Moody’s Analytics - T-Bonds Look Juicy

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					                                                                                                                                                 CAPITAL MARKETS RESEARCH
  APRIL 4, 2013

  WEEKLY                                              T-Bonds Look Juicy Compared to Skimpy
  MARKET OUTLOOK                                      Offerings from Japan and Germany
  Moody’s Capital Markets Research, Inc.              Credit Markets Review and Outlook by John Lonski
  Weekly Market Outlook Contributors:                 T-bonds look juicy compared to skimpy offerings from Japan and Germany.
  David W. Munves, CFA                                                                                                                                 » FULL STORY PAGE 2
  1.212.553.2844                             Topic of the Week by Ben Garber
  John Lonski                                         Global capital markets slow as Europe slumps.
  1.212.553.7144                                                                                                                                 » FULL STORY PAGE 5
  Ben Garber
  1.212.553.4732                                      The Week Ahead                           We preview economic reports and forecasts from the US, UK/Europe, and Asia/Pacific regions.
  Njundu Sanneh                                                                                                                                         » FULL STORY PAGE 9
  1.212.553.4036                            The Long View
  Yukyung Choi                                         Check our chart here for forecast                  Credit        Investment Grade: Year-end 2013 spread to remain
  1.212.553.0906                                      summaries of key credit market                      Spreads       close to its recent 116 bp.                                                                                               High Yield: Recent spread of 478 bp could narrow to
  Irina Makarova                                      metrics. Full updated stories (“First-                            450 bp by year end 2013 in response to the global
  1.212.553.4307                                      quarter 2013’s worldwide issuance of                              application of monetary stimulus, a diminution of                           high-yield corporate bonds advanced                               political risks, and appreciation in equity prices.
  Franklin Kim                                        by 25% annually to a record $167
  1.212.553.4419                                      billion”) begin on page 18.                         Defaults      US HY default rate: easing to 2.5% by December 2013                                                                                 Issuance      IG: up by 33% to a record $1.134 trillion for 2012. In
  Ervis Deda                                                                                                            2013, IG bond issuance may rise by 1% to a new
  1.212.553.1404                                                                                                        record $1.146 trillion.                                                                                                 HY: up by 48% to a record $388 billion for 2012;
                                                                                                                        2013 may rise 4% to a new record $403 billion.
  Moody's Analytics/Europe:
  Melanie Bowler
  44.0207.772.1528                                                                                                                                     » FULL STORY PAGE 18
                                                      Ratings Round-Up
  Moody's Analytics/Asia-Pacific:                     US balance goes for upgrade; negative dominates Europe.
  Fred Gibson
  1.612.9270.8146                                                                                                                                     » FULL STORY PAGE 2O
  Katrina Ell                                         Market Data
  1- 61-2-9270-8144                                   Credit spreads, CDS movers, issuance.
                                                                                                                                                      » FULL STORY PAGE 22
  Dana Gordon
                                                      Moody’s Capital Markets Research recent publications
  1.212.553.0398                                      Links to commentaries on: COF, issuance, bank risk, Cyprus, rotation, C&I, Cyprus, ECB, sequester,                              JCP.
                                                                                                                                                      » FULL STORY PAGE 26

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                                                                                                                  CAPITAL MARKETS RESEARCH

    Credit Markets Review and Outlook

                            Credit Markets Review and Outlook
                            By John Lonski, Chief Economist, Moody’s Capital Markets Research, Inc.

