Bank and Capital MarketsNew Issue Review
23 Mar 2015 – 27 Mar 2015
Capital & Debt Advisory
Market Leading Independent Debt AdvisoryBank Market | Public Bonds | Private Placements | Ratings | Hedging | Retail Bonds
ContentsSection 1 Market backdrop 2
Section 2 Bank loan market 3
Section 3 USD public bond market 7
Section 4 GBP public bond market 9
Section 6 EUR public bond market 11
ContactsUnited KingdomLuke ReeveTel: +44 20 7951 6548Email: [email protected]
Chris LoweTel: +44 20 7951 0826Email: [email protected]
Gary DavisonTel: +44 161 333 2767Email: [email protected]
EuropeOlivier CatonnetTel: +33 1 5561 0535Email: [email protected]
Jonathan H.M. HarfieldTel: +420 731 627 155Email: [email protected]
Britta BeckerTel: +49 40 36132 20781Email: [email protected]
AsiaGaurav AhujaTel: +65 6309 8276Email: [email protected]
US & CanadaK.C. BrechnitzTel: +1 704 335 4211Email: [email protected]
Tony IanniTel: +1 416 943 3476Email: [email protected]
AustraliaSebastian PaphitisTel: +61 2 9248 4773Email: [email protected]
Jason LoweTel: +61 3 8650 7600Email: [email protected]
Section 7 Private Placement market 13
Section 8 Ratings Update 16
@EY_UKI
Section 9 Glossary 15
Section 5 ORB Retail Bond Market 10
EY Capital and Debt Advisory - New Issue Review 2
Market backdropPolicy hopes lift global equities indices► The euro has bounced after reaching a low of 1.0458 to the dollar earlier this month, lifted in part by
commentary from the US central bank that indicated its pace of monetary tightening would be slowerthan initially thought. US inflationary pressures are unlikely to rise enough to justify lifting interest ratesin June according to a key member of the US Federal Reserve, adding to hopes that the central bank willdefer its first rate rise since 2006 until at least autumn. The diverging monetary policies between theFederal Reserve and the European Central bank — which has unleashed a €60 billion a month bondbuying programme — have prompted a number of currency strategists to call for the euro-dollar pair togo to parity later this year or early in 2016.
► British consumer prices were unchanged in the year to February 2015, the level not seen sincecomparable records started in 1989. The main contributions to the slowdown came from food, fuel,furniture & furnishings and a range of recreational goods.
► The US economy slowed further in the early months of 2015, partly because of freezing weather in thenortheast but also as a result of the strengthening dollar, which has weighted on exports. The growth forthe final quarter 2014, of 2.2%, is set to remain for the first quarter 2015.
► Brazil’s economy eked out growth in the final quarter of last year, but the data did little to relieveconcerns that the country faces its worst recession in a quarter of a century. Gross domestic productgrew 0.3% in the final quarter of 2014, compared with the previous three months. However, a decline ininvestment to 19.7% of GDP last year appeared to confirm analysts’ fears that Brazil’s consumption-ledgrowth model has been exhausted.
► Greece's creditors, EU officials, the International Monetary Fund and the European Central Bank arestudying new reform plans put forward by Prime Minister Alexis Tsipras' government in a bid to securefurther bailout funds. Greece, which submitted the proposals on Friday night, says the plans will raise €3billion (£2.2 billion; $3.3 billion) in state revenues for the cash-strapped country. International creditorshave suggested they are ready to extend help on Greece's €240 billion (£176 billion; $272 billion)bailout until the end of June. A response is expected in the coming week.
► The FTSE 100 ends Friday lower, falling 0.58% or 40 points to finish at 6,855. This went against thetrend of European markets, with both Frankfurt's Dax 30 index and Paris's Cac 40 ending the day higher.The FTSE Eurofirst 300 rose 0.2% to 1,577 and the S&P 500 added 0.2% to 2,061, pushing it back intopositive territory after a sharp fall earlier in the week.
