Daily Credit Brierfing - UniCredit Research - UniCredit Group

16 March 2015 Credit Research

Daily Credit Briefing

UniCredit Research page 1 See last pages for disclaimer.

Credit Market SnapshotSynthetics closed unchanged on Friday, after having tightened somewhat initially. There was still some selling interest by investors but less than in previous days. However, credit markets continue to be very illiquid. In terms of activity, there is an ongoing trend towards longer maturities, as government curves also continue to flatten. On the other hand, primary markets are very busy, and the pipeline appears to be full for the next couple of weeks. European stock markets were trading softer for the largest part of the day, but turned into positive territory in the last trading hours. The Euro STOXX 50 closed at +0.4%, as did most other European indices except in Italy, where the FTSE MIB lost 0.4%. However, at the sector level, a bigger disparity was apparent: the main losers were Oil & Gas (-2.5%) and Basic Resources (-1.8%), while Autos (+1.4%) and Technology (+1.2%) outperformed. 10Y government bond yields closed more or less unchanged. Only 10Y Greek yields saw another move wider (+28bp). EUR-USD dropped almost 1.5%, on Friday, falling below 1.05. But it recovered some of those loses this morning, currently

trading at 1.0515. In commodities, the oil price was again in the spotlight, dropping 4%. Most of the losses occurred after European markets closed on Friday. Currently, Brent crude oil futures trade at USD 54/bbl, a multi week low.

This morning, Chinese stocks rallied almost 2%, with the benchmark CSI 300 index climbing to its highest level since August 2009, after Premier Li Keqiang pledged to take action if economic growth slows too much.

Credit Strategy Highlights ■ European stocks outperformed credits big time – but

stocks still look cheap from an USD investors perspective

■ Main event this week is the FOMC meeting – the Fed will lose patience

■ iTraxx opening: Main 49.0/50.0bp, XO 251/252bp, Sen 55.0/56.0bp, Sub 118.0/125.0bp

Top Credit StoriesENERGY p4

Acea Releases solid FY14 results

ENI 2015-18 strategy presentation

BP US appeals ruling on size of gulf spill

INDUSTRIALS p7

DSM announces JV with CVC on Polymer Intermediates and Composite Resins

Holcim Renewed negotiations about merger terms

Linde FY14 results in line with expectations

AUTOS p9

Valeo 2020 medium-term strategy

TMT p10

Vivendi Confirms intention to sell stake in TVN

WPP Rumored to have submitted a bid for Dunnhumby

CONSUMER p11

S&P: Pharmaceutical outlook remains positive despite M&A

BANKS p12

Cerved Releases full FY14 results and reaches leverage target

News is credit positive neutral negative

Quick links Market Data Page (p13) Rating Actions (p15) Recent Credit Research Publications (p16)

MARKET DATA

Credits 1D Govies 1D FX/FI 1D Equities 1D Other iBoxx NFI Sen 42 +2.8 Bund Ft 157.99 +0.03 3m Euribor 0.03 -0.002 Euro STOXX 50 3,656 +15 VSTOXX 19

iBoxx NFI Hyb 209 +2.4 Germany 5Y -0.09 +0.01 2Y EUR Swap 0.09 -0.002 DAX 11,902 +102 VDAX 17

iBoxx FIN Sen 36 +2.3 France 5Y 0.04 +0.01 5Y EUR Swap 0.27 -0.007 CAC 5,010 +23 VIX 16

iBoxx FIN Sub 149 +3.8 Italy 5Y 0.49 +0.01 10Y EUR Swap 0.63 -0.014 FTSE MIB 22,714 -95 Brent Future 174

iBoxx NFI HY 354 +0.5 Spain 5Y 0.50 +0.01 EUR-USD 1.05 -0.012 IBEX 35 11,034 +22 Gold Spot 1,159

Source: Bloomberg, iBoxx, Markit, UniCredit Research

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Credit Strategy Highlights European stocks outperformed credits big time – but stocks still look cheap from an USD investors perspective

Over the last couple of weeks, European stocks have outperformed credits substantially, with the iTraxx Main 8bp tighter YTD. While this performance is already impressive (and together with the massively tighter yields, total returns are incredible), the STOXX 600 Europe index is up almost 20%. The left chart below underpins this massive relative performance graphically.Note that we charted the stock index on a reverse scale to highlight the close correlation it typically exhibits with credits. This raises the question as to why there has been this massive outperformance of stocks, which, incidentally, we have been calling for in our outlook. The right chart should provide some insight. It shows the STOXX 600 Europe (this time on anormal scale) in EUR terms as well as in USD terms. Due to the huge drop in EUR-USD, the index has traded broadly sideways from an USD investor’s perspective. Moreover, as pointed out by Erik Nielsen in his Sunday Wrap, European assets are supported by improving economic prospects, rendering them cheap for US investors, as US equities will probably beimpacted by the upcoming hike in monetary policy by the Fed (about which we will get more news from this week’s FOMC meeting – see below). Moreover, as the EUR appears to be fundamentally undervalued (our FX strategists’ economic model pins the fair value at around1.20) and the economic situation remains favorable, US investors are moving into European equities. Moreover, we might also see bids from strategic US investors that want to buy intoEuropean targets.

What does that mean for credits? While spreads will likely continue to hold up well due to theECB’s QE, they will also continue to underperform risky assets. Moreover, they will also notcatch up with the latest movement in equities. Our frequent readers might recall our long-term debt-equity cycle chart – we are now in the domain where equities outperform credits.

EQUITIES OUTPERFORMING CREDITS – WHAT’S THE TRIGGER?

Credits move sideways while equities (in rev. order) rally European stock from a USD investors perspective: still cheap

Source: Bloomberg, UniCredit Research

Main event this week is the FOMC meeting – the Fed will lose patience

This week’s key event is the FOMC meeting on Wednesday. While no policy change isexpected, focus will be on the statement issued after the meeting. Our economists expect that“the Fed will lose patience”, i.e., that it will modify the statement that it can be “patient” in the beginning to normalize monetary policy. Fed chair Janet Yellen has repeatedly emphasizedthat this formulation rules out a rate hike occuromg at the subsequent two meetings. Therefore, if the Fed reiterates its patient guidance, a June rate hike, which is our baseline scenario, would be off the table. Aside from this, US IP data will be released today, and the German ZEW index is on the agenda for Tuesday.

Dr. Philip Gisdakis (UniCredit Bank) +49 89 378-13228 [email protected]

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EEMEA Credit Strategy Highlights CEE credits performance one week after ECB’s QE

One week after the ECB started its QE it is worth looking at its impact on CEE credits. Although the ECB is not directly buying corporate bonds, it has been widely expected that regional credits will benefit from the hunt for yield and related second-round effects. The chart below summarizes the total return performance of CEE euro-denominated credits over the past week, with red bars highlighting high-yield credits. The chart suggests that the performance so far does not point to a clear outperformance of high-yield or investment-gradecredits and eurozone/non-eurozone credits. Out of ten outperformers there are five high-yield credits and five investment-grade credits. Similarly, among the ten underperformers there are four high-yield credits. Eurozone membership of the country of risk does not explain clear out/underperformance: Estonian credits are among the top performers while Slovak issuersare among the underperformers. Noteworthy, however, is that most regional financials are among the outperformers, though in the case of BRE, for example, a catch up after the recent underperformance may have played a role as well. Bottom line, CEE credits do not benefit particularly from the ECB’s QE, something that we also observe among iBoxx credits. Also in CEE, the most obvious explanation is the higher dividend yield in CEE equities vs. CEE credits – e.g. WIG: 3.4% Prague Stock Exchange: 3% compared to, e.g CEE banks YTM below 2.2% and Utilities also below 2.3% (except for BULENR paper) – which is attracting investment and leading to credit underperformance.

New issuance New bond supply from Emerging European corporates remains subdued; last week theprimary market saw a mere EUR 125mn 2/2019 FRN from Play at Bunds+386bp. The new issuance pipeline includes only the Turkish Airlines bond.