                            T-Bonds Look Juicy Compared to Skimpy Offerings from Japan and
                            Market focus shifted to the Far East. Risk premiums rose slightly in reaction to what is, hopefully, mere sabre
                            rattling from the Korean peninsula. By contrast, markets rallied in response to the Bank of Japan’s (BoJ)
                            stepped up efforts to combat a chronically sluggish economy and its offshoot of persistent price deflation.
                            Through forthcoming purchases of Japanese government bonds, the BoJ aims to lift February’s -0.7% annual
                            rate of Japanese consumer price deflation to a 2.0% annual rate of inflation by 2015.
                            Monthly BoJ purchases of Japanese government debt are expected to approach 1.4% of Japan’s GDP, which is
                            much greater than the 0.6% of US GDP approximated by the Federal Reserve’s $85 billion per month
                            purchase of US Treasuries and agency MBS.
                            Ironically, while many doubt the BoJ’s ability to end Japanese price deflation that has persisted since 1999,
                            many believe that the Fed’s extraordinary stimulus risks triggering breakneck price inflation. In all likelihood,
                            the truth is somewhere in between. The cost advantages of emerging market competitors may limit the rise
                            by Japanese price inflation to an annual rate no greater than 1%, where a similar competitive disadvantage
                            reins in US price inflation. Though the US may outperform Japan through 2023, US activity will lag its own
                            historical trend.
                            During the next 10 years the average US annual growth rates may approximate 2.5% for real GDP and 2% for
                            price inflation. If fiscal austerity makes room in government budgets for the future funding of massive
                            retirement obligations accruing to baby boomers, the 10-year Treasury yield might fluctuate in a range of
                            2.5% to 3.5% and average 3% through 2023.
                            A projected 10-year Treasury yield that is 1.5 percentage points less than the accompanying rate of nominal
                            GDP growth is hardly a radical notion. During the 20 years ended 1973, or when publicly-held federal debt
                            fell from 61% to 25% of GDP, the 6.7% average annualized increase by nominal GDP was accompanied by a
                            4.65% average for the 10-year Treasury yield. Given that the 10-year Treasury yield trailed nominal GDP
                            growth by 2.0 percentage points during the 20 years-ended 1973, the benchmark might well trail nominal
                            GDP growth by 1.5 percentage points, on average, through 2023, especially since both the US’s competitive
                            standing in the world economy and American demographics have switched from favoring brisk growth during
                            the 1950s and 1960s to weighing against rapid growth through the next 10 years.
                            The eurozone’s contractive composite PMI implies that Germany’s 1.25% 10-year government bond yield will
                            not rise by much anytime soon. At nearly 1.8%, the US’s 10-year Treasury yield, US Treasuries look
                            compelling compared to German government paper and to the 0.45% yield of the 10-year Japanese
                            government bond. An expected appreciation of the dollar exchange rate adds to the lure of US Treasuries to
                            foreign investors.
                            To global investors, supposedly low-yielding US Treasury bonds become even more attractive amid
                            expectations of a more richly priced dollar exchange rate in terms of yen and euros. Both the weaker yen and
                            the eurozone’s weak economy ought to eventually prompt policy shifts that soften the euro. Even if the Fed
                            starts to wind down its purchases of US Treasury bonds, the extremely low government bond yields of Japan
                            and Germany will help to limit the upside for Treasury yields. Thus, the 10-year Treasury yield may be no
                            greater than 2.25% by year’s end.

                            Slower profits and faster debt growth menaces corporate credit quality
                            The recent deceleration by US corporate profits is the consequence of subpar global expenditures. In all
                            likelihood, US Treasury bond yields will not climb significantly higher until a substantive reacceleration of
                            profits materializes.
                            The annual growth rate of US corporate profits from current production is expected to slow from 2012’s
                            6.8% to 2013’s 3.3%, but then recover to 6.0% in 2014. A realization of that recovery is mandatory if a
                            further narrowing of credit spreads is to occur. (Figure 1.)
                            Recently, the yearly increase of profits from current production slowed from Q4-2011’s 9.2% and Q3-2012’s
                            7.5% to Q4-2012’s 3.1%. This slump is noteworthy in view of how the previous corporate credit cycle upturn
                            deteriorated not long after profits’ annual increase slowed from Q4-2005’s 19.5% and Q3-2006’s 12.8% to
                            Q4-2006’s 3.7%.
2         APRIL 4, 2013                                                                CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                                                   CAPITAL MARKETS RESEARCH

    Credit Markets Review and Outlook

                              Figure 1: A Rejuvenation of Profits Would Assure an Extension of the Corporate Credit Cycle Upturn

                                          Corporate Credit Cycle Downturns are Shaded
                                          Profits from Current Production: nonfinancial corporations, yy % change of mov 4 qtr sum
                                 84Q1 86Q2 88Q3 90Q4 93Q1 95Q2 97Q3 99Q4 02Q1 04Q2 06Q3 08Q4 11Q1 13Q2

                            Furthermore, credit quality has been pressured by the faster growth of corporate debt relative to profits. In a
                            manner that can soften corporate credit quality, the year-over-year increase by non-financial corporate
                            profits from current production slowed from H1-2012’s 11.7% to H2-2012’s 4.7%, as the annual percent
                            increase by corporate debt quickened from 6.7% to 7.7%. In Q4-2012, an 8.2% annual increase by
                            nonfinancial-corporate debt outran the group’s 4.3% yearly increase by profits from current production.
                            Earlier, profits generally outran debt in terms of year-to-year growth rates from Q4-2009 through Q2-2012.
                            (Figure 2.)
                              Figure 2: Narrower Credit Spreads Require a Lower Ratio of Corporate Debt to Profits