Section 1: Market backdrop
Tenor 3yr 5yr 7yr 10yr 30yr
UK swap rate 1.06 1.31 1.49 1.63 1.94
Gilt rate 0.78 1.17 1.39 1.54 2.29
Tenor 3yr 5yr 7yr 10yr 30yr
US swap rate 1.15 1.58 1.83 2.05 2.38
UST rate 0.93 1.44 1.76 1.96 2.54
Source: Bloomberg Source: Bloomberg
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Yie
ld(%
)
10-year Benchmark yields
10yr UST 10yr Gilt 10yr Bund
0.0
1.0
2.0
3.0
4.0
2015 2017 2019 2021 2023 2025
Rat
e(%
)
3 month UK LIBOR forward rates
Current forward 3m UK LIBOR (-1 wk) fwd 3m UK LIBOR
2yr3yr
4yr5yr
7yr
10yr
0
1
2
3
4
5
6
Rat
e(b
ps)
Weekly change in UK SWAP
Source: Bloomberg Source: Bloomberg
Bank loan market
EY Capital and Debt Advisory - New Issue Review 3
Section 2: EUR/GBP bank loan market
Source: Loan Connector Source: Loan Connector
EUR / GBP completed transactions greater than US$250m
Issuedate Issuer
Trancherating(M, S&P)
Form Ccy Amount Maturity Margin(+bps) Sector Ctry Leads
25-Mar E.ON NR, NR RCF EUR 80 2020 - Power & Utilities DE Various
25-Mar E.ON NR, NR TL EUR 1,020 2020 - Power & Utilities DE Various
25-Mar Hutchison 3G NR, NR OTH GBP 6,000 2017 - Telecommunications UK HSBC
25-Mar Nordsee One NR, NR OTH EUR 180 - - Power & Utilities DE -
25-Mar Nordsee One NR, NR OTH EUR 180 - - Power & Utilities DE -
► Hutchison Whampoa has signed a facility agreement with HSBC for a £6 billion bridge loan to back itsacquisition of O2 UK, which will create Britain’s largest mobile network after agreeing a £10.3 billiondeal to acquire O2 in the UK from Spain’s Telefónica. The loan is committed, with funds being availablefor 24 months from signing, to finance the acquisition. Under the terms of the acquisition, Hutchinsonwill make an initial payment of £9.25 billion on completion of the deal, with up to £1 billion of deferredupside interest-sharing payments. However, those will only be paid once the cumulative free cash flow ofthe new entity has reached £1.85 billion. Moody’s and Standard & Poor’s said the merger was not likelyto affect Hutchison’s ratings.
► Foncia, a French property management firm, has allocated its €270 million add-on to acquisition loansafter tightening pricing on the deal. Pricing finished at 425bsp over Euribor on the deal’s €190 millionsix year term loan B, a 25bps tightening from initial guidance. Foncia inserted six month soft call 101protection on the loan. Generally investors have been increasing demand for soft call protection on theirloans as they anticipate increasing refinancing activity. The borrower is adding proceeds to €597 millionof acquisition debt raised for its acquisition by Bridgepoint in 2011, which includes a €112 million add-on Foncia made to the initial €485 million loan in 2013.
► Ista completed a reprice of its €1.3 billion TLB due 2020, cutting margins by 25bps to E+325 Themargin has already been previously cut by 50bps since the original syndication in May 2013.
0
20
40
60
80
100
120
Mar
gin
(bps
)
European pricing grid - multiyear drawn
AA A BBB
0
50
100
150
200
250
0
50
100
150
200
250
300
350
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
Num
ber
ofde
als
Vol
ume
(US$
bn)
Western Europe Loan Volumes
Lev - Vol. ($Bils.) IG - Vol. ($Bils.)Lev - No. of Deals IG - No. of Deals
Bank loan market
EY Capital and Debt Advisory - New Issue Review 4
Section 2: USD Bank loan market
EUR/GBP completed transactions greater than US$250m
Issuedate Issuer
Trancherating (M,S&P)
Form Ccy Amount Maturity Margin(+bps) Sector Ctry Leads
25-Mar Nordsee One NR, NR TL EUR 840 2027 E+275 Power & Utilities DE Various
24-Mar Eurogrid NR, NR RCF EUR 750 2020 - Power & Utilities PR Various
24-Mar Foncia NR, NR OTH EUR 80 - E+450 Real Estate FR CA, NAT
24-Mar Foncia NR, NR TL EUR 190 2021 E+450 Real Estate FR CA, NAT
24-Mar G4S NR, NR RCF GBP 1,000 2020 L+130 Business Services UK Various
24-Mar Ista International NR, NR TL EUR 1,300 2020 E+325 Industrial DE DB
23-Mar Home Retail Group NR, NR RCF GBP 250 2019 - Consumer Products UK Various
23-Mar Iberdrola NR, NR TL EUR 900 2019 - Power & Utilities ES Various
23-Mar Optimal Payments NR, NR RCF EUR 85 2020 E+275 Business Services UK Bom, BAR, DB