This week’s data releases In terms of earnings, PKO Bank is reporting today, and PZU tomorrow. As regards macro-data releases, we will get Poland current account today, and industrial output and retail sales on Wednesday; Russian industrial production will be released tomorrow and real wages, disposable income and retail sales on Thursday. Ukraine retail sales will be released today, foreign trade tomorrow, industrial production on Wednesday and final GDP on Friday. InTurkey, the monetary policy rate meeting takes place tomorrow.

CEE EUR-DENOMINATED CREDITS 1W TOTAL RETURN PERFORMANCE

Source: Reuters, Bloomberg, UniCredit Research

Dr. Stefan Kolek (UniCredit Bank) +49 89 378-12495 [email protected]

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% 1

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7%

2/2

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4.2

5%

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/18

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% 1

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25%

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% 1

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5%

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5%

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/18

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IN 4

.62

5% 7

/18

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W 2

.5%

6/2

1

NO

VA

LJ

2.8

75%

7/1

7

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SD

RA

4.5

% 6

/16

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SP

W 6

% 5

/16

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M 1

1.7

5% 1

/20

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W 1

.37

5%

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5% 6

/19

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ID 7

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W 7

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% 1

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K 9

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/19

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/17

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% 7

/21

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NP

W 4

% 2

/17

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EN

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75%

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/18

EP

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GY

5.8

75

% 1

1/1

9

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PD

IS 2

.62

5% 6

/21

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P 4

.5%

6/2

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W 4

% 9

/21

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P 5

% 1

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CIE

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% 1

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Energy

Acea (Marketweight) Event Acea (Baa2s/BBB-s/BBB+s) released solid FY14 results despite a challenging

operating environment, with revenues down by 7.6% yoy to EUR 3,038mn and consolidated EBITDA up by 6.3% (EUR 42mn) yoy to EUR 718mn. In terms of FY14 EBITDA by segments, 1. Environment grew 12.6% (EUR 55mn) due to improved performance of the Terni plant, 2. Energy was up 21.7% (EUR 112mn) on improved energy sales margin, 3. Water improved 4.1% (EUR 292mn) after new tariff regime came in to force, while 4. Grids declined by 1.6% (EUR 253mn) due to a drop in energy margin. In FY14 the company invested a total of EUR 319mn (FY13: EUR 269mn), which was split into Water EUR 149mn, Grids EUR 122mn, Energy EUR 20mn, Environment EUR 14mn, and Parent Company EUR 14mn. Reported net debt amounted to EUR 2,089mn, down by EUR 160mn vs FY13 (9M14: EUR 2,412mn). The decline reflects a positive impact of working capital management (improved by EUR 185mn), which was mainly due to accelerated billings in Energy and Water. The net debt/EBITDA ratio has consequently improved to 2.9x from 3.3x yoy.

Expected development of credit profile/rating

Based on its 2014-2018 business plan, ACEA targets an average annual EBITDA growth in the period 2014-18 of over 6% and a net-debt-to-EBITDA ratio of 2.6x by 2018 (FY13: 3.3x). In the investor call, ACEA explained that the increased cash position (FY14: EUR 1,018mn vs. FY13: EUR 563mn) on its balance sheet stems from a combination of improved workingcapital and bonds issued in 2014 (EUR 600mn). However, the current level is not sustainable going forward and will be reduced by repayments of ST debt and LT investment. ACEA stated that it feels comfortable with the current leverage <3.0x although a slightly higherleverage would still be appropriate for its business risk profile. The 2014 reported capex number (EUR 319mn) is a good proxy for the capex level in the next couple of years. S&P considers a rating downgrade of Acea if FFO/net debt <15% (FY13: 16%) and expects the ratio to rise to 16%-18% over the next two years. Moody’s expects the company to maintain a FFO/interest coverage between 3.5x-4.5x (FY13: 5.3x), a FFO/net debt ratio in the low to high teens (FY13:17%) and a RCF/net debt in the low double digits to mid-teens (FY13: 14.4%). Moody’s notes that a successful reduction in leverage to 2.4x in 2018 (Moody’s calculation FY13: 3.2x), as targeted in the 2014-2018 plan, could result in a rating upgrade for ACEA. A downgrade of Italy (Baa2s/BBB-s/BBB+s) would lead to a subsequent downgrade of ACEA.The Municipality of Rome is the major shareholder of Acea, holding 51% of shares. For more details on ACEA, please refer to our latest Credit Flash as of 4 December 2014.

Name recommendation We continue to have a marketweight recommendation on the name and recommend buyingthe ACEIM 2.625% 7/24, which offers a spread pick-up against the HERIM 2.375% 7/24 (Baa1n/BBBs/--) of a of around 25bp.

Michael Gerstner (UniCredit Bank) +49 89 378-15449 [email protected]

https://www.research.unicredit.eu/DocsKey/credit_docs_2014_144924.ashx?EXT=pdf&KEY=n03ZZLYZf5nBctlEwROf35A041H7ubccFskkL5WCR5w=&T=1�

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ENI (Overweight) Event Eni (A3s/Awn/A+n) presented its 2015-18 strategic plan, which includes disposals of

EUR 8bn, a dividend cut of around 30%, and suspension of share buybacks. Management states that it is committed to maintaining its A Rating. S&P placed Eni’s ratings on watch negative in December. The rating agency intended to resolve the watchnegative status by mid-March, as it wanted to assess management’s business plan, notably with respect to adjusting capital spending and implementing cost reduction. Furthermore S&Paimed to gain more clarity in Eni’s dividend policy and financial debt.

2015-18 strategic outlook With its updated strategic plan, Eni aims to turn around the non-oil business, including Gas and Power, and Chemicals. The company targets a dividend of EUR 0.80 per share vs. EUR 1.12 in 2014, which is the first dividend cut since 2009. Among oil majors, Eni is the first to announce a dividend cut. Furthermore, the company announced asset sales of EUR 8bn in 2015-18, of which 70% will come in 2015-16. 25% of the disposals will consist of shares in its subsidiaries Galp Energia (8% share, not rated) and Snam (8.5% share, Baa1s/BBBs/--), 50% will come from the dilution of shares held in recent exploration discoveries, while the remaining 25% will come from mature upstream and non-core mid downstream assets. Eni proposed a reduction in capex of 17% to EUR 48bn for 2015-18 (vs. its previous strategic plan at constant FX rates), thereof 13% in Upstream. Although Eni lowered its capex forecast, the company said that its oil and natural gas output will grow by 3.5% per year, until 2018. Onthe back of several projects started in 2014, Eni targets to increase its production by more than 650kboed in 2018 (FY14 total hydrocarbons production 1,598kboed, -1.3%yoy), while the new projects will have an average breakeven level of USD 45/bbl and will generate an additional cumulative OCF of EUR 19bn. The company aims to bring EBIT and OCF inRefining and Marketing to break even in 2015 through a 20% reduction in its refining capacity (in addition to its previously achieved 30%). Furthermore, Eni announced it would suspend its previously announced share-buyback plan. Management stated its reintroduction will be evaluated when strategic progress and the market scenario allow it. With its new strategic Plan, Eni expects a cumulative FCF of EUR >16bn, while OCF will cover investments in 2015-16 (at an average oil price of USD 63/bbl). In 2017-18, OCF is expected to increase by40%. We commented Eni’s FY14 results in our Credit Flash from 19 February 2015.

Name recommendation In our view, Eni’s updated strategic plan is a necessary step in order to hold its A Rating atS&P, while we note that Eni’s adjustments regarding capex and dividend cuts are more significant relative to other oil majors such as Shell (Aa1s/AAn/AAs) and BP (A2n/An/As). We keep our overweight recommendation on the name and recommend switching out of OMVAV 1.75% 11/19 (A3s/--/A-s) into ENIIM 4.25% 2/20 for a pickup in Z-Spread of 15bp.

