IFR 03.08.2019

7HILEûUNSECUREDûHOLDERSûOFûTHEû
PARENTûLEVELûBONDSûWILLûRANKûBEHINDûAû
SUBSTANTIALûAMOUNTûOFûSECUREDûANDû
UNSECUREDûDEBTûATûSUBSIDIARIESûTHEYûSTILLû
HAVEûAûDIRECTûCLAIMûTOûUNENCUMBEREDû
ASSETSûANDûCASHmOWSûATûTHEû,ASû6EGASû
SUBSIDIARIESûSAIDû30
4HATûISûTHEûREASONûWHYû30ûHASûKEPTûTHEû
BONDûRATINGûATû"""
ûTHEûSAMEûLEVELûASûTHEû
CORPORATEûRATING
h4HEREûAREûNOûUPSTREAMûORûDOWNSTREAMû
GUARANTEESûAMONGûTHEûVARIOUSûENTITIESûTHATû
WOULDûALLOWûANYûOFûTHEûCOMPANYSûCREDITORSû
ASIDEûFROMû,63#SûUNSECUREDûLENDERSûTOû
HAVEûAûMEANINGFULûCLAIMûONûTHEûVALUEûATûTHEû
53ûASSETSvûTHEûRATINGSûAGENCYûSAID
Bank of America Merrill LynchûBarclaysûANDû
Goldman Sachs WEREûACTIVEûBOOKRUNNERSûONû
HEûDEAL

SOCALED RAISES BOND FUNDING FOR
WILDFIRE INSURANCE

SOUTHERN CALIFORNIA EDISONûHITûTHEûMARKETû
WITHûAû53BNûTWO
PARTûBONDûONû4HURSDAYû
ASûPARTûOFûLARGERûEFFORTSûTOûBUILDûAû53BNû
FUNDûTOûCOVERûFUTUREûLIABILITIESûFROMû
WILDlRESûCAUSEDûBYûITSûEQUIPMENT
3O#AL%DûISûONEûOFûSEVERALû#ALIFORNIAû
UTILITIESûCONTRIBUTINGûTOûTHEûFUNDûINCLUDINGû
0ACIlCû'ASûû%LECTRICûWHICHûSOUGHTû
BANKRUPTCYûPROTECTIONûINûANUARYûAFTERû
BEINGûWEIGHEDûDOWNûBYûLIABILITIESûSTEMMINGû
FROMûWILDlRESûINûûANDû
#ALIFORNIASûGOVERNORû'AVINû.EWSOMû
SIGNEDûAûBILLûINûULYûTOûCREATEûTHEûFUNDûAFTERû
30ûWARNEDûITûCOULDûCUTûRATINGSûONû3O#AL%Dû
ANDû3ANû$IEGOû'ASûû%LECTRICûIFûPOLICYMAKERSû
FAILEDûTOûREDUCEûWILDlREûRISKSûTOûSTATEû
UTILITIESûACCORDINGûTOû2EUTERS
,ASTûWEEKû-OODYSûCHANGEDûITSûOUTLOOKû
ONûTHEûCOMPANYûFROMûNEGATIVEûTOûSTABLEû
FOLLOWINGûTHEûPASSAGEûOFûTHEûBILLûNOTINGûTHATû
FUTUREûLIABILITIESûFROMûWILDlRESûWOULDûBEû
CAPPEDûASûAûRESULT
3O#AL%DûTOOKûADVANTAGEûOFûWHATûREMAINSû
AûSTRONGûMARKETûFORûCREDITûANDûARGUABLYû

STRONGûTECHNICALSûFORûAûSECTORûWHEREû

INVESTORSûREMAINûUNDERWEIGHT

h!ûLOTûOFûPEOPLEûHAVEûBEENûUNDERWEIGHTû

INû#ALIFORNIAûUTILITIES    ûANDûTHEREûHASûBEENû

SOMEûTECHNICALûREBALANCINGûINTOûTHEMvûSAIDû

3COTTû+IMBALLûPORTFOLIOûMANAGERûWITHû

"-/Sû4APLINû#ANIDAûANDû(ABACHT

4HATû%DISONû)NTERNATIONALû3O#AL%DSû

PARENTûALSOûRAISEDûAûLARGER

THAN

EXPECTEDû

53BNûFROMûTHEûEQUITYûMARKETû

ûPERHAPSû

MOREûONCEûTHEûGREENSHOEûISûEXERCISEDû

ûTOû

CONTRIBUTEûTOûTHEûFUNDûISûALSOûCREDITûPOSITIVE

!NDûTHISûWASûSEENûINûSTRONGûPRICEû

PROGRESSIONûWITHûTHEûCOMPANYûRATEDû!!