23-Mar Optimal Payments NR, NR TL EUR 500 2020 E+275 Business Services UK Bom, BAR, DB
Bank loan market
EY Capital and Debt Advisory - New Issue Review 5
Section 2: USD Bank loan market
USD completed transactions greater than US$250m
Issuedate Issuer
Trancherating (M,S&P)
Form Ccy Amount Maturity Margin(+bps) Sector Ctry Leads
29-Mar Cliffs Natural NR, NR RCF USD 550 2020 L+200 Mining & Metals US Various
27-Mar Boston Scientific NR, NR TL USD 600 2020 - Life Sciences US JPM
27-Mar China Resources Power NR, NR TL USD 200 2020 - Power & Utilities HK Various
27-Mar Hersha Hospitality NR, NR RCF USD 250 2020 L+175 Real Estate US Citi, Wells
27-Mar UGI Utilities NR, NR RCF USD 300 2020 L+88 Power & Utilities US PNC, RBS
26-Mar COLFIN COBALT NR, NR TL USD 1,133 2016 - Mining & Metals US GE
27-Mar United Parcel NR, NR RCF USD 3,000 2020 - Transport US Various
27-Mar United Parcel NR, NR RCF USD 1,500 2016 N/A Transport US Various
26-Mar Douglas Emmett NR, NR TL USD 350 2022 L+140 Real Estate US PNC
26-Mar Harman International NR, NR RCF USD 1,000 2020 L+138 Media & Entertainment US Various
26-Mar Harsco NR, NR RCF USD 525 2019 L+200 Industrial US Citi, RBS
26-Mar Hasbro NR, NR RCF USD 700 2020 L+112 Media & Entertainment US Various
26-Mar Ichikoh NR, NR TL USD 15 2022 - Automotive JP MIZ
26-Mar ICRE REIT NR, NR RCF USD 400 2017 L+110 Real Estate US Wells
26-Mar Mohawk NR, NR RCF USD 1,800 2020 L+125 Consumer Products US Various
26-Mar Monsanto NR, NR RCF USD 3,000 2020 L+91 Chemicals US Various
26-Mar Rockwell Automation NR, NR RCF USD 1,000 2020 L+88 Industrial US BAML, GS, JPM
26-Mar Wyndham Worldwide NR, BBB- RCF USD 1,500 2020 L+130 Hospitality & Leisure US BAML, JPM, SunTrust
25-Mar Bombardier NR, NR RCF USD 750 2018 - Transport CA Various
25-Mar Bombardier NR, NR OTH USD 600 2018 - Transport CA Various
25-Mar Covanta Energy NR, NR RCF USD 1,000 2020 L+200 Oil & Gas US Various
25-Mar Covanta Energy NR, NR TL USD 250 2020 L+200 Oil & Gas US Various
25-Mar HC Group NR, NR RCF USD 80 - - Oil & Gas US Various
25-Mar HC Group B2, B TL USD 415 2022 L+500 Oil & Gas US Various
25-Mar Orchid Alliance NR, NR RCF USD 7,126 2016 - Consumer Products JP BOTM, MIZ, SUM
25-Mar Orchid Alliance NR, NR RCF USD 3,912 2016 - Consumer Products JP MIZ
25-Mar Orchid Alliance NR, NR RCF USD 800 2016 - Consumer Products JP MIZ
25-Mar Public Storage NR, NR RCF USD 500 2020 L+85 Real Estate US BAML, Wells
Bank loan market
EY Capital and Debt Advisory - New Issue Review 6
Section 2: USD Bank loan market
USD completed transactions greater than US$250m
Issuedate Issuer
Trancherating (M,S&P)
Form Ccy Amount Maturity Margin(+bps) Sector Ctry Leads
25-Mar Teradata NR, NR RCF USD 400 2020 L+125 Technology US BAML, JPM
25-Mar Teradata NR, NR TL USD 600 2020 L+125 Technology US BAML, JPM
24-Mar C&J Energy NR, NR RCF USD 600 2020 L+250 Oil & Gas US Various
24-Mar C&J Energy Ba3, NR TL USD 485 2022 L+625 Oil & Gas US Various
24-Mar C&J Energy Ba3, NR TL USD 575 2020 L+550 Oil & Gas US Various
24-Mar C&J Energy NR, NR OTH USD 600 2016 - Oil & Gas US Various
24-Mar Coty NR, NR TL USD 600 2018 L+162 Chemicals US Various
24-Mar Coyote Logistics NR, NR RCF USD 100 2020 - Transport US GS, Wells
24-Mar Coyote Logistics B2, B- TL USD 360 2022 L+525 Transport US GS, Wells
24-Mar Dow Chemical Baa2, NR RCF USD 5,000 2020 L+125 Chemicals US Citi, HSBC
24-Mar Molex NR, NR RCF USD 1,500 2020 L+125 Consumer Products US Various
24-Mar NXP NR, NR RCF USD 500 2020 L+200 Technology NL CS
24-Mar NXP NR, NR TL USD 3,250 2022 L+300 Technology NL CS
24-Mar NXP NR, NR TL USD 3,250 2020 L+300 Technology NL CS
24-Mar Raizen Cayman NR, NR RCF USD 250 2020 L+120 Consumer Products BR Various
24-Mar Raizen Cayman NR, NR TL USD 450 2020 L+120 Consumer Products BR Various
24-Mar World Wide Technology NR, NR RCF USD 1,000 2019 L+175 Business Services US Various
23-Mar China Gas NR, NR TL USD 64 2022 L+235 Power & Utilities HK IFC
23-Mar China Gas NR, NR TL USD 86 2022 L+235 Power & Utilities HK IFC
23-Mar China Gas NR, NR TL USD 150 2020 L+210 Power & Utilities HK IFC, RBS
23-Mar Concordia NR, NR OTH USD 1,600 - - Life Sciences CA RBC
23-Mar FREIF North American NR, NR RCF USD 15 2019 L+375 Power & Utilities US Citi, DB
