Embed Size (px)
Citation preview
Important disclosures and certifications are contained from page 9 of this report. www.danskeresearch.com
Investment Research
Headlines
The Scottish independence referendum took the spotlight
New Danske Bank Markets Credit Outlook published today
TDC acquires Norwegian cable operator GET
New provisioning rules for banks
Market commentary
Following a cautious tone last week, the market ended this week on a strong note
following Scotland’s ‘No’ vote to the Referendum for Independence. Overall, the Itraxx
Main and cross-over moved tighter by some 5bp and 22bp, respectively. Yields continue
to be at low levels in a historical context and this, coupled with a benign investor
sentiment, should continue to bode well for new issuance activity. Indeed, this week saw
a large amount of new issues across most categories. We note that A.P. Moller–Maersk
issued its first ever USD bonds. The transaction included an USD750m five-year bond
and an USD500m 10-year bond with coupons of 2.55% and 3.75%, respectively. Other
noticeable issues from the Nordic included Nordea’s AT1.
We are publishing our Credit Outlook publication today, this time in a new presentation
format. We have in-depth comments on 13 different sectors across our coverage with
selected bonds for each sector as well as a strategy introduction with our current thoughts.
TDC acquires GET – agencies differ on rating impact
On Monday, TDC announced its intention to acquire Norwegian cable operator GET for
NOK13.8bn. Interestingly, the transaction will be funded by a mix of hybrids and senior
debt and will thereby expand the Nordic hybrid space. Moody’s downgraded TDC one
notch to ‘Baa3’ after the acquisition was announced as Moody’s ‘expects the deal will
weaken TDC’s credit metrics beyond levels commensurate with the previous rating’.
However, Fitch kept its ‘BBB’ rating unchanged although the acquisition will take the
company’s FFO/adjusted leverage above Fitch’s downgrade threshold, as TDC will be
given a period of between 18 months – two years in order for leverage to be brought back
within the downgrade threshold.
Selected new issues
Name Rating Coupon Currency Tenor Size Spread*
A.P.Moller-Maersk BBB+ Fixed USD 5Y 750 +80 A.P.Moller-Maersk BBB+ Fixed USD 10Y 500 +120 Outokumpu NR Fixed EUR 5Y 250 +608 Diageo A- Fixed EUR 10Y 500 +76 LVMH A+ Fixed EUR 7Y 650 +30
Note: ratings are senior unsecured ratings from S&P/Moody's/Fitch
* Mid-swap for fixed, discount margin for FRNs, in basis points
Source: Bloomberg, Danske Bank Markets
19 September 2014
Senior Analyst Brian Børsting +45 45 12 85 19 [email protected]
Contents
Market commentary 1
Selected charts 3
Recently published research 5
Official and shadow ratings 6
Weekly Credit Update
iTraxx Europe (investment grade)
Source: Bloomberg, Danske Bank Markets
iTraxx Crossover (high yield)
Source: Bloomberg, Danske Bank Markets
2 | 19 September 2014 www.danskeresearch.com
Weekly C
redit U
pd
ate
Weekly Credit Update
New provisioning rules for Banks, IFRS9
On Tuesday, Kristian Vie Madsen, deputy director of the Danish FSA, stated in an e-mail
response to Bloomberg that the upcoming IFRS 9 effective for accounting periods
beginning 1 January 2018 was likely to increase loan loss provisions in Danish banks.
‘We do not have any numbers on the effects yet, but the provisions on new loans based on
a 12-month forecast of losses would be new’, Madsen said. This statement was in line
with the report from Standard & Poor's (S&P) last week, which concluded that western
European banks could see common equity tier-1 ratios falling by an average of 53bp for
each 10% rise in new required reserves. Furthermore, S&P referred to an analysis by the
International Accounting Standards Board involving 15 banks, which indicated that loan
loss reserves would increase by 25-60% for non-mortgage lending and 30-250% for
mortgage lending. We expect the introduction of IFRS 9 to be the final proof of whether
or not the Danish banks are better reserved for than the other Nordic banks, something
many Danish banks have claimed since the Danish FSA introduced tighter provisioning
rules back in April 2012.