Mehmet Dere (UniCredit Bank) +49 89 378 11294 [email protected]

https://www.research.unicredit.eu/DocsKey/credit_docs_2015_146167.ashx?EXT=pdf&KEY=n03ZZLYZf5l73IxHdbTjmhWUPrSmCSxjyx4rNCr0CKk=&T=1�

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BP (Marketweight) According to Reuters, the US government appealed a federal court ruling that reduced

the potential penalty BP (A2s/An/As) must pay for the 2010 Gulf of Mexico oil spill byalmost USD 4bn. The appeal challenges a January decision that set the size of the spill at3.19mn barrels vs. the government’s estimate of 4.09mn barrels and BP at 3.26mn barrels.BP could have been fined a maximum of USD 17.6bn under the Clean Water act, but the US District Court’s ruling lowered the potential figure to USD 13.7bn. Furthermore, BP acquired a12% stake in the TANAP gas pipeline project, a pipeline which will run from the Turkish-Georgian border to Turkey’s border with Bulgaria. According to Reuters, the preliminary costof the pipeline has been estimated at USD 10-11bn, while the completion is expected by the end of 2018. The remaining 58% of the project will be owned by Azerbaijan’s state oil company, SOCAR, while 30% will be owned by Turkey’s BOTAS. We note that headlinesregarding the Gulf of Mexico oil spill, which exposes BP to potential fines and increased debt, will continue. Among other things, S&P might downgrade the company if payments related to the oil spill were likely to be more than USD 20bn in the next 18 months. On a relative value basis, we recommend switching out of BGGRP 2.25% 11/19 into BPLN 2.213% 9/26 for a lower duration of around two years at similar spread levels, as we anticipate widening spreads at BG Energy (A2n/A-wn/A-n) due to its expected downgrade.

Mehmet Dere (UniCredit Bank)+49 89 378 11294 [email protected]

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Industrials DSM (Overweight) DSM announced a JV with CVC regarding its Polymer Intermediates and Composite Resins

business today. The NewCo will be 65% owned by CVC and 35% by DSM and generates pro-forma sales of EUR 2.1bn with an EBITDA of EUR 106mn. Financing of the NewCo will primarily be through an equity contribution from both shareholders, third party financing and a EUR 100mn bridge loan provided by DSM. The EV of the transactions is at EUR 600mn with EUR 175mmn earn-out option for DSM. The group estimates net cash proceeds at closing (expected for 3Q15) of EUR 300 to 350mn. We regard it as positive for DSM credit profile that the group delivers at the portfolio re-alignment and divests non-performing activities. We have an Overweight recommendation on DSM.

Christian Aust, CFA (UniCredit Bank)+49 89 378-12806 [email protected]

Holcim (Marketweight); Lafarge (Buy) Holcim is seeking new negotiations with Lafarge on merger terms as Holcim believes

that the combination agreement can no longer be pursued in its present form. Ahead of the AGM on 13 April, Holcim has decided that the agenda will only contain topics related to Holcim. According to the statement, this decision has been taken due to pending antitrust clearance in the US and India, pending EU approval of CRH as purchaser of divested assetsas well as delays in the social process in France. However, Holcim also concluded it wouldseek changes to the combination agreement with Lafarge and “proposed to enter into negotiations in good faith around the exchange ratio and governance issues”. Lafarge has indicated that it refuses to renegotiate, except the exchange ratio. While the merger might get delayed due to new negotiations between the two cement makers, we still see a relatively high probability that a compromise (i.e. mainly agreement on new exchange ratio) will bereached eventually. The confirmation of renewed negotiations might therefore slightly weighon LGFP spreads today (though rumors were already circulating last week). However, our base-case scenario remains that the merger will go through since the fundamental long-term benefits have not changed (also not with a slightly altered exchange ratio). Hence, and for the time being, we keep a marketweight recommendation on Holcim and a buy recommendation on Lafarge.


Linde (Marketweight) Linde reports 4Q14 results in line with expectations. Supported by FX, 4Q14 revenues

increased 6.6% to EUR 4.46bn, while Linde-defined operating profit (EBITDA) improved 5% yoy to EUR 1.02bn in 4Q14 (vs. consensus estimate of EUR 1.01bn). The operating profit margin declined 30bp yoy to 22.9%. Top-line growth in 4Q14 was driven by Asia and the Americas, while Europe retreated. Reported net debt stood at EUR 8.2bn at FYE 2014 (unchanged from FYE 2013) and, hence, the reported net debt/EBITDA ratio remained stable yoy at 2.1x at end-December 2014. For FY15, Linde expects group revenues to increase to EUR 18.2-19.0bn (FY14: EUR 17.05bn; i.e. +6.8% yoy to +11.5% yoy) and a group operatingprofit (after non-recurring items) of between EUR 4.1bn and EUR 4.3bn (FY14: 3.92bn). The global gases market is anticipated to grow at a slightly faster pace in 2015 (vs. 2014) andLinde remains committed to outperforming the market and continuing to increase productivity. Depending on sector-specific trends and FX, in FY15, Linde is seeking to achieve revenue in Gases of between EUR 14.9bn and EUR 15.4bn and operating profit of between EUR 4.05bn and EUR 4.25bn. In Engineering in FY15, revenues are expected to be between EUR 3.0bn and EUR 3.3bn, with an operating margin of around 8%. We expect LINGR spreads to be

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unaffected by these in-line FY14 results and FY15 outlook today and keep a marketweight recommendation on Linde.


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Autos

Valeo (Overweight) Event Valeo (Baa3p/BBBs) presented its new medium-term objectives at its investor day. The

company said that its growth strategy is driven by its market-leading position and sustainedR&D efforts focused on CO2 emissions reduction and improved vehicle performance, as well as intuitive driving and strengthening its presence in Asia and emerging countries. Valeo’s target is to generate more than a third of its OE sales in Asia and around 40% in Europe by 2020, compared to 28% and 49%, respectively, in 2014. Driven by a higher order intakeresulting from the success of its innovations (more than a third of the order intake over the past few years is for innovative technologies), the group is aiming to accelerate organic growth, improve profitability and increase FCF:

■ Accelerating organic growth and operational excellence: Leveraging the high level of its order intake over the past few years, Valeo confirms its objective to achieve averageannual organic growth five percentage points above global automotive production on theback of its innovation-based product mix. Assuming that global automotive production increases by an annual average of 3% over the next five years, sales would therefore riseto around EUR 17bn in 2017 and to more than EUR 20bn by 2020 (FY14: EUR 12.7bn).

■ Improving operating margin: The group intends to leverage the growth in sales to improve its operating margin and profitability. Accordingly, Valeo has set a target foroperating margin in the region of 8% and between 8-9% for 2020 (FY14: 7.2%).

■ Increasing FCF: After four years of strong growth in production capacity, particularly in Asia and emerging countries, Valeo is aiming to increase its FCF/EBITDA ratio from 21% in FY14 to around 28% in 2017, and then to more than 30% by 2020. Valeo said that itsstrong financial position will enable it to capitalize on opportunities for growth in technologies for CO2 emissions reduction and improved vehicle performance as well asintuitive driving, while maintaining strict financial discipline.

Expected development of credit profile/rating

The webcast of the investor day starts today at 10:00 GMT and we are looking forward to some more comments on Valeo’s strategy concerning M&A and capital allocation. For detailson Valeo’s FY14 credit profile, please refer to our Credit Flash dated 26 February. Valeo’s 2015 outlook is based on the following assumptions: +3% in global automotive production,+2% in Europe (excluding Russia); raw material prices and FX rates in line with current levels.The objectives for 2015 are: sales growth higher than the market in the main production regions and a slight increase in the operating margin as a percentage of sales compared with2014. Valeo’s debt maturity profile is EUR 1.5bn in cash and EUR 1.1bn in undrawn creditlines of 3.8 years maturity with no major debt maturities before its EUR 700mn 2024 bond. On4 February, Valeo’s CEO said at an industry conference in Bochum that he has no plans forlarge acquisitions such as ZF and TRW, according to Bloomberg. Despite the increase individend payments and some risk of bolt-on acquisitions, we expect an upgrade by Moody’s to Baa2, which is the same rating level at S&P.

Name recommendation Although the FRFP 3.25% 1/24 bond trades rather tight at around 46bp over swaps, we keep our overweight recommendation on the name given that we prefer BBB’s in the auto sectorfor relative-value reasons. Among iBoxx BBB’s we prefer the DLPH 1.5% 3/25 bond.