23-Mar FREIF North American NR, NR TL USD 45 2022 L+375 Power & Utilities US Citi, DB, Macquaire
23-Mar FREIF North American NR, NR TL USD 250 2022 L+375 Power & Utilities US Citi, DB, Macquaire
23-Mar Tenet Healthcare NR, NR TL USD 400 2016 L+350 Life Sciences US BAR
USD public bond market
EY Capital and Debt Advisory - New Issue Review 7
► Q1 2015 is set to go down as the second busiest quarter for US corporate dollar issuance in history,with M&A activity being the main driver of this statistic. The glut of M&A supply during the quarter,where M&A related US bond financings totalling US$56 billion were announced, helped to pick up theslack in the primary market as the rate of corporate refinancings began to slow down. M&A relatedfinancings accounted for 27% of all corporate high grade issuance during the quarter, up from 7% in Q12014.
► BOC Aviation (NR, NR A-) tapped the market during the week with a 5-year US$750 million bond. Theaircraft leasing company was well received by investors who were comfortable with the credit given thefact that its part of the Bank of China group. The spread on the notes tightened to 170bps overTreasuries from 190bps and the notes pay a coupon of 3.00%.
► In the cross border space, Schaeffler (Ba2, BB-, NR), announced a €1.5 billion three-part cross boarderoffering of secured notes during the week, with the US dollar tranche consisting of a US$600 million 8-year bond. The proceeds of the issuance will primarily be used to refinance the company’s existing euroand dollar –denominated notes due in 2017.
Domestic
Section 3: USD public bond market
Source: Reuters Source: Reuters
Issuedate Issuer Tranche rating
(M,S&P,F) Form Amount(US$m) Coupon Maturity Spread
(T+bps) Sector Ctry Leads
25-Mar Outfront Media B1, NR, NR SN 100 5.625% 2024 +324 Media & Entertainment US BAML, MS
25-Mar Cliffs Natural Ba2, BB-, NR SSN 540 8.250% 2020 +865 Metals & Mining US Various
25-Mar CONSOL Energy B1, BB, NR SN 500 8.000% 2023 +643 Metals & Mining US Various
24-Mar Whiting Petroleum Ba2, BB, NR SN 750 6.250% 2023 +451 Power & Utilities US Various
24-Mar Townsquare Media B3, B-, NR SN 300 6.500% 2023 +477 Media & Entertainment US Various
24-Mar VeriSign Ba1, BB+, NR SN 500 5.250% 2025 +337 Media & Technology US JPM
24-Mar Calumet Specialty B2, B+, NR SN 325 7.750% 2023 +612 Power & Utilities US Various
23-Mar Kimco Realty Baa1, BBB+, NR SN 350 4.250% 2045 +180 Real Estate US Various
23-Mar Southwestern Electric Baa2, BBB, NR SN 400 3.900% 2045 +145 Power & Utilities US Various
23-Mar Rice Energy B3, B-, NR SN 400 7.250% 2023 +561 Power & Utilities US Various
23-Mar National Grid NorthAmerica Baa1, NR, NR SN 300 2.375% 2020 +85 Power & Utilities US CS, RBC
0
50
100
150
200
Spre
ad(b
ps)
USD secondary public bond spread 10-year
Avg. AA USD 10yr spreads Avg. A USD 10yr spreads
Avg. BBB USD 10yr spreads
0
20
40
60
80
100
0
10
20
30
40
50
60
Num
ber
issu
ed
Vol
ume
(US$
bn)
Monthy US$ bond volumes
Domestic volume (US$) Cross-border volume (US$)Cross-border number issued Domestic number issued
USD public bond market
EY Capital and Debt Advisory - New Issue Review 8
Section 3: USD public bond market
Issuedate Issuer Tranche rating
(M,S&P,F) Form Amount(US$m)
Coupon Maturity Spread(T+bps) Sector Ctry Leads
27-Mar Schaeffler Ba2, BB-, NR SSN 600 4.750% 2023 +289 Industrials NL Various
25-Mar Genel Energy NR, NR, NR SN 230 7.500% 2019 - Oil & Gas UK Pareto Fonds
23-Mar BOC Aviation NR, NR, A- SN 750 3.000% 2020 +170 Industrials SG Various
23-Mar Potash Corp A3, A-, NR SN 500 3.000% 2025 +115 Chemicals CA Various
Cross border
GBP public bond market
EY Capital and Debt Advisory - New Issue Review 9
Section 4: GBP public bond market
Source: Reuters Source: Reuters
Domestic
Cross-border
► The main issuance in the GBP bond market during the week came from the AA Group (NR, BB-, NR)which tapped the domestic market with a 7-year £735 million secured notes offering. The proceeds willbe used to refinance the company’s existing £655 million secured notes due in 2019 and c. £209 millionof the group’s senior bank loan facility and also to put some cash on balance sheet.
