G. Bergin / L. LandemanHusqvarna Ab BBB- Pos E. Hjalmarsson / L. LandemanIkano Bank Ab BBB Stable L. Holm / K. JensenInvestor Ab AA- Stable A1 Stable B. Børsting / M. Rosendal OVERWEIGHTIss A/S BBB- Pos B. Børsting / M. Rosendal OVERWEIGHTJ Lauritzen A/S B Stable B- B.K. Røed / J. MeyerJernhusen Ab A- Stable E. Hjalmarsson / L. LandemanJyske Bank A/S A- Stable Baa1U Stable L. Holm / K. Jensen OVERWEIGHTKemira Oyj BBB- Stable Wr M. Rosendal / L. Landeman OVERWEIGHT


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Our coverage and shadow ratings 3 of 5 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 OutlookKesko Oyj BBB Stable M. Rosendal / E. HjalmarssonKlaveness Ship Holding As BB- Stable B+ B.K. Røed / J. MeyerLoomis Ab BBB- Stable B. Børsting / M. RosendalLuossavaara-Kiirunavaara Ab BBB+ Neg L. Landeman / E. HjalmarssonMeda Ab BB- Stable L. Landeman / E. HjalmarssonMetsa Board Oyj BB Stable Ba2 Stable M. Rosendal / E. Hjalmarsson OVERWEIGHTMetso Oyj BBB Stable Baa2 Stable M. Rosendal / L. Landeman MARKETWEIGHTNcc Ab BBB- Stable E. Hjalmarsson / L. LandemanNeste Oyj BBB- Stable J. Magnussen / L. Landeman OVERWEIGHTNibe Industrier Ab BBB- Stable E. Hjalmarsson / L. LandemanNokia Oyj BB+ Pos Ba2 Stable BB Pos O. Heldal / L. Landeman MARKETWEIGHTNokian Renkaat Oyj BBB+ Stable J. Magnussen / M. RosendalNordax Bank Ab BBB- Stable L. Holm / K. JensenNordea Bank Ab AA- Neg Aa3 Stable AA- Stable L. Holm / K. Jensen UNDERWEIGHTNorth Atlantic Drilling Ltd B+ Neg B S. Stormyr / B.K. RøedNorwegian Air Shuttle Asa BB- Neg B+ B. Børsting / M. RosendalNorwegian Property Asa BBB- Stable O. Heldal / L. LandemanNykredit Bank A/S A Neg Baa3U Stable A Stable L. Holm / K. Jensen OVERWEIGHTNynas Group B+ Stable B+ J. Magnussen / L. LandemanOcean Rig Udw Inc B- Stable Caa3 Neg S. Stormyr / B.K. RøedOcean Yield Asa BB BB- Ø. MossigeOdfjell Se B+ Stable B B.K. Røed / J. MeyerOlav Thon Eiendomsselskap Asa BBB+ Stable O. Heldal / L. LandemanOlympic Ship As B+ Stable B I. Båtvik/Ø. MossigeOrava Residential Reit Plc B+ Stable B+ M. Rosendal / L. LandemanOrkla Asa BBB+ Pos O. Heldal / L. LandemanOutokumpu Oyj B Neg M. Rosendal / E. HjalmarssonPacific Drilling Sa B Neg Caa2 Neg S. Stormyr / B.K. RøedPetroleum Geo Services B+ Neg B1 Neg I. BåtvikPohjola Bank Oyj AA- Neg Aa3 Stable A+ Stable L. Holm / K. Jensen MARKETWEIGHTPosten Norge As A- Stable O. Heldal / L. LandemanPostnord Ab BBB+ Stable G. Bergin / L. Landeman