"""ûPRICINGûAû53Mû

YEARûATû

4REASURIESûPLUSûBPûANDûAû53MûTAPûOFû

ITSûûSûATûBPûBP

BPûTIGHTûTOû

INITIALûTHOUGHTS

!TûTHATûLEVELûTHEû

YEARûCAMEûWITHûATû

LEASTûAûNEGATIVEûBPûOFûCONCESSIONûAGAINSTûAû

CURVEûWHEREûTHEûEXISTINGûûSûHADû

BEENûTRADINGûWITHûAû'

SPREADûOFûBPûANDû

HIGHûDOLLARûPRICEûOFûûACCORDINGûTOû

-ARKET!XESSûDATA

4HATûTAPûALSOûCAMEûINSIDEûSECONDARYûLEVELû

ONûTHEûûWHICHûHADûBEENûCHANGINGû

HANDSûATû4REASURIESûPLUSûBP

!LLûTHISûWASûGOODûNEWSûFORûTHEûISSUERû

WHICHûWASûLOCKINGûINûCONSIDERABLYûLOWERû

PRICINGûTHANûITûDIDûJUSTûAûFEWûMONTHSûAGO

4HEûLASTûTIMEû3O#AL%DûISSUEDûûANDû

YEARûPAPERûBACKûINûEARLYû-ARCHûITûPRINTEDûAû

ûûANDûAûûûATû4REASURIESû

PLUSûBPûANDûBPûRESPECTIVELY

4HATûWASûWHENûYIELDSûONûTHEûûANDû

YEARû4REASURIESûSTOODûATûûANDûû

RESPECTIVELY

/Nû4UESDAYûYIELDSûONûTHOSEûTWOûTENORSû

DROPPEDûTOûûANDûûRESPECTIVELYû

AMIDûCONCERNSûABOUTûAûDECELERATIONûINû53û

GROWTH

,IKEûTHEûDEALûINû-ARCHû3O#AL%DûCAMEû

WITHûlRSTûMORTGAGEûBONDSûAûSECUREDû

SECURITYûTHATû#REDIT3IGHTSûSAYSûWOULDûSTANDû

HIGHERûTHANûWILDlREûCLAIMSûINûTHEûEVENTûOFûAû

RESTRUCTURING

4HATûSECUREDûSTRUCTUREûMAYûHAVEûOFFSETû

SOMEûOFûTHEûPREMIUMûREQUIREDûONûAûBONDû

STILLûEXPOSEDûTOûlREûRISKSûINû#ALIFORNIA

30ûSAIDûINûAûNOTEûLASTûWEEKûTHATûITûCOULDû

LOWERûTHEûCOMPANYSûRATINGûOVERûTHEûNEXTûû

MONTHSûIFûTHEûCOSTûOFûWILDlRESûDEPLETEDûTHEû

INSURANCEûFUND

Bank of America Merrill LynchûJP Morgan ANDû

MUFGûWEREûACTIVEûBOOKRUNNERSûONûTHEûBOND

CROWN CASTLE LANDS US$900m IN

TWO-PART IG DEAL

7IRELESSûINFRASTRUCTUREûOPERATORûCROWN

CASTLEûTOOKûADVANTAGEûOFûIMPROVEDû

SENTIMENTûINûTHEûSECTORûANDûSTRONGûMARKETû

CONDITIONSûAFTERû7EDNESDAYSûINTERESTûRATEû

CUTûTOûLANDûAû53MûTWO

PARTûBONDûONû

4HURSDAY

4HEû"AA"""