3 | 19 September 2014 www.danskeresearch.com
Weekly C
redit U
pd
ate
Weekly Credit Update
Selected charts
iTraxx (Europe) vs CDX (US) Investment grade corporate yields
Source: Bloomberg, Danske Bank Markets Source: Bloomberg, Danske Bank Markets
Nordic corporates vs iTraxx Nordic banks 5Y CDS spreads
Source: Bloomberg, Danske Bank Markets Source: Bloomberg, Danske Bank Markets
Corporate BBB bond yield vs EuroSTOXX dividend yield 3M Libor OIS spreads
Source: Bloomberg, Danske Bank Markets Source: Bloomberg, Danske Bank Markets
Financials spread vs non-financials (Industrials), A-rated
Source: Bloomberg, Danske Bank Markets
4 | 19 September 2014 www.danskeresearch.com
Weekly C
redit U
pd
ate
Weekly Credit Update
Europe fund flows Sweden fund flows Norway fund flows
Source: Macrobond Source: Macrobond Source: Macrobond
5 | 19 September 2014 www.danskeresearch.com
Weekly C
redit U
pd
ate
Weekly Credit Update
Recently published research
Credit Update: TDC acquires Norwegian cable operator GET(16 September 2014)
On Monday 15 September 2014, TDC announced its intention to acquire Norwegian
cable operator GET. TDC will pay NOK13.8bn with a transaction multiple of 10.5x
2015E EBITDA. Moody’s downgraded TDC to Baa3 after the acquisition was announced
and we expect S&P to follow with a downgrade to BBB-. We maintain our Hold
recommendation on TDC’s senior debt at current levels.
Issuer profile – Outokumpu (16 September 2014)
With a global market share of 8% in 2013 (35% in Europe), Finland’s Outokumpu is one
of the world’s largest stainless steel producers. Headquartered in Espoo, Finland, it was
founded in 1910 and produces cold- and hot-rolled flat stainless steel products, long
products and tubes. The group employs some 12,500 people worldwide, with sales
concentrated mainly in Europe (66% of 2013 sales), Asia (13%) and North America
(19%). The main plants are in Finland, Germany, Sweden, the UK and the US. Solidium
Oy (Finnish state) is the main shareholder with 29.9% of capital. None of the large rating
agencies rate Outokumpu but we see an indicative issuer rating of ‘B’.
6 | 19 September 2014 www.danskeresearch.com
Weekly C
redit U
pd
ate
Weekly Credit Update
Ratings from Standard & Poor’s, Moody’s and Fitch and Danske Bank markets shadow ratings
Source: Standard & Poor’s, Moody’s, Fitch, Danske Bank Markets
Analyst(s)
Company Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating OutlookAkelius Residential Ab BB+ Pos BB Louis LandemanAmbu A/S BBB- Stable Jakob MagnussenAp Moeller - Maersk A/S BBB+ Stable Baa1 Stable Brian Børsting BUYArla Foods Amba BBB+ Stable Mads RosendalAtlas Copco Ab A Stable A2 Stable Mads Rosendal SELLAvinor As AA- Stable A1 Stable Åse Haagensen HOLDBank 1 Oslo Akershus As BBB+ Stable T. Hovard / L. HolmBeerenberg Holdco Ii As B+ Stable Øyvind MossigeBwg Homes Asa BB Stable BB- Nils AspeliCargotec Oyj BBB- Stable Kasper F. LarsenCarlsberg Breweries A/S Baa2 Stable BBB Stable Brian Børsting SELLCermaq Asa BB Stable Knut-Ivar BakkenColor Group As BB- Stable B+ Kasper F. LarsenDanske Bank A/S A Neg Baa1 Pos A StableDlg Finance As BB- Stable Mads RosendalDfds A/S BB+ Stable Kasper F. LarsenDna Ltd BBB- Stable Kasper F. LarsenDnb Bank Asa A+ Stable A1 Neg T. Hovard / L. Holm HOLDDong Energy A/S BBB+ Stable Baa1 Stable BBB+ Stable Jakob Magnussen BUYDsv A/S BBB Stable Brian BørstingEg Holding B Stable Jakob MagnussenEika Boligkreditt As