Issuedate Issuer Tranche rating
(M,S&P,F) Form Amount(GBPm) Coupon Maturity Spread
(G+bps) Sector Ctry Leads
No significant issuance in this week
Issuedate Issuer Tranche rating
(M,S&P,F) Form Amount(GBPm)
Coupon Maturity Spread(T+bps) Sector Ctry Leads
27-Mar AA Group NR, BB-, NR SSN 735 5.500% 2022 - Business Services UK Various
25-Mar North Powergrid A3, A-, A SN 150 2.500% 2025 +112 Power & Utilities UK LTSB, RBS, SANT
011
223
344
5
0
0
0
1
1
1
1
1
2N
umbe
ris
sued
Vol
ume
(GBP
m)
Monthy GBP bond volumes
Volume (GBP) Number issued
0
50
100
150
200
Spre
ad(b
ps)
GBP secondary public bond spread 10-year
Avg. AA GBP 10yr spreads Avg. A GBP 10yr spreads
Avg. BBB GBP 10yr spreads
ORB retail bond market
EY Capital and Debt Advisory - New Issue Review 10
In the market
Recent Issues
Date Issuer Ratings (M,S&P,F) Form Amount(GBPm) Coupon Maturity Sector Country
Oct-14 Eros International NR, NR, NR SN 50 6.50% 2021 Media & Entertainment UK
Oct-14 A2D Funding NR, NR, NR SSN 150 4.50% 2026 Real Estate UK
Aug-14 Burford Capital NR, NR, NR SN 90 6.50% 2022 Finance UK
Jul-14 Golden Lane Charity NR, NR, NR SN 11 4.47% 2021 Real Estate UK
Jun-14 Ladbrokes NR, BB, BB SN 100 5.13% 2022 Leisure UK
Jan-14 Paragon NR, NR, NR SN 125 6.13% 2022 Finance UK
Dec-13 Premier Oil NR, NR, NR SN 150 5.00% 2020 Oil & Gas UK
Oct-13 A2Dominion NR, NR, AA- SN 150 4.75% 2022 Real Estate UK
Jul-13 Bruntwood NR, NR, NR SSN 50 6.00% 2020 Real Estate UK
Jun-13 Helical Bar NR, NR, NR SN 80 6.00% 2020 Real Estate UK
May-13 International PersonalFinance NR, NR, BB+ SN 70 6.13% 2020 Finance UK
Mar-13 Provident NR, NR, BBB SN 65 6.00% 2021 Finance UK
Mar-13 Paragon NR, NR, NR SN 60 6.00% 2020 Finance UK
Feb-13 EnQuest NR, NR, NR SN 145 5.50% 2022 Oil & Gas UK
Dec-12 Alpha Plus NR, NR, NR SSN 49 5.75% 2019 Education UK
Dec-12 UNITE NR, NR, NR SN 90 6.13% 2020 Real Estate UK
Section 5: ORB retail bond market
Date Issuer Ratings (M,S&P,F) Form Amount(GBPm) Coupon Maturity Sector Country
Oct-14 International PersonalFinance NR, NR, NR SN - 5.88% 2022 Finance UK
Mar-15 Intermediate CapitalGroup NR, BBB-, BBB- SN - 5.00% 2023 Finance UK
EUR public bond market
EY Capital and Debt Advisory - New Issue Review 11
► One of the stand out transactions in the investment grade space during the week came from the GermanIT company SAP (A2, NR,NR), which completed the long term financing for its acquisition of Concur, theUS expenses software firm via a €1.75 billion floating and fixed rate bond.