41

Our coverage and shadow ratings 4 of 5 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 OutlookProsafe Se BB Stable BB- S. Stormyr / B.K. RøedRamirent Oyj BB+ Stable B. Børsting / M. RosendalRem Offshore B- Neg I. Båtvik / Ø. MossigeSandnes Sparebank BBB+ Stable L. Holm / K. JensenSandvik Ab BBB Neg M. Rosendal / E. Hjalmarsson MARKETWEIGHTSas Ab B- Stable Wr Stable B. Børsting / M. RosendalSbab Bank Ab A Neg A2 Stable L. Holm / K. Jensen MARKETWEIGHTScania Ab A- M. Rosendal / B. Børsting UNDERWEIGHTSchibsted Asa BBB Stable O. Heldal / L. LandemanSeadrill Ltd BB- Stable B+ S. Stormyr / B.K. RøedSecuritas Ab BBB Pos Wr B. Børsting / M. Rosendal MARKETWEIGHTSiem Offshore B- Neg I. Båtvik / Ø. MossigeSkandinaviska Enskilda Banken Ab A+ Neg Aa3 Stable A+ Pos L. Holm / K. Jensen OVERWEIGHTSkanska Ab BBB+ Stable E. Hjalmarsson / L. LandemanSkf Ab BBB Stable Baa1 Neg M. Rosendal / E. Hjalmarsson UNDERWEIGHTSognekraft As BBB Stable BBB J. Magnussen / L. LandemanSolstad Offshore Asa BB- Stable B+ I. Båtvik / Ø. MossigeSpar Nord Bank A/S BBB+ Stable L. Holm / K. JensenSparebank 1 Boligkreditt As A- Stable L. Holm / K. JensenSparebank 1 Nord Norge A1 Stable A Stable L. Holm / K. Jensen UNDERWEIGHTSparebank 1 Smn A1 Stable A- Stable L. Holm / K. Jensen MARKETWEIGHTSparebank 1 Sr-Bank Asa A1 Stable A- Stable L. Holm / K. Jensen UNDERWEIGHTSponda Oyj BBB- Stable E. Hjalmarsson / L. LandemanSsab Ab BB- Stable M. Rosendal / L. Landeman UNDERWEIGHTSt1 Nordic Oy BB Stable J. Magnussen / L. LandemanStatkraft Sf A- Stable Aaa Stable J. Magnussen / L. Landeman OVERWEIGHTStatnett Sf A+ Stable Wr Stable J. Magnussen / L. Landeman MARKETWEIGHTStatoil Asa AA- Neg Aa2 Stable J. Magnussen / L. Landeman UNDERWEIGHTSteen & Strom As BBB+ Stable O. Heldal / L. LandemanStena Ab BB Stable B2 Stable N. Ripa / B. Børsting UNDERWEIGHTStockmann Oyj Abp B+ Stable M. Rosendal / L. LandemanStolt-Nielsen Ltd BB+ Stable BB B.K. Røed / J. Meyer


42


Source: Standard & Poor's, Moody's, Fitch, Danske Bank Markets


Analyst(s)