Dr. Sven Kreitmair, CFA (UniCredit Bank) +49 89 378-13246 [email protected]

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TMT Vivendi (Marketweight) Vivendi’s (Baa2s/BBBp/BBBs) Canal+ Group and ITI Group today confirmed that they have

agreed to sell their controlling stake in TVN, Poland’s leading commercial broadcaster, toSouthbank Media Ltd, which is a member of the Scripps Networks Interactive group. Thetransaction still requires regulatory approval. Vivendi had originally reported in October that it had been approached by a number of investors that were interested in acquiring the stakeand said that it was considering the sale. Vivendi commented that the sale does not mean that it is abandoning the Polish market, rather it will allow the company to refocus its presencein Poland around pay-TV. The total cash consideration for the 51% stake in the companyamounts to EUR 584mn and the acquirers will also assume the company’s EUR 300mn PiK toggle notes. The sale is a little puzzling considering that Vivendi has been selling telecoms assets to refocus its business profile around media but Vivendi evidently believes that it caninvest the cash in more attractive assets. However, in the meantime, the sale will merely add to Vivendi’s growing net cash position. In its most recent results conference call, Vivendiindicated that it may need 12-18 months before it can announce a major acquisition target inthe media sector. As a result, we do not believe that the growing cash position of EUR 4.6bn as of FYE 2014 (and shrinking operating business) makes the company’s credit profile moreattractive in the near term. We therefore reiterate our marketweight recommendation on thename.

Jonathan Schroer, CFA (UniCredit Bank)+49 89 378-13212 [email protected]

WPP (Marketweight) According to Bloomberg, WPP (--BBBs/BBB+s) has reportedly submitted a bid to acquire a

majority stake in Tesco’s Dunnhumby. WPP’s alleged interest in the company was reportedearlier this year by the Sunday Telegraph. Tesco reportedly intends to hold a minority stake in the company. An acquisition of Dunnhumby, which is Tesco’s customer data unit, hascollected data on around 1bn customers globally, and would strengthen WPP’s data and analytics business. Tesco is reportedly seeking GBP 2bn for the business. WPP said in its FY14 results conference call that its leverage of 1.6x was currently at the low end of its target range of 1.5-2.0x and indicated that it would probably rise in the near term. While thecompany has ample headroom at current rating levels, its intention to raise leverage through acquisitions or otherwise is one reason we recently switched our preference from WPPLN toPUBFP. We expect the latter to focus on deleveraging after the acquisition of Sapient this year. While news of WPP’s interest in Dunnhumby may put some minor pressure on WPP today, we expect that the company’s current strong operating performance and credit profilewill limit any downside and we therefore reiterate our marketweight recommendation on WPP.


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Consumer S&P: Pharmaceutical outlook remains positive (Teva [OW],

Amgen [OW]) Health Care S&P highlighted that the outlook on global pharmaceutical industry remains positive

despite M&A activity that could cause volatility. The rating agency’s outlook, based on its expectation for revenue growth of 4-5% for the global pharmaceutical sector, which is ahead of estimated 3.3% global real GDP growth. According to the research institute Evaluate Pharma, the global pharmaceutical market will grow to USD 1tn in 2020 (USD 747bn in FY14). For FY15, S&P believes that there will not be many positive rating actions, but that downgrades on the operating level remain unlikely (especially for IG). S&P indicated that many companies reached or exceeded the threshold for the current rating due to M&A. Positive credit factors remain ongoing pricing power in the US, strong growth of the specialtydrug market, an aging population and increasing disposable income and medical coverage inemerging markets. On a regional perspective, S&P anticipates the U.S. Affordable Care Act, which has expanded insurance coverage in the US, to make only moderate positivecontribution to overall global growth. The rating agency expects the specialty pharmaceutical market to grow 15% to 20% in both 2014 and 2015 in the U.S.. These very high growth ratesreflect a growing patient population with diseases such as cancer and hepatitis C, new pharmaceutical products that command high prices. For Europe a modestly decline or only minimal growth is expected due to cutting healthcare costs by many European governments.Emerging markets should be the fastest-growing pharma geographical area with 20% to 25% of the global pharmaceutical market by 2020. For 2015, S&P anticipates still “heavy” M&A activity however not of the level of last year (USD 264bn). R&D spending should remain stable yoy with a spending ratio of 16-18% of sales. In 2014, the U.S. Food and Drug Administration approved 41 novel new drugs, up from 35 in 2013 (two third drug approvals were designed in a fast track modus) which is also a positive indicator for future growth for the pharma industry. We confirm our overweight recommendation on Teva (A3s/A-s/BBB+s) and Amgen due to their current spread levels. We think that the M&A risk for Amgen (Baa1s/As/BBBn) will be relatively low in the near future, as management is focused on theintegration with Onyx. After the strong FY14 results, Teva is in good shape to counterbalanceM&A activity and share-buyback programs.

Dr. Silke Stegemann (UniCredit Bank)+49 89 378-18202 [email protected]

<date>




Banks Cerved (Hold) On Friday, Cerved released its full FY14 report, which contained no surprises since the

company already preannounced key figures in February. Revenues rose 5.7% yoy to EUR 331.3mn in FY14 (organically 3.8%), with EBITDA up 5.6% to EUR 160.1mn for a margin of 48.3%. Operating cash flow (after capex, before interest and tax expense) ofEUR 126.2mn, was up 17.3%. Net debt was down slightly qoq to EUR 488mn from EUR 496mn due to a higher cash position. This resulted in a net leverage ratio of 3.0x (aspreviously announced), down from 3.1x as of 9M14. As a result, the company reached its medium-term leverage target. Since Cerved is not targeting further deleveraging in the near term, it will pay out a significant share of its cash flow as a dividend in 2015. The proposed dividend of EUR 0.205 per share amounts to an expected EUR 40mn cash outflow. We expect the dividend to absorb a significant amount of the company’s FOCF and the remainderwill likely be used for bolt-on acquisitions. Within the divisions, the company’s core Credit Information business showed a flat revenue trend, with 3.3% growth in the corporate segmentbeing offset by a 3.4% decline at financial institutions. Credit Management again showedstrong growth of 45.5% and Marketing Solutions was up by 15.3%. The company’s outlook for2015 was vague, calling for continued organic growth in revenues and EBITDA in all divisions and for improving margins via rationalization and efficiency improvements. The company willalso consolidate Recus in 2015, which it acquired in 4Q14. With its 2014 results, Cerved again demonstrated that it can generate solid organic growth and free cash flow in a difficult Italian macro environment. However, we do not expect the FY14 results release to have an impact on CERTCH bonds because the two outstanding bonds are already pricing in the expectation that they will be called in the near term (both callable in January 2016). We therefore believe that any upside in the bonds is currently capped and reiterate our holdrecommendation on the name.