A- Stable Nils AspeliEika Gruppen As BBB Stable Nils AspeliElectrolux Ab BBB Wr WD Brian Børsting HOLDElisa Oyj BBB Pos Baa2 Stable Kasper F. Larsen BUYEntra Eiendom As A- Stable Nils AspeliFarstad Shipping Asa BB Stable BB- Åse HaagensenFinnair Oyj BB Stable Brian BørstingFingrid Oyj AA- Neg A1 Stable A+ Stable Jakob Magnussen BUYFortum Oyj A- Neg A2 Neg A- Neg Jakob Magnussen SELLFred Olsen Energy Asa BB+ Stable Sondre StormyrG4S Plc BBB- Stable Brian Børsting BUYGetinge Ab BBB- Neg Louis LandemanHelgeland Sparebank Baa2 Neg T. Hovard / L. HolmHemso Fastighets Ab BBB+ Stable Wiveca SwartingHusqvarna Ab BBB- Stable Louis LandemanInvestor Ab AA- Stable A1 Stable Brian Børsting BUYIss A/S BBB- Stable Baa3 Stable Brian Børsting HOLDJernhusen Ab A- Stable Gabriel BerginJ Lauritzen A/S B Stable B- Åse HaagensenJyske Bank A/S A- Stable Baa1 Neg Thomas M. Hovard BUYKesko Oyj BBB Stable Mads RosendalKlaveness Ship Holding As BB- Stable B+ Bjørn Kristian RøedMeda Ab BB Neg Louis LandemanMetsa Board Oyj B+ Stable B2 Pos Mads RosendalMetso Oyj BBB Stable Baa2 Neg Mads Rosendal BUYMjolby-Svartadalen Energi Ab BBB+ Watch Louis LandemanNcc Ab BBB- Stable Louis LandemanNeste Oil Oyj BBB- Stable Jakob Magnussen HOLDNokia Oyj BB Pos Ba2 Stable BB Stable Kasper F. Larsen HOLDNokian Renkaat Oyj BBB+ Stable Jakob MagnussenNordea Bank Ab AA- Neg Aa3 Neg AA- Stable T. Hovard / L. Holm SELLNorth Atlantic Drilling Ltd BB Stable BB- Sondre StormyrNorwegian Air Shuttle As BB- Stable B+ Brian BørstingNorwegian Property Asa BBB- Stable Nils AspeliNykredit Bank A/S A+ Neg Baa2U Stable A Stable T. Hovard / L. Holm BUYNynas Group B+ Stable B+ Jakob MagnussenOdfjell Se B+ Stable B Bjørn Kristian RøedOlav Thon Eiendomsselskap Asa BBB+ Stable Nils AspeliOlympic Shipping As B+ Stable B Åse HaagensenOutokumpu Oyj B- Pos Mads RosendalOrkla Asa BBB+ Pos Nils AspeliPohjola Bank Plc AA- Neg Aa3 Neg A+ Stable T. Hovard / L. Holm SELLPosten Norge As A- Stable Nils AspeliPostnord Ab BBB+ Stable Gabriel BerginProsafe Se BB Stable Åse HaagensenRamirent Oyj BB+ Stable Brian BørstingSaab Ab BBB+ Stable Wr Wiveca SwartingSampo Oyj Baa2 Stable T. Hovard / L. Holm HOLDSandnes Sparebank BBB+ Stable T. Hovard / L. Holm HOLDSandvik Ab BBB Stable Mads Rosendal HOLD
S&P Moody's FitchDanske Bank Recomm.
7 | 19 September 2014 www.danskeresearch.com
Weekly C
redit U
pd
ate
Weekly Credit Update
Ratings from Standard & Poor’s, Moody’s and Fitch and Danske Bank markets shadow ratings
Source: Standard & Poor’s, Moody’s, Fitch, Danske Bank Markets
Analyst(s)
Company Rating Outlook Sr. Unsec Rating Outlook Rating Outlook Rating OutlookSas Ab B- Stable Wr Pos Brian BørstingSbab Bank Ab A Neg A2 Neg T. Hovard / L. Holm HOLDScania Ab A- Pos Mads Rosendal HOLDSchibsted Asa BBB Stable Nils AspeliSeadrill Ltd BB+ Stable BB Sondre StormyrSecuritas Ab BBB Stable Wr Brian Børsting HOLDSkandinaviska Enskilda Banken Ab A+ Neg A1 Neg A+ Pos T. Hovard / L. Holm BUYSkanska Ab BBB+ Stable Louis LandemanSkf Ab BBB+ Stable Baa1 Stable Mads Rosendal HOLDSolstad Offshore Asa BB- Stable B+ Åse HaagensenSparebank 1 Boligkreditt As BB- Stable Lars HolmSparebank 1 Nord Norge A- Stable A2 Neg A Stable T. Hovard / L. HolmSparebank 1 Smn A2 Neg A- Stable T. Hovard / L. Holm HOLDSparebank 1 Sr Bank Asa A2 Neg A- Stable T. Hovard / L. Holm HOLDSpar Nord Bank A/S BBB+ Stable T. Hovard / L. HolmSponda Oyj BBB- Stable Louis LandemanSt1 Nordic Oy