► The transaction comprised of €500 million 2-year notes, €650 million 5-year floating rate notes and a€600 million 10-year fixed rate tranche. The proceeds of the issuance will be used to repay part of a €7billion syndicated loan underwritten by Deutsche Bank in September which the company used to fund theUS$8.3 billion acquisition.
► Another significant investment grade deal came via the cross boarder €2 billion offering from the Israelicompany Teva Pharmaceuticals (A3, NR, BBB+), which represents it’s largest ever euro denominatedbond. The issuance comprised of a dual tranche €1.3 billion 8-year note and €700 million 12-year note.
► Though the company is headquartered in Israel, the bonds appealed to investment grade investorsrather than emerging market buyers. The deal also fits the current trend of US and global corporatesissuing in euros to take advantage of tight spreads and low absolute yields, with the majority of theborrowers also having euro funding needs.
Section 6: EUR public bond market
Source: Reuters Source: Reuters
DomesticIssuedate Issuer Tranche rating
(M,S&P,F) Form Amount(EURm) Coupon Maturity Spread
(MS+bps) Sector Ctry Leads
27-Mar Schaeffler Ba2, NR, NR SSN 400 2.500% 2020 +272 Industrial NL Various
27-Mar Schaeffler Ba2, NR, NR SSN 600 3.250% 2025 +316 Industrials NL Various
27-Mar UCB NR, NR, NR SN 350 1.875% 2022 MS+150 Life Sciences BE Various
25-Mar SAP A2, NR, NR SN 500 Float 2017 - Technolology DE Various
25-Mar SAP A2, NR, NR SN 600 1.000% 2025 MS+50 Technolology DE Various
25-Mar SAP NR, NR, NR SN 650 Float 2020 - Technolology DE Various
24-Mar Deutsche Annington NR, BBB+, NR SN 500 0.875% 2020 MS+75 Construction NL Various
24-Mar Deutsche Annington NR, BBB+, NR SN 500 1.500% 2025 MS+110 Construction NL Various
020406080
100120140160
Spre
ad(b
ps)
EUR secondary public bond spread 10-year
Avg. AA EUR 10yr spreads Avg. A EUR 10yr spreads
Avg. BBB EUR 10yr spreads
0
10
20
30
40
50
60
70
02
468
10121416
18
Num
ber
issu
ed
Vol
ume
(EU
Rm
)
Monthy EUR bond volumes
Volume (EUR) Number issued
EUR public bond market
EY Capital and Debt Advisory - New Issue Review 12
Section 6: EUR public bond market
Cross-border
Issuedate Issuer Tranche rating
(M,S&P,F) Form Amount(EURm) Coupon Maturity Spread
(MS+bps) Sector Ctry Leads
26-Mar Sky Baa2, BBB, NR SN 600 Float 2020 - Media & Entertainment UK BAR, SG
26-Mar TA Manufacturing BA2, BB+, NR SN 330 3.625% 2023 - Transport UK BAML, Wells
25-Mar Anglo American Baa2, NR, NR SN 600 1.500% 2020 MS+130 Metals & Mining UK Various
24-Mar Teva Pharmaceutical A3, NR, BBB+ SN 700 1.875% 2027 MS+125 Life Sciences US Various
24-Mar Teva Pharmaceutical A3, NR, BBB+ SN 1,300 1.250% 2023 MS+90 Life Sciences US Various
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Am
ount
(US$
b)
US Private Placement volumes
2011 2012 2013 2014 2015
Private Placement market
EY Capital and Debt Advisory - New Issue Review 13
► UNS Electric Inc and UNS Gas Inc tapped the market this week. The issuers, viewed as an NAIC-1 (A3),are subsidiaries of UNS Energy Corp, a holding company that provides electricity and natural gas tocustomers in Arizona. The deal was finalised in two pieces: $80 million of 12-year bullets, at+120bps/+125bps with August delay, and $5 million of 30-year bullets, at +140bps, no delay; UNS Gas$45 million of 30-year bullets, at +140bps/+145bps with an August delay.