<date>




Market Data Page IBOXX YIELD BY ASSET CLASS

current 1D 1W MTD YTDSovereigns 0.44 0.01 -0.11 -0.09 -0.37

Germany 0.08 0.00 -0.11 -0.05 -0.24

SSA 0.19 0.00 -0.10 -0.07 -0.27

Covered 0.24 0.00 -0.07 -0.03 -0.19

Non-Financials 0.82 0.02 0.00 -0.03 -0.26

Financials 0.85 0.02 0.00 0.02 -0.24

High Yield NFI 3.79 0.01 0.06 0.23 -0.64

Source: iBoxx, UniCredit Research

INTEREST RATE CURVES

current 1D 1W MTD YTDEuribor 6m 0.03 0.00 -0.01 -0.01 -0.05

EUR Swap 2Y 0.09 0.00 -0.02 0.00 -0.08

EUR Swap 5Y 0.27 -0.01 -0.06 0.01 -0.09

EUR Swap 10Y 0.63 -0.01 -0.15 -0.06 -0.19

USD Libor 6m 0.40 0.00 0.01 0.02 0.04

USD Swap 5Y 1.75 -0.01 -0.10 0.10 -0.02

USD Swap 10Y 2.23 0.00 -0.13 0.11 -0.05


ASW SPREAD CURVES BY ASSET CLASS CORPORATE IBOXX AND ITRAXX HISTORY


IBOXX ASW SPREADS BY SECTOR

current 1D 1W MTD YTDNon-Financials 51 +2.8 +8.0 -1.3 -14.8

Automobiles & Parts 41 +2.5 +7.5 +8.2 +0.8

Chemicals 45 +1.8 +5.6 +2.7 -10.1

Construction & Materials 48 +3.1 +7.3 +5.2 -6.4

Food & Beverage 34 +2.7 +8.4 +6.7 -3.8

Health Care 34 +3.0 +8.5 +6.1 -2.4

Industrial Goods & S. 42 +3.0 +6.6 +5.7 -6.4

Media 45 +3.1 +6.6 +5.4 -9.1

Oil & Gas 63 +2.9 +7.9 -69.9 -80.8

Personal & Household G. 38 +2.8 +11.1 +10.9 -0.6

Retail 49 +2.8 +9.2 +8.2 -32.5

Technology 30 +3.0 +8.4 +8.4 -3.1

Telecommunications 61 +3.1 +8.8 +7.9 -5.2

Travel & Leisure 53 +3.1 +7.6 -26.2 -22.8

Utilities 58 +2.6 +7.3 +5.3 -8.0

HY Non-Financials 354 +0.5 +11.9 +20.4 -46.0

Consumers 349 -0.6 +8.7 -4.0 -99.4

Energy 473 +11.4 +40.7 +233.1 +158.3

Industrials 321 -0.9 +6.1 -2.2 -53.9

TMT 360 -0.3 +12.5 +0.4 -67.5

Financials 61 +2.6 +6.4 +3.0 -13.9

Banks 50 +2.2 +5.3 +2.9 -10.4

Insurance 144 +5.6 +14.9 +2.3 -37.5

Financial Services 46 +1.7 +3.9 +1.6 -37.6


IBOXX ASW SPREADS BY STRUCTURE/QUALITY

current 1D 1W MTD YTDNon-Financials 51 +2.8 +8.0 -1.3 -14.8

IG Senior 42 +2.8 +7.6 -2.2 -14.5

IG Hybrids 209 +2.4 +15.4 -3.7 -52.9

AAA 23 +2.9 +8.4 +8.0 -6.9

AA 24 +2.6 +7.3 +6.8 -3.9

A 36 +2.8 +7.7 +7.1 -1.4

BBB 68 +2.8 +8.3 -9.7 -27.8

BB 273 +1.1 +14.7 +36.8 -17.0

B 610 -2.4 +8.0 +1.8 -46.6

CCC 1098 -4.9 -12.0 -37.9 +44.6

Financials 61 +2.6 +6.4 +3.0 -13.9

IG Senior 36 +2.3 +5.4 +3.2 -4.7

IG LT2 117 +2.6 +6.4 +1.7 -44.5

IG UT2 179 -2.2 +7.1 -14.1 -53.9

IG T1 176 -5.9 -4.0 -8.2 -24.6

AAA 21 +2.0 +1.7 +0.5 -5.5

AA 21 +2.0 +3.7 +2.5 +3.1

A 47 +2.8 +6.5 +4.1 -6.6

BBB 113 +2.6 +8.0 0.0 -36.4

BB 306 +1.0 +9.3 +3.6 -20.4

B 562 -2.7 +25.1 +6.7 -5.3

CCC 997 +0.2 +84.1 -882.6 -689.2


COV

DBR

FNL

NFI

SSA

-60

-40

-20

0

20

40

60

80

100

0 5 10 15 20

Se

nio

r AS

W (

bp

)

mDur30

40

50

60

70

80

90

100

110

Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15

Sp

rea

d in

bp

iBoxx Non-Fin iTraxx Europe 5Y

iBoxx Fin Sen iTraxx Fin Sen 5Y

<date>




ITRAXX 5Y ON THE RUN SPREADS

current 1D 1W MTDiTraxx Main 50 +0.1 +0.9 0.0

iTraxx Non-Fin* 48 +0.2 +0.7 -0.5

iTraxx Fin Sen 56 -0.3 +1.6 +1.8

iTraxx Fin Sub 122 -0.5 -0.9 0.0

iTraxx XOver 252 +0.8 +1.0 -9.5

Source: Markit, UniCredit Research

ITRAXX 10Y ON THE RUN SPREADS

current 1D 1W MTDiTraxx Main 82 +0.1 +1.8 -1.3

iTraxx Non-Fin* 82 +0.3 +2.2 -1.3

iTraxx Fin Sen 84 -0.5 +0.1 -1.2

iTraxx Fin Sub 162 -0.2 -0.7 0.0

iTraxx XOver 317 +0.9 +0.9 -9.7

Source: Markit, UniCredit Research

INTRADAY HISTORY

Source: Bloomberg, Markit, UniCredit Research

5Y GOVERNMENT YIELDS

current 1D 1W MTD YTDGermany -0.09 +0.01 -0.04 0.00 -0.11

France 0.04 +0.01 -0.04 -0.01 -0.13

Italy 0.49 +0.01 -0.05 -0.10 -0.47

Spain 0.50 +0.01 -0.03 -0.08 -0.38

Austria -0.02 +0.02 -0.01 +0.01 -0.14

UK 1.31 -0.04 -0.21 0.09 0.15

US 1.58 -0.01 -0.11 0.09 -0.07


10Y GOVERNMENT YIELDS

current 1D 1W MTD YTDGermany 0.26 +0.01 -0.14 -0.07 -0.28

France 0.50 0.00 -0.20 -0.11 -0.33

Italy 1.15 +0.02 -0.17 -0.18 -0.74

Spain 1.15 0.00 -0.15 -0.11 -0.46

Austria 0.32 +0.01 -0.14 -0.08 -0.32

UK 1.71 -0.03 -0.24 -0.09 -0.05

US 2.11 0.00 -0.13 0.12 -0.06


158.10

158.19

158.28

158.37

158.46

158.55

158.64

158.73

158.82

158.9149.00

49.20

49.40

49.60

49.80

50.00

50.20

50.40

50.60

50.80

7:30 9:30 11:30 13:30 15:30 17:30CET

iTraxx Europe Series 22 Version 1 5Y Bund Future (RS)11,455

11,495

11,535

11,575

11,615

11,655

11,695

11,735

11,775

11,815

11,855

11,895252

253

254

255

256

257

258

259

260

261

262

263

7:30 9:30 11:30 13:30 15:30 17:30CET

iTraxx Europe Crossover Series 22 Version 1 5Y Dax Future (RS)




Rating Actions Issuer Sector Agency Rating From To Credito Emiliano (CRDEM) Covered Fitch Subordinated Debt

Rating A- BBB

KA Finanz (KAFIN) Non-iBoxx S&P Issuer Credit Rating A A-

Outlook STABLE STABLE

Source: Rating Agencies, Bloomberg, UniCredit Research




Recent Credit Research Publications Date Title Sector/Region Analyst

13 Mar 15 » Daily Credit Briefing Utilities, Automobiles & Parts, Corporates, Banks, Energy

Michael Gerstner, Dr. Sven Kreitmair, Stephan Haber, Dr. Tilo Höpker, Dr. Stefan Kolek

» High Yield Pacenotes - More than an illusion? Belgium, Brazil, Canada, France, Germany, Greece, Ireland, Italy, Luxembourg, Norway, United Kingdom, USA

» Sector Flash RAS - EBA Requirements for Business Reorganization Plans (BRRD)

Banks, Financials, Insurance Luis Maglanoc

» Sector Flash RAS - EIOPA on Symmetric Adjustment of Solvency II Equity Capital Charge


» Sector Flash RAS - ESAs ITS on Credit Quality Steps for ECAIs Credit Assessments


» HY & Xover Update - Strategy, HTOGA, Earnings Previews Corporates Mehmet Dere, Stephan Haber, Dr. Sven Kreitmair, Dr. Christian Weber

12 Mar 15 » Daily Credit Briefing Utilities, Chemicals, Personal & Household Goods, Health Care, Corporates, Energy, Industrial Goods & Services, Construction & Materials

Michael Gerstner, Christian Aust, Dr. Silke Stegemann, Dr. Sven Kreitmair, Jana Arndt, Dr. Christian Weber