BB Stable Jakob MagnussenStatkraft Sf A- Stable Aaa Stable Jakob Magnussen BUYStatnett Sf A+ Stable Wr Stable Jakob Magnussen HOLDStatoil Asa AA- Stable Aa2 Stable Jakob Magnussen SELLStena Ab BB Stable B2 Stable Brian Børsting BUYStockmann Oyj Abp BB- Neg Mads RosendalStolt-Nielsen Ltd BB+ Stable BB Bjørn Kristian RøedStora Enso Oyj BB Stable Ba2 Neg BB- Stable Mads Rosendal HOLDStorebrand Bank Asa BBB+ Stable BBB+ Neg Baa1 Neg T. Hovard / L. HolmSuomen Hypoteekkiyhdistys A- Stable T. Hovard / L. HolmSwedavia Ab A- Stable Gabriel BerginSwedbank Ab A+ Neg A1 Neg A+ Pos T. Hovard / L. Holm BUYSwedish Match Ab BBB Stable Baa2 Stable Brian Børsting HOLDSvenska Cellulosa Ab Sca A- Stable Baa1 Stable Mads Rosendal BUYSvensk Fastighetsfinansiering Ab BBB Stable Louis LandemanSvenska Handelsbanken Ab AA- Neg Aa3 Neg AA- Stable T. Hovard / L. Holm HOLDSydbank A/S Baa1 Neg T. Hovard / L. Holm HOLDTallink Group As BB Stable BB- Jakob MagnussenTalvivaara Mining Co Plc C Mads RosendalTdc A/S BBB Stable Baa2 Stable BBB Stable Kasper F. Larsen HOLDTeekay Offshore Partners Lp BB- Stable B+ Kasper F. LarsenTele2 Ab BBB Stable Kasper F. LarsenTelefonaktiebolaget Lm Ericsson BBB+ Neg Baa1 Stable BBB+ Neg Kasper F. Larsen HOLDTelenor Asa A- Pos A3 Stable Kasper F. Larsen HOLDTeliasonera Ab A- Stable A3 Stable A- Stable Kasper F. Larsen SELLTeollisuuden Voima Oyj BBB Neg Wr BBB Stable Jakob Magnussen BUYThon Holding As BBB+ Stable Nils AspeliUpm-Kymmene Oyj BB Pos Ba1 Stable BB Stable Mads Rosendal HOLDVasakronan Ab BBB+ Stable Louis LandemanVattenfall Ab A- Stable A3 Stable A- Neg Jakob Magnussen HOLDVestas Wind Systems A/S BBB- Pos Kasper F. Larsen BUYVolvo Ab BBB Neg Baa2 Neg BBB Stable Mads Rosendal BUYWilh Wilhelmsen Asa BBB- Stable Bjørn Kristian RøedYit Oyj B Neg Louis Landeman
Danske Bank S&P Moody's Fitch Recomm.
8 | 19 September 2014 www.danskeresearch.com
Weekly C
redit U
pd
ate
Weekly Credit Update
Knut-Ivar Bakken
Fish farming Fish farming (+47) 85 40 70 74 [email protected]
Wiveca Swarting
Real Estate, Construction (+46) 8 568 80617 [email protected]
Ola Heldal
TMT (+47) 85408433 [email protected]
Henrik René Andresen
Credit Portfolios (+45) 45 13 33 27 [email protected]
Brian Børsting
Industrials (+45) 45 12 85 19 [email protected]
Mads Rosendal
Industrials, Pulp & Paper (+45) 45 14 88 79 [email protected]
Lars Holm
Financials (+45) 45 12 80 41 [email protected]
Jakob Magnussen
Utilities, Energy (+45) 45 12 85 03 [email protected]
Åse Haagensen
High Yield, Industrials (+47) 22 86 13 22 [email protected]
Fixed Income Credit Research
Louis Landeman
TMT, Industrials (+46) 8 568 80524 [email protected]
Thomas Hovard
Head of Credit Research (+45) 45 12 85 05
Find the latest Credit Research
Danske Bank Markets: Bloomberg: http://www.danskebank.com/danskemarketsresearch DNSK<GO>
Gabriel Bergin
Strategy, Industrials (+46) 8 568 80602 [email protected]
Niklas Ripa
High Yield, Industrials (+45) 45 12 80 47 [email protected]
Bjørn Kristian Røed
Shipping (+47) 85 40 70 72 [email protected]
Sondre Dale Stormyr
Offshore rigs (+47) 85 40 70 70 [email protected]
Øyvind Mossige
Oil services (+47) 85 40 54 91 [email protected]
9 | 19 September 2014 www.danskeresearch.com
Weekly C
redit U
pd
ate
Weekly Credit Update
Disclosures This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S (‘Danske
Bank’).
Analyst certification
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.