► Rolls-Royce & Partners Finance Ltd was upped and priced this week. The issuer, viewed as an NAIC-1,provides short, medium and long-term spare engine leasing solutions with the largest world-wideportfolio of Rolls-Royce and International Aero Engine (IAE) engines. The deal was launched as $250million of senior secured notes in the 7-year to 15-year part of the curve. The transaction was done as$300 million in three pieces: $100 million of 7-year fixed rate notes at +90bps, with a 2.77% coupon;$100 million of 12-year floating rate notes at 6m +82bps and $100 million of 15-year floating ratenotes at 6m +87bps.
Section 7: US Private Placement market
Source: Private Placement Monitor Source: Bloomberg
Source: Private Placement Monitor Source: Private Placement Monitor
050
100150200250300350400450500
Spre
adto
US
Trea
sury
/bps
NAIC-1 US Private Placement spreads (bps)
10yr High 10yr Low
050
100150200250300350400450500
Spre
adto
US
Trea
sury
/bps
NAIC-2 US Private Placement spreads (bps)
10yr High 10yr Low
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Yie
ld(%
)
US Treasury benchmark yields
5yr UST 7yr UST 10yr UST 30yr UST
Date Issuer Ratings Form Amount(US$m) Coupon Maturity Spread
(T+bps) Sector Ctry
Mar-15 UNS Gas NAIC-1 (A3) SN 45 - 30yr - Power &Utilities US
Mar-15 UNS Electric NAIC-1 SN 130 12yr, 30yr - Power &Utilities US
Mar-15 Stericycle NAIC-1(A) SN 200
1002.67%2.74%
7yr8yr
+95+95
Power &Utilities US
Mar-15 National BasketballAssociation NAIC-1 (A-) SSN
133.8134.9229.2228.2
-
7yr10yr12yr13yr
+115+120+130+145
Hospitality &Leisure US
Mar-15 ITC Midwest NAIC-1(A1/A) - 225 3.83% 40yr +125 Power &
Utilities US
Mar-15 Kayne Anderson EnergyDevelopment - - - 3.37% 5yr - Power &
Utilities US
Mar-15 Eli Lilly NAIC-1 - 17 - 10yr - Manufacturing US
Private Placement market
EY Capital and Debt Advisory - New Issue Review 14
Section 7: US Private Placement market
Date Issuer Ratings Form Amount(US$m) Coupon Maturity Spread
(T+bps) Sector Ctry
Mar-15 RREEF America REIT II NAIC-1(A) SN 100 - 7yr, 10yr
and 12yr +140-150 Real Estate US
Mar-15 TETRA Technologies - SSN 50 - - - Technology US
Date Issuer Ratings Form Amount Coupon Maturity Spread(T+bps) Sector Ctry
Mar-15 SA Power NAIC-1 SSN 200 - 10yr, 12yr,15yr - Power &
Utilities AU
Mar-15 AMA SpA - - 30 - 5yr, 7yr - Agriculture IT
Mar-15 Electrocomponents NAIC-2(BBB) - 85 - 5-7yr +140 Technology UK
Mar-15 SA Power Networks NAIC-1 - 200 - 10yr, 12yr,15yr - Power &
Utilities AUS
Mar-15 CBH Group - - - - - - Logistics AUS
Domestic: In the market
Domestic: Issued
Cross Border: In the market
Private Placement market
EY Capital and Debt Advisory - New Issue Review 15
Section 7: US Private Placement market
Cross Border: Issued
Date Issuer Ratings Form Amount Coupon Maturity Spread(T+bps) Sector Ctry
Mar-15 ICG NAIC-2 -1574280
4.52%4.95%5.21%
5yr7yr
10yr
+310+320+325
Financial UK
Mar-15 Sikuki Nuuk Harbour NAIC-1 SN EUR 59 2.59% 21f/13avg MS+190(T+227 eqv.) Transport GL
Mar-15 WABCO NAIC-1(A) SN 500 -
7yr10yr12yr
+115+120+130
Automotive BE
Mar-15 Visy Packaging NAIC-2(BBB) SN 200 - 12yr +160 Manufacturing AU
Mar-15 Beni Stabili - SN EUR 125 2.13% 7yr - Real Estate IT
Mar-15 NSW Ports NAIC-2(BBB) SSN 300
3.44%3.44%4.86%
10yr12 yr15yr
+140150180
Infrastructure AU
Mar-15 YIT - - 100 6.25%. 5yr - Construction FI
Mar-15 Cofinimmo - - 150 1.93% 7yr - Real Estate BE
► E.ON (German power & utilitiescompany) downgraded to Baa1/stablefrom A3 by Moody’s
► DTEK Energy (Ukrainian energycompany) downgraded to Ca/negativefrom Caa3 by Moody’s
► Hyva Global B.V (Dutch industrialgroup) downgraded to B3/stable fromB2 by Moody’s
► Tullow (U.S. oil & gas company)downgraded to B1/negative from Ba3by Moody’s
Ratings UpdateNew and notable from Ratings Agencies
EY Capital and Debt Advisory - New Issue Review 16
The above list highlights ratings developments that we believe are interesting or noteworthy. This list is not exhaustive.