» Evening Credit Roundup - Technical reactions everywhere Dr. Christian Weber

» Sector Flash RAS - EFAMA on New EU-wide Pension Products


» Sector Flash RAS - IE on EIOPA Solvency II ITS and Guidelines


» Sector Flash RAS - ESMA Clarifies its Interest Rate Swaps (IRS) Clearing Standards


» HY & Xover Update - Strategy, FCAIM, STLNSW, Earnings Preview

Corporates, Banks Dr. Sven Kreitmair, Jana Arndt, Jonathan Schroer, Dr. Christian Weber

» Sector Report RAS - IFRS 9: The final standard Banks, Financials, Insurance Natalie Tehrani Monfared

» Credit Comment - Italy’s lower house approves legislation on Banche Popolari: assets of over EUR 8bn to be transformed into joint-stock companies

Banks Dr. Tilo Höpker

» Credit Flash (HG/Autos): Volkswagen - hybrids most attractive (Marketweight)

Automobiles & Parts Dr. Sven Kreitmair

» Sector Flash - The 2015 Fed CCAR Banks Emanuel Teuber, Dr. Claudia Vortmüller

» Credit Comment - Lloyds Banking Group Banks Dr. Tilo Höpker

» Credit Flash - Düsseldorfer Hyp: the facts Banks Florian Hillenbrand

» Credit Flash (HG/Industrials): K+S - 'Konfidence'+'Spread' (Overweight)

Industrial Goods & Services Christian Aust

» Credit Flash (HG/Industrials) - ISS: raised to overweight (from marketweight) after FY14 results

Industrial Goods & Services Jonathan Schroer

Source: UniCredit Research

https://www.research.unicredit.eu/DocsKey/credit_docs_2015_146668.ashx?EXT=pdf&KEY=n03ZZLYZf5l73IxHdbTjmrEQWCvGohlE0glhDyO3IZs=�

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UniCredit Research page 17

Disclaimer Our recommendations are based on information obtained from, or are based upon public information sources that we consider to be reliable but for the completeness and accuracy of which we assume no liability. All estimates and opinions included in the report represent the independent judgment of the analysts as of the date of the issue. We reserve the right to modify the views expressed herein at any time without notice. Moreover, we reserve the right not to update this information or to discontinue it altogether without notice.

This analysis is for information purposes only and (i) does not constitute or form part of any offer for sale or subscription of or solicitation of any offer to buy or subscribe for any financial, money market or investment instrument or any security, (ii) is neither intended as such an offer for sale or subscription of or solicitation of an offer to buy or subscribe for any financial, money market or investment instrument or any security nor (iii) as an advertisement thereof. The investment possibilities discussed in this report may not be suitable for certain investors depending on their specific investment objectives and time horizon or in the context of their overall financial situation. The investments discussed may fluctuate in price or value. Investors may get back less than they invested. Changes in rates of exchange may have an adverse effect on the value of investments. Furthermore, past performance is not necessarily indicative of future results. In particular, the risks associated with an investment in the financial, money market or investment instrument or security under discussion are not explained in their entirety.

This information is given without any warranty on an "as is" basis and should not be regarded as a substitute for obtaining individual advice. Investors must make their own determination of the appropriateness of an investment in any instruments referred to herein based on the merits and risks involved, their own investment strategy and their legal, fiscal and financial position. As this document does not qualify as an investment recommendation or as a direct investment recommendation, neither this document nor any part of it shall form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment whatsoever. Investors are urged to contact their bank's investment advisor for individual explanations and advice.

Neither UniCredit Bank nor any of their respective directors, officers or employees nor any other person accepts any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection therewith.

This analysis is being distributed by electronic and ordinary mail to professional investors, who are expected to make their own investment decisions without undue reliance on this publication, and may not be redistributed, reproduced or published in whole or in part for any purpose.

Responsibility for the content of this publication lies with: a) UniCredit Bank AG (UniCredit Bank), Am Tucherpark 16, 80538 Munich, Germany, (also responsible for the distribution pursuant to §34b WpHG). The company belongs to UniCredit Group. Regulatory authority: “BaFin“ – Bundesanstalt für Finanzdienstleistungsaufsicht, Lurgiallee 12, 60439 Frankfurt, Germany.

b) UniCredit Bank AG London Branch (UniCredit Bank London), Moor House, 120 London Wall, London EC2Y 5ET, United Kingdom. Regulatory authority: “BaFin“ – Bundesanstalt für Finanzdienstleistungsaufsicht, Lurgiallee 12, 60439 Frankfurt, Germany and subject to limited regulation by the Financial Conduct Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS, United Kingdom and Prudential Regulation Authority 20 Moorgate, London, EC2R 6DA, United Kingdom. Further details regarding our regulatory status are available on request.

c) UniCredit Bank AG Hong Kong Branch (UniCredit Bank Hong Kong), 25/F Man Yee Building, 68 Des Voeux Road Central, Hong Kong. Regulatory authority: Hong Kong Monetary Authority, 55th Floor, Two International Financial Centre, 8 Finance Street, Central, Hong Kong

d) UniCredit Bank AG Singapore Branch (UniCredit Bank Singapore), Prudential Tower, 30 Cecil Street, #25-01, Singapore 049712 Regulatory authority: Monetary Authority of Singapore, 10 Shenton Way MAS Building, Singapore 079117

e) UniCredit Bank AG Tokyo Branch (UniCredit Tokyo), Otemachi 1st Square East Tower 18/F, 1-5-1 Otemachi, Chiyoda-ku, 100-0004 Tokyo, Japan Regulatory authority: Financial Services Agency, The Japanese Government, 3-2-1 Kasumigaseki Chiyoda-ku Tokyo, 100-8967 Japan, The Central Common Government Offices No. 7.

POTENTIAL CONFLICTS OF INTERESTS Acea 3, 4, 7; Amgen 3; Cerved 4; ENI 3, 4, 7; Holcim 7; Linde 7; OMV 3, 4, 7; Snam 3, 7; Vivendi 3 Key 1a: UniCredit Bank AG and/or a company affiliated with it (pursuant to relevant domestic law) owns at least 2% of the capital stock of the company.

Key 1b: The analyzed company owns at least 2% of the capital stock of UniCredit Bank AG and/or a company affiliated with it (pursuant to relevant domestic law).

Key 2: UniCredit Bank AG and/or a company affiliated with it (pursuant to relevant domestic law) belonged to a syndicate that has acquired securities or any related derivatives of the analyzed company within the twelve months preceding publication, in connection with any publicly disclosed offer of securities of the analyzed company, or in any related derivatives.

Key 3: UniCredit Bank AG and/or a company affiliated (pursuant to relevant domestic law) administers the securities issued by the analyzed company on the stock exchange or on the market by quoting bid and ask prices (i.e. acts as a market maker or liquidity provider in the securities of the analyzed company or in any related derivatives).

Key 4: The analyzed company and UniCredit Bank AG and/or a company affiliated (pursuant to relevant domestic law) concluded an agreement on services in connection with investment banking transactions in the last 12 months, in return for which the Bank received a consideration or promise of consideration.

Key 5: The analyzed company and UniCredit Bank AG and/or a company affiliated (pursuant to relevant domestic law) have concluded an agreement on the preparation of analyses.

Key 6a: Employees of UniCredit Bank AG Milan Branch and/or members of the Board of Directors of UniCredit (pursuant to relevant domestic law) are members of the Board of Directors of the Issuer. Members of the Board of Directors of the Issuer hold office in the Board of Directors of UniCredit (pursuant to relevant domestic law).

Key 6b: The analyst is on the supervisory/management board of the company they cover.