Regulation
Danske Bank is authorised and subject to regulation by the Danish Financial Supervisory Authority and is subject
to the rules and regulation of the relevant regulators in all other jurisdictions where it conducts business. Danske
Bank is subject to limited regulation by the Financial Conduct Authority and the Prudential Regulation Authority
(UK). Details on the extent of the regulation by the Financial Conduct Authority and the Prudential Regulation
Authority are available from Danske Bank on request.
The research reports of Danske Bank are prepared in accordance with the Danish Society of Financial Analysts’
rules of ethics and the recommendations of the Danish Securities Dealers Association.
Conflicts of interest
Danske Bank has established procedures to prevent conflicts of interest and to ensure the provision of high-
quality research based on research objectivity and independence. These procedures are documented in Danske
Bank’s research policies. Employees within Danske Bank’s Research Departments have been instructed that any
request that might impair the objectivity and independence of research shall be referred to Research Management
and the Compliance Department. Danske Bank’s Research Departments are organised independently from and do
not report to other business areas within Danske Bank.
Research analysts are remunerated in part based on the overall profitability of Danske Bank, which includes
investment banking revenues, but do not receive bonuses or other remuneration linked to specific corporate
finance or debt capital transactions.
Danske Bank, its affiliates and subsidiaries are engaged in commercial banking, securities underwriting, dealing,
trading, brokerage, investment management, investment banking, custody and other financial services activities,
may be a lender to the companies mentioned in this publication and have whatever rights are available to a
creditor under applicable law and the applicable loan and credit agreements. At any time, Danske Bank, its
affiliates and subsidiaries may have credit or other information regarding the companies mentioned in this
publication that is not available to or may not be used by the personnel responsible for the preparation of this
report, which might affect the analysis and opinions expressed in this research report.
See http://www-2.danskebank.com/Link/researchdisclaimer for further disclosures and information.
General disclaimer This research has been prepared by Danske Bank Markets (a division of Danske Bank A/S). It is provided for
informational purposes only. It does not constitute or form part of, and shall under no circumstances be
considered as, an offer to sell or a solicitation of an offer to purchase or sell any relevant financial instruments
(i.e. financial instruments mentioned herein or other financial instruments of any issuer mentioned herein and/or
options, warrants, rights or other interests with respect to any such financial instruments) (‘Relevant Financial
Instruments’).
The research report has been prepared independently and solely on the basis of publicly available information that
Danske Bank considers to be reliable. While reasonable care has been taken to ensure that its contents are not
untrue or misleading, no representation is made as to its accuracy or completeness and Danske Bank, its affiliates
and subsidiaries accept no liability whatsoever for any direct or consequential loss, including without limitation
any loss of profits, arising from reliance on this research report.
The opinions expressed herein are the opinions of the research analysts responsible for the research report and
reflect their judgement as of the date hereof. These opinions are subject to change and Danske Bank does not
undertake to notify any recipient of this research report of any such change nor of any other changes related to the
information provided in this research report.
This research report is not intended for retail customers in the United Kingdom or the United States.
10 | 19 September 2014 www.danskeresearch.com
Weekly C
redit U
pd
ate
Weekly Credit Update
This research report is protected by copyright and is intended solely for the designated addressee. It may not be
reproduced or distributed, in whole or in part, by any recipient for any purpose without Danske Bank’s prior
written consent.
Disclaimer related to distribution in the United States This research report is distributed in the United States by Danske Markets Inc., a U.S. registered broker-dealer
and subsidiary of Danske Bank, pursuant to SEC Rule 15a-6 and related interpretations issued by the U.S.
Securities and Exchange Commission. The research report is intended for distribution in the United States solely
to ‘U.S. institutional investors’ as defined in SEC Rule 15a-6. Danske Markets Inc. accepts responsibility for this
research report in connection with distribution in the United States solely to ‘U.S. institutional investors’.
Danske Bank is not subject to U.S. rules with regard to the preparation of research reports and the independence
of research analysts. In addition, the research analysts of Danske Bank who have prepared this research report are
not registered or qualified as research analysts with the NYSE or FINRA but satisfy the applicable requirements
of a non-U.S. jurisdiction.
Any U.S. investor recipient of this research report who wishes to purchase or sell any Relevant Financial
Instrument may do so only by contacting Danske Markets Inc. directly and should be aware that investing in non-
U.S. financial instruments may entail certain risks. Financial instruments of non-U.S. issuers may not be
registered with the U.S. Securities and Exchange Commission and may not be subject to the reporting and
auditing standards of the U.S. Securities and Exchange Commission.