"""ûRATEDûCOMPANYûCAMEû

TOûTHEûMARKETûWITHûûANDû

YEARûSENIORû

UNSECUREDûNOTESûTOûRElNANCEûSHORT

TERMû

DEBTûUNDERûTHEûlRMSûCOMMERCIALûPAPERû

PROGRAMMEûANDûREVOLVER

"OOKRUNNERSûWEREûABLEûTOûBRINGûPRICINGû

WELLûINSIDEûINITIALûLEVELSû4HEû53Mû

YEARûWASûPRICEDûATûBPûOVERû4REASURIESû

AFTERûTIGHTENINGûFROMûGUIDANCEûOFûBPû

AREAûANDûINITIALûPRICEûTHOUGHTSûOFûBPû

AREAû4HEû53Mû

YEARûCAMEûATûBPû

INSIDEûGUIDANCEûOFûBPûAREAûANDûPRICEûTALKû

OFûBPûAREA

#REDIT3IGHTSûANALYSTSûHADûEARLIERûSAIDûTHEû

NOTESûWOULDûLOOKûATTRACTIVEûATûBPûANDû

BPûRESPECTIVELY

3TRONGûDEMANDûFORûCORPORATEûRISKûAFTERû

THEû&EDERALû2ESERVEûCUTûRATESûONû7EDNESDAYû

HELPEDûENSUREûAûSTRONGûRECEPTIONûFORûTHEû

BORROWER

h4HEREûISûAûMASSIVEûAMOUNTûOFûNEGATIVE

YIELDINGûDEBTûAROUNDûTHEûGLOBEûANDûTHATû

PERPETUATESûDEMANDûFORûYIELDvûSAIDû$OUGû

,OPEZûPRINCIPALûPORTFOLIOûMANAGERûATû

!RISTOTLEû#REDITû0ARTNERS

h!ûLOTûOFûTHEûNEWûISSUANCEûHASûBEENû

RElNANCINGû#OMPANIESûAREûDOINGûWHATûTHEYû

AREûSUPPOSEDûTOûDOûANDûTAKINGûADVANTAGEûOFû

RECORDûLOWûRATESûANDûSUPERûHIGHûDEMANDûTOû

RElNANCEûDEBTv

RIPPLE EFFECT

/THERûDEALSûELSEWHEREûINûTHEû)'ûMARKETûALSOû

SAWûPRICINGûTIGHTENûBYûASûMUCHûASûBPû

FROMûINITIALûTALKûINûWHATûWASûAûSTRONGû

MARKETûONû4HURSDAY

#REDIT3IGHTSûANALYSTSûALSOûSAIDûTHEûOUTLOOKû

FORûTOWERûCOMPANIESûSUCHûASû#ROWNû#ASTLEû

HADûIMPROVEDûAFTERû4

-OBILEûANDû$ISHû

STRUCKûAûDEALûFORûDIVESTEDû3PRINTûASSETSûTOû

MAKEû$ISHûAûNEWûWIRELESSûCOMPETITOR

#ROWNû#ASTLESûBONDSûHAVEûBEENûTRADINGû

WELLûINûTHEûSECONDARYûMARKETûWITHûTHEûû

SûITûSOLDûINû*ANUARYûRALLYINGûFROMûBPû

OVERû4REASURIESûTOûBP

4HEû$ISHûDEALûSHOULDûRESULTûINûLOWERû

CHURNûANDûHIGHERûINVESTMENTSûINûWIRELESSû

INFRASTRUCTUREûACCORDINGûTOû#REDIT3IGHTS

$ISHûWILLûACQUIREûATûLEASTûû

DECOMMISSIONEDûCELLûSITESûFROMû3PRINTûINûAû

DEALûAIMEDûATûPRESERVINGûAûFOUR

PLAYERû

WIRELESSûMARKET

#ROWNû#ASTLESûPOSITIONûISûWELLûPLACEDûTOû

OFFERûlBREûANDûSMALLûCELLûSERVICESûTOûTHEû

hINFRASTRUCTURE

LIGHTvû4

-OBILEûANDû$ISHû

#REDIT3IGHTSûSAID

CitigroupûCredit AgricoleûDeutsche BankûRBC

ANDûSunTrust RobinsonûWEREûBOOKRUNNERSûONû

THEûDEAL

MYLAN BOND PRICES LEAP ON

MERGER PLANS

"ONDSûFROMûGENERICûDRUGMAKERûMYLANûRALLIEDû

OVERûBPûLASTû-ONDAYûAFTERûTHEûCOMPANYû

ALL ASIAN HIGH-YIELD ISSUERS
1/1/2019 TO DATE

Managing No of Total Share
bank or group issues US$(m) (%)
1 Credit Suisse 41 4,615.21 8.0
2 Haitong Securities 66 3,801.05 6.6
3 Deutsche Bank 48 3,451.25 6.0
4 Citic 47 3,128.28 5.4
5 UBS 40 2,779.70 4.8
6 HSBC 41 2,663.62 4.6
7 JP Morgan 19 2,648.68 4.6
8 Morgan Stanley 33 2,558.73 4.5
9 Goldman Sachs 16 2,353.16 4.1
10 Guotai Junan Securities 56 2,182.52 3.8
Total 144 57,462.70
Excluding equity-related debt.
Source: Refinitiv SDC code: B06d