Key 7: UniCredit Bank AG Milan Branch and/or other Italian banks belonging to the UniCredit Group (pursuant to relevant domestic law) extended significant amounts of credit facilities to the Issuer. RECOMMENDATIONS, RATINGS AND EVALUATION METHODOLOGY Company Date Rec. Company Date Rec. Company Date Rec. ACEIM 04/09/2014 Marketweight ENIIM 19/02/2015 Overweight SRGIM 21/01/2015 Restricted ACEIM 29/07/2014 Overweight ENIIM 05/02/2015 no

recommendation SRGIM 06/11/2014 no

recommendation ACEIM 08/07/2014 Restricted ENIIM 27/01/2015 Restricted VIVFP 02/03/2015 Marketweight CERTCH 13/11/2014 Hold FRFP 02/07/2014 Overweight VIVFP 02/02/2015 Underweight CERTCH 17/09/2014 Buy FRFP 24/04/2014 Marketweight WPPLN 02/02/2015 Marketweight CERTCH 03/04/2014 Restricted LGFP 08/04/2014 Buy DLPH 05/03/2015 Overweight OMVAV 05/12/2014 Marketweight DSM 11/02/2015 Overweight OMVAV 10/11/2014 Restricted Overview of our ratings You will find the history of rating regarding recommendation changes as well as an overview of the breakdown in absolute and relative terms of our investment ratings on our website http://www.disclaimer.unicreditmib.eu/credit-research-rd/Recommendations_CR_e.pdf.

Note on the evaluation basis for interest-bearing securities: Recommendations relative to an index:

For high grade names the recommendations are relative to the "iBoxx EUR Benchmark" index family, for sub investment grade names the recommendations are relative to the "iBoxx EUR High Yield" index family.

Marketweight: We recommend having the same portfolio exposure in the name as the respective iBoxx index. We expect that the average total return of the instruments of the issuer is equal to the total return of the index.

Overweight: We recommend having a higher portfolio exposure in the name as the respective iBoxx index. We expect that the average total return of the instruments of the issuer is greater than the total return of the index.

Underweight: We recommend having a lower portfolio exposure in the name as the respective iBoxx index. We expect that the average total return of the instruments of the issuer is less than the total return of the index.

Outright recommendations:

Hold: We recommend holding the respective instrument for investors who already have exposure. We expect that the total return of the instruments of the issuer is equal to the yield.

http://www.disclaimer.unicreditmib.eu/credit-research-rd/Recommendations_CR_e.pdf�




Buy: We recommend buying the respective instrument for investors who already have exposure. We expect that the total return of the instruments of the issuer is greater than the yield.

Sell: We recommend selling the respective instrument for investors who already have exposure. We expect that the total return of the instruments of the issuer is less than the yield.

We employ three further categorizations for interest-bearing securities in our coverage:

Restricted: A recommendation and/or financial forecast is not disclosed owing to compliance or other regulatory considerations such as a blackout period or a conflict of interest.

Coverage in transition: Due to changes in the research team, the disclosure of a recommendation and/or financial information are temporarily suspended. The interest-bearing security remains in the research universe and disclosures of relevant information will be resumed in due course.

Not rated: Suspension of coverage.

Trading recommendations for fixed-interest securities mostly focus on the credit spread (yield difference between the fixed-interest security and the relevant government bond or swap rate) and on the rating views and methodologies of recognized agencies (S&P, Moody’s, Fitch). Depending on the type of investor, investment ratings may refer to a short period or to a 6 to 9-month horizon. Please note that the provision of securities services may be subject to restrictions in certain jurisdictions. You are required to acquaint yourself with local laws and restrictions on the usage and the availability of any services described herein. The information is not intended for distribution to or use by any person or entity in any jurisdiction where such distribution would be contrary to the applicable law or provisions.

Coverage Policy A list of the companies covered by UniCredit Bank is available upon request.

Frequency of reports and updates It is intended that each of these companies be covered at least once a year, in the event of key operations and/or changes in the recommendation.

SIGNIFICANT FINANCIAL INTEREST: UniCredit Bank and/or a company affiliated (pursuant to relevant national law) with them regularly trade shares of the analyzed company. UniCredit Bank and/or a company affiliated may hold significant open derivative positions on the stocks of the company which are not delta-neutral. Analyses may refer to one or several companies and to the securities issued by them. In some cases, the analyzed issuers have actively supplied information for this analysis.

ANALYST DECLARATION The author’s remuneration has not been, and will not be, geared to the recommendations or views expressed in this study, neither directly nor indirectly.

ORGANIZATIONAL AND ADMINISTRATIVE ARRANGEMENTS TO AVOID AND PREVENT CONFLICTS OF INTEREST To prevent or remedy conflicts of interest, UniCredit Bank has established the organizational arrangements required from a legal and supervisory aspect, adherence to which is monitored by its compliance department. Conflicts of interest arising are managed by legal and physical and non-physical barriers (collectively referred to as “Chinese Walls”) designed to restrict the flow of information between one area/department of UniCredit Bank and another. In particular, Investment Banking units, including corporate finance, capital market activities, financial advisory and other capital raising activities, are segregated by physical and non-physical boundaries from Markets Units, as well as the research department. Disclosure of publicly available conflicts of interest and other material interests is made in the research. Analysts are supervised and managed on a day-to-day basis by line managers who do not have responsibility for Investment Banking activities, including corporate finance activities, or other activities other than the sale of securities to clients.

ADDITIONAL REQUIRED DISCLOSURES UNDER THE LAWS AND REGULATIONS OF JURISDICTIONS INDICATED Notice to Australian investors This publication is intended for wholesale clients in Australia subject to the following: UniCredit Bank AG and its branches do not hold an Australian Financial Services licence but are exempt from the requirement to hold an Australian financial services licence in respect of the financial services UniCredit Bank AG and its branches provide to wholesale clients. UniCredit Bank AG and its branches are regulated by BaFin under German laws, which differ from Australian laws. This document is only for distribution to wholesale clients as defined in Section 761G of the Corporations Act. UniCredit Bank AG and its branches are not Authorised Deposit Taking Institutions under the Banking Act 1959 and are not authorised to conduct a banking business in Australia.

Notice to Austrian investors This document does not constitute or form part of any offer for sale or subscription of or solicitation of any offer to buy or subscribe for any securities and neither this document nor any part of it shall form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment whatsoever.

This document is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on to any other person or published, in whole or part, for any purpose.

Notice to Czech investors This report is intended for clients of UniCredit in the Czech Republic and may not be used or relied upon by any other person for any purpose.

Notice to Hong Kong investors The information in this publication is intended for recipient(s) who is/are Professional Investor as defined in Section 1 of Part 1 of Schedule 1 to the Securities and Futures Ordinance (Cap. 571). The information in this publication is based on carefully selected sources believed to be reliable, however we do not make any representation as to the accuracy or completeness of the information. Any opinions herein reflect our judgement at the date hereof and are subject to change without notice. Any investments presented in this publication may be unsuitable for the investor depending on his or her specific investment objectives and financial position. Any reports provided herein are provided for general information purposes only and cannot substitute the obtaining of independent financial advice. Private investors should obtain the advice of their banker/broker about any investments concerned prior to making them. Nothing in this publication is intended to create contractual obligations.

Notice to Italian investors This document is not for distribution to retail clients as defined in article 26, paragraph 1(e) of Regulation n. 16190 approved by CONSOB on 29 October 2007. In the case of a short note, we invite the investors to read the related company report that can be found on UniCredit Research website www.research.unicredit.eu.

Notice to Japanese investors This document does not constitute or form part of any offer for sale or subscription for or solicitation of any offer to buy or subscribe for any securities and neither this document nor any part of it shall form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment whatsoever.

Notice to Polish investors This document is intended solely for professional clients as defined in Art. 3 39b of the Trading in Financial Instruments Act of 29 July 2005. The publisher and distributor of the recommendation certifies that it has acted with due care and diligence in preparing the recommendation, however, assumes no liability for its completeness and accuracy. Notice to Russian investors As far as we are aware, not all of the financial instruments referred to in this analysis have been registered under the federal law of the Russian Federation "On the Securities Market" dated 22 April 1996, as amended (the "Law"), and are not being offered, sold, delivered or advertised in the Russian Federation. This analysis is intended for qualified investors, as defined by the Law, and shall not be distributed or disseminated to a general public and to any person, who is not a qualified investor.