Company Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating OutlookStora Enso Oyj BB Stable Ba2 Stable WD M. Rosendal / L. Landeman MARKETWEIGHTStorebrand Bank Asa BBB+ Stable BBB+ Neg Nr Stable L. Holm / K. JensenStorebrand Livsforsikring As BBB+ Stable Baa1 Stable L. Holm / K. JensenSunnfjord Energi As BBB- Stable BBB- J. Magnussen / L. LandemanSuomen Hypoteekkiyhdistys BBB Neg L. Holm / K. JensenSvensk Fastighetsfinansiering Ab BBB Stable Louis LandemanSvenska Cellulosa Ab Sca A- Stable Baa1 Stable M. Rosendal / B. Børsting MARKETWEIGHTSvenska Handelsbanken Ab AA- Neg Aa2 Stable AA- Stable L. Holm / K. Jensen MARKETWEIGHTSwedavia Ab A- Stable G. Bergin / L. LandemanSwedbank Ab A+ Stable Aa3 Stable A+ Pos L. Holm / K. Jensen MARKETWEIGHTSwedish Match Ab BBB Stable Baa2 Stable B. Børsting / M. Rosendal MARKETWEIGHTSydbank A/S Baa1 Stable L. Holm / K. Jensen OVERWEIGHTSaab Ab BBB+ Stable Wr E. Hjalmarsson / L. LandemanTallink Grupp As BB Stable BB- N. Ripa / J. MagnussenTdc A/S BBB Neg Baa3 Stable BBB Neg O. Heldal / L. Landeman MARKETWEIGHTTechnopolis Oyj BB+ Stable BB L. Landeman / E. HjalmarssonTeekay Lng Partners Lp BB Stable BB- Ø. MossigeTeekay Offshore Partners Lp BB- Stable B+ Ø. MossigeTele2 Ab BBB Stable O. Heldal / L. LandemanTelefonaktiebolaget Lm Ericsson BBB+ Stable Baa1 Stable BBB+ Stable O. Heldal / L. Landeman MARKETWEIGHTTelenor Asa A Stable A3 Stable O. Heldal / L. Landeman MARKETWEIGHTTeliasonera Ab A- Stable A3 Neg A- Stable O. Heldal / L. Landeman UNDERWEIGHTTeollisuuden Voima Oyj BBB- Neg Wr BBB Stable J. Magnussen / L. Landeman OVERWEIGHTThon Holding As BBB+ Stable O. Heldal / L. LandemanTine Sa BBB+ Stable O. Heldal / L. LandemanUpm-Kymmene Oyj BB+ Stable Ba1 Stable WD M. Rosendal / L. Landeman MARKET WEIGHTVasakronan Ab A- Stable E. Hjalmarsson / L. LandemanVattenfall Ab BBB+ Neg A3 Neg A- Neg J. Magnussen / L. Landeman UNDERWEIGHTVestas Wind Systems A/S BBB- N. Ripa / J. Magnussen OVERWEIGHTVictoria Park Ab BB- Stable B+ L. Landeman / E. HjalmarssonVolvo Ab BBB Stable Baa2 Stable BBB Stable M. Rosendal / B. Børsting MARKETWEIGHTWihlborgs Fastigheter Ab BB+ Stable BB L. Landeman / E. Hjalmarsson


43

Fixed Income Credit Research team Thomas Hovard, Chief Analyst Head of Credit Research +45 45 12 85 05 [email protected]

Louis Landeman, Senior Analyst TMT, Industrials +46 8 568 80524 [email protected]

Mads Rosendal, Analyst Industrials, Pulp & Paper +45 45 14 88 79 [email protected]

Jakob Magnussen, Senior Analyst Utilities, Energy +45 45 12 85 03 [email protected]

Knut-Ivar Bakken, Senior Analyst Fish Farming +47 85 40 70 74 [email protected]

Katrine Jensen, Analyst Financials +45 45 12 80 56 [email protected]

Brian Børsting, Senior Analyst Industrials +45 45 12 85 19 [email protected]

Lars Holm, Senior Analyst Financials +45 45 12 80 41 [email protected]

Gabriel Bergin, Analyst Strategy, Industrials +46 8 568 80602 [email protected]

Niklas Ripa, Senior Analyst High Yield, Industrials +45 45 12 80 47 [email protected]

Bjørn Kristian Røed, Senior Analyst Shipping +47 85 40 70 72 [email protected]

Iver Christian Båtvik, Analyst Shipping +47 95 97 74 45 [email protected]

Ola Heldal, Senior Analyst TMT +47 85 40 84 33 [email protected]

Sondre Dale Stormyr, Senior Analyst Offshore Rigs +47 85 40 70 70 [email protected]

Henrik René Andresen, Senior Analyst Credit Portfolios +45 45 13 33 27 [email protected]

Øyvind Mossige, Senior Analyst Oil Services +47 85 40 54 91 [email protected]

Emil Hjalmarsson, Analyst Real Estate, Construction +46 8 568 80634 [email protected]

Haseeb Syed High Yield, Norway +47 85 40 54 19 [email protected]






















44

Disclosures This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S ('Danske Bank'). The authors of this research report are Mads Rosendal, Senior Analyst, and Katrine Jensen, Analyst.

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Each research analyst responsible for the content of this research report certifies that the views expressed in the research report accurately reflect the research analyst's personal view about the financial instruments and issuers covered by the research report. Each responsible research analyst further certifies that no part of the compensation of the research analyst was, is or will be, directly or indirectly, related to the specific recommendations expressed in the research report.

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