Section 8: Ratings Update
► Eden Acquisition 5’s Top Right (U.K.-based B2B information provider) gets S&P’s B and Moody’sB2 rating with stable outlook
► Hemsö Fastigheter AB (Swedish housing provider ) gets S&P A- rating with stable outlook► Santander UK Group Holdings Plc (Spanish bank U.K. holdco) gets Moody’s Baa2 rating with
positive outlook► Brenntag AG (German chemical distributor) gets Moody’s Baa3 rating with stable outlook
► Ukraine's sovereign rating downgradedto Ca/negative from Caa3 by Moody’s
► Greece's sovereign rating downgradedto CCC from B by Fitch
► Pendagron (U.K. auto retailer)upgraded to BB-/stable from B+ by S&Pand to Ba3/stable from B1 by Moody’s
► Shield Holdco (U.K. security softwarecompany) upgraded to B+/stable from Bby S&P
► DZ Bank (German bank) upgraded toAA-/stable from A+ by Fitch
Key
New ratings
Negative rating actions
23 March – 27 March 2015
Positive rating actions
Trends in financial markets and industry sectors
► Strong corporate bond issuance driven by low interest rates and led by Healthcare (Fitch)
► $30 billion corporate green bond issuance predicted in 2015, but challenges lie ahead (S&P)
► The proposed revised Basel Standardized Approach for credit risk for financial institutions mayadd complexity without improving standards (S&P)
► U.K. infrastructure is well hedged against temporary deflation through their use of contractualand synthetic hedging mechanisms (Fitch)
► Long-Term oil and gas price assumptions lowered on the expectation of a more muted recovery(S&P)
► Spain faces slow, uneven housing market recovery (Fitch)
► North American corporate credit quality worsens as companies pay out to shareholders(Moody’s)
► Many life insurers face losses and capital declines if interest rates stay low (Moody’s)
Asset-backed securitization ABS Not rated NR
Commercial mortgage-backed securitization CMBS Other loan OTH
Deep discount bond DDB Revolving credit facility RCF
Energy savings performance contract ESPC Senior note SN
First mortgage bonds FMB Senior secured note SSN
London interbank offered rate LIBOR Subordinated note SUB
Medium-term note MTN Term loan TL
ABN Amro ABN Jefferies & Co. JEF
Bank of America Merrill Lynch BAML JP Morgan JPM
BBVA Securities BBVA KBC Capital Markets KBC
Bank of Tokyo Mitsubishi UFJ BOTM Landesbank Baden-Wuerttemberg LBBW
Banco Santander SA SANT Lloyds Capital Services Ltd LCS
Bank of New York BNY Lloyds Banking Group LBG
Bank of Egypt BoE Banca March MAR
Bank of Nova Scotia BNS Mega International Commercial Bank Co Ltd MICBC
Bank of the West BoW Mitsubishi UFJ Financial MIS
Barclays Bank BAR Mizuho Financial Group Inc MIZ
BayernLB BLB Morgan Stanley MS
BMO Capital Markets BMO Natixis NAT
BNP Paribas Group BNP Norddeutsche Landesbank GZ NLB
Capital One Bank COB Nomura NOM
Calyon CAL PNC Capital Markets PNC
CIBC World Markets CIBC Rabobank RAB
Citi Citi RBC Capital Markets RBC
Commonwealth Bank of Australia CBA Raiffeisen Bank International RBI
Commerzbank AG CZB RBS RBS
Crédit Agricole CA Société Générale SG
Credit Suisse CS Scotia Capital Inc SCA
Deutsche Bank DB Standard Bank Plc SB
DnB NORD DnB Standard Chartered Bank STA
European Investment Group EIG National Bank of Egypt STET
Fortis Securities Inc FOR SRM Robinson Humphrey SRH
Goldman Sachs & Co GS Sumitomo SUM
HSBC HSBC UBS UBS
Itau BBA IBBA UniCredit Group UNI
ING Groep NV ING U.S. Bancorp USB
Intesa Sanpaolo SA ISP Wells Fargo Wells
Incapital LLC INC WestLB WLB
Banca IMI IMI WestPac WP
GlossaryTechnical abbreviations
Financial institution abbreviations
EY Capital and Debt Advisory - New Issue Review 17
Section 9: Glossary
EY | Assurance | Tax | Transactions | Advisory
Ernst & Young LLP
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