Notice to Singapore investors The information in this publication is intended solely for Institutional and Accredited investors only, as defined in section 4A of the Securities and Futures Act (Cap. 289) of Singapore (“SFA”) and is not intended to be made available to the retail public. We have taken reasonable steps to select information based on sources believed to be reliable. However we do not make any representation as to its accuracy or completeness. This publication is distributed for information only and is not a prospectus as defined in the SFA. It is not and should not be construed as an offer to sell or a solicitation of an offer to buy any security or investment product. It is also not and should not be construed as providing advice regarding any security, investment or product. Any opinions herein reflect our judgement at the date hereof and are subject to change without notice. Such opinions do not take into consideration the investment objectives, financial situation, risk appetite of any other characteristics and particular needs of an investor. You should consult your advisers concerning any potential transactions and consider carefully whether the security, investment or product is suitable for you before making any investment decision. Any reports provided herein are provided for general information purposes only. Any information regarding past performances of the investment may not be indicative of future performances and cannot substitute the obtaining of independent financial advice.

Notice to Turkish investors Investment information, comments and recommendations stated herein are not within the scope of investment advisory activities. Investment advisory services are provided in accordance with a contract of engagement on investment advisory services concluded with brokerage houses, portfolio management companies, non-deposit banks and the clients. Comments and recommendations stated herein rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not suit your financial status, risk and return preferences. For this reason, to make an investment decision by relying solely on the information stated here may not result in consequences that meet your expectations.

Notice to UK investors This communication is directed only at clients of UniCredit Bank who (i) have professional experience in matters relating to investments or (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations, etc.”) of the United Kingdom Financial Services and Markets Act 2000 (Financial Promotion) Order 2005

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or (iii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons.

Notice to U.S. investors This report is being furnished to U.S. recipients in reliance on Rule 15a-6 ("Rule 15a-6") under the U.S. Securities Exchange Act of 1934, as amended. Each U.S. recipient of this report represents and agrees, by virtue of its acceptance thereof, that it is such a "major U.S. institutional investor" (as such term is defined in Rule 15a-6) and that it understands the risks involved in executing transactions in such securities. Any U.S. recipient of this report that wishes to discuss or receive additional information regarding any security or issuer mentioned herein, or engage in any transaction to purchase or sell or solicit or offer the purchase or sale of such securities, should contact a registered representative of UniCredit Capital Markets, LLC. Any transaction by U.S. persons (other than a registered U.S. broker-dealer or bank acting in a broker-dealer capacity) must be effected with or through UniCredit Capital Markets. The securities referred to in this report may not be registered under the U.S. Securities Act of 1933, as amended, and the issuer of such securities may not be subject to U.S. reporting and/or other requirements. Available information regarding the issuers of such securities may be limited, and such issuers may not be subject to the same auditing and reporting standards as U.S. issuers. The information contained in this report is intended solely for certain "major U.S. institutional investors" and may not be used or relied upon by any other person for any purpose. Such information is provided for informational purposes only and does not constitute a solicitation to buy or an offer to sell any securities under the Securities Act of 1933, as amended, or under any other U.S. federal or state securities laws, rules or regulations. The investment opportunities discussed in this report may be unsuitable for certain investors depending on their specific investment objectives, risk tolerance and financial position. In jurisdictions where UniCredit Capital Markets is not registered or licensed to trade in securities, commodities or other financial products, transactions may be executed only in accordance with applicable law and legislation, which may vary from jurisdiction to jurisdiction and which may require that a transaction be made in accordance with applicable exemptions from registration or licensing requirements. The information in this publication is based on carefully selected sources believed to be reliable, but UniCredit Capital Markets does not make any representation with respect to its completeness or accuracy. All opinions expressed herein reflect the author’s judgment at the original time of publication, without regard to the date on which you may receive such information, and are subject to change without notice. UniCredit Capital Markets may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. These publications reflect the different assumptions, views and analytical methods of the analysts who prepared them. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is provided in relation to future performance. UniCredit Capital Markets and any company affiliated with it may, with respect to any securities discussed herein: (a) take a long or short position and buy or sell such securities; (b) act as investment and/or commercial bankers for issuers of such securities; (c) act as market makers for such securities; (d) serve on the board of any issuer of such securities; and (e) act as paid consultant or advisor to any issuer. The information contained herein may include forward-looking statements within the meaning of U.S. federal securities laws that are subject to risks and uncertainties. Factors that could cause a company’s actual results and financial condition to differ from expectations include, without limitation: political uncertainty, changes in general economic conditions that adversely affect the level of demand for the company’s products or services, changes in foreign exchange markets, changes in international and domestic financial markets and in the competitive environment, and other factors relating to the foregoing. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement

This document may not be distributed in Canada.

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UniCredit Research* Michael Baptista Global Head of CIB Research +44 207 826-1328 [email protected]

Dr. Ingo Heimig Head of Research Operations +49 89 378-13952 [email protected]

Credit Research

Luis Maglanoc, CFA, Head +49 89 378-12708 [email protected]

Credit Strategy & Structured Credit Research

Dr. Philip Gisdakis, Head Credit Strategy +49 89 378-13228 [email protected]

Dr. Christian Weber, CFA, Deputy Head Credit Strategy +49 89 378-12250 [email protected]

Dr. Tim Brunne Quantitative Credit Strategy +49 89 378-13521 [email protected]

Holger Kapitza Credit Strategy & Structured Credit +49 89 378-28745 [email protected]

Dr. Stefan Kolek EEMEA Corporate Credits & Strategy +49 89 378-12495 [email protected]

Manuel Trojovsky Credit Strategy & Structured Credit +49 89 378-14145 [email protected]

Financials Credit Research

Franz Rudolf, CEFA, Head Covered Bonds +49 89 378-12449 [email protected]

Valentina Stadler, Deputy Head Sub-Sovereigns & Agencies +49 89 378-16296 [email protected]

Florian Hillenbrand, CFA Covered Bonds +49 89 378-12961 [email protected]

Dr. Tilo Höpker Banks +49 89 378-12960 [email protected]

Luis Maglanoc, CFA Regulatory & Accounting Service +49 89 378-12708 [email protected]

Natalie Tehrani Monfared Regulatory & Accounting Service +49 89 378-12242 [email protected]

Emanuel Teuber Banks, Financial Services, Insurance +49 89 378-14245 [email protected]

Robert Vielhaber Sub-Sovereigns & Agencies +49 89 378-12004 [email protected]

Dr. Claudia Vortmüller Banks +49 89 378-12429 [email protected]

Corporate Credit Research

Stephan Haber, CFA, Co-Head Telecoms, Technology +49 89 378-15192 [email protected]

Dr. Sven Kreitmair, CFA, Co-Head Automotive & Mobility +49 89 378-13246 [email protected]

Jana Arndt, CFA Basic Resources, Industrial G&S, Construction & Materials +49 89 378-13211 [email protected]

Christian Aust, CFA Chemicals, Industrial Transportation, Paper & Packaging +49 89 378-12806 [email protected]

Mehmet Dere Retail, Travel & Leisure, Oil & Gas +49 89 378-11294 [email protected]

Olga Fedotova Russia/CIS (Banks, Oil & Gas, Basic Resources, Telecoms) +44 207 826-1376 [email protected]

Michael Gerstner Utilities, Hybrids +49 89 378-15449 [email protected]

Alexander Rozhetskin Russia/CIS (Banks, Oil & Gas, Basic Resources, Telecoms) +44 207 826-7953 [email protected]

Jonathan Schroer, CFA Media/Cable, Logistics, Business Services +49 89 378-13212 [email protected]

Dr. Silke Stegemann, CEFA Health Care & Pharma, Food & Beverage,Personal & Household Goods +49 89 378-18202 [email protected]

Publication Address

UniCredit Research Corporate & Investment Banking UniCredit Bank AG Arabellastrasse 12 D-81925 Munich [email protected]

BloombergUCCR Internet www.research.unicredit.eu

*UniCredit Research is the joint research department of UniCredit Bank AG (UniCredit Bank), UniCredit Bank AG London Branch (UniCredit Bank London), UniCredit Bank AG Milan Branch (UniCredit Bank Milan), UniCredit Bank New York (UniCredit Bank NY), UniCredit Bulbank, Zagrebačka banka d.d., UniCredit Bank Czech Republic and Slovakia, Bank Pekao, ZAO UniCredit Bank Russia (UniCredit Russia), UniCredit Tiriac Bank (UniCredit Tiriac).

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Daily Credit Brierfing - UniCredit Research - UniCredit Group

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