                                                     Corporate Credit Cycle Downturns are Shaded
                                                     Debt X Profits from Current Production: nonfin corp











                                 84Q1 86Q2 88Q3 90Q4 93Q1 95Q2 97Q3 99Q4 02Q1 04Q2 06Q3 08Q4 11Q1 13Q2

                            During the previous economic recovery, credit quality was enhanced when profits outpaced debt from Q2-
                            2002 through Q3-2006. By contrast, when nonfinancial corporate debt grew more rapidly than profits from
                            Q1-2007 through Q4-2009, a corporate credit cycle downturn took hold. Unless debt slows vis-a-vis profits,
                            credit spread narrowing may cease. (Figure 3.)
                            In all likelihood, if corporate debt continues to outrun profits, a peaking of the corporate credit cycle will
                            come into view.

                            Shrinkage by net interest expenses offsets risks arising from faster debt growth
                            However, a drop in net interest expense offset some of the risks implicit to the faster growth of debt relative
                            to profits. Notwithstanding Q4-2012’s 8.2% year-to-year increase by the outstanding indebtedness of US
                            nonfinancial corporations, the group’s net interest expense fell by 3.0% yearly. The drop by net interest
3         APRIL 4, 2013                                                                                CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                                                                    CAPITAL MARKETS RESEARCH

    Credit Markets Review and Outlook
                            expense in the face of faster debt growth reflected how the average bond yield of US investment grade
                            industrial companies fell from Q4-2011’s 3.40% to Q4-2012’s 2.68%, while the US’s average speculative
                            grade bond yield plummeted from 8.67% to 6.37%. (Figure 4.)
                             Figure 4: Lower Borrowing Costs Allow for a Drop by Net Interest Expense Despite Faster Growth of Debt:
                                        nonfin corp, yy % changes
                                            Net Interest Expense ( L ) Corporate Debt ( R )
                             50.0%                                                                                                      16.00%
                             45.0%                                                                                                      14.75%
                             40.0%                                                                                                      13.50%
                             35.0%                                                                                                      12.25%
                             30.0%                                                                                                      11.00%
                             25.0%                                                                                                      9.75%
                              0.0%                                                                                                      2.25%
                             -5.0%                                                                                                      1.00%
                            -10.0%                                                                                                      -0.25%
                            -15.0%                                                                                                      -1.50%
                            -20.0%                                                                                                      -2.75%
                            -25.0%                                                                                                      -4.00%
                                   85Q1 87Q3 90Q1 92Q3 95Q1 97Q3 00Q1 02Q3 05Q1 07Q3 10Q1 12Q3

                            During the previous economic recovery, the yearly increase of nonfinancial corporate debt first broke above
                            8% in Q2-2006. However, instead of shrinking, net interest expense grew by 7.8% annually when debt
                            advanced by 8.6% annually in Q2-2006. (Figure 5.)

                             Figure 5: A Declining Ratio of Net Interest Expense to Profits Lessens the Risk of a Corporate Credit Cycle Downturn
                                        Corporate Credit Cycle Downturns are Shaded
                                        Net Interest Expense as % Profits from Current Production: nonfin. corporations, mov 2 qtr ratio









                                84Q1 86Q2 88Q3 90Q4 93Q1 95Q2 97Q3 99Q4 02Q1 04Q2 06Q3 08Q4 11Q1                                           13Q2

4         APRIL 4, 2013                                                                                       CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                                             CAPITAL MARKETS RESEARCH

    Topic of the Week
    The Week Ahead

                                        Topic of the Week
                                        By Ben Garber, Economist, Moody’s Capital Markets Research, Inc

                                        Global Capital Markets Slow as Europe Slumps
                                        Corporations globally have become increasingly skittish in recent weeks about accessing the capital markets
                                        and executing deals. Deep yearly declines in corporate and financial bond issuance were registered over the
                                        last two months, while the count of M&A transactions plummeted to the lowest levels in years. The lack of
                                        a clear bottom for Europe’s recession has inhibited business activity worldwide. Yet continued robust
                                        demand for US dollar risk assets presents a contrasting opinion that financial markets will ultimately stage a
                                        broad revival and Europe’s struggles will be contained.

                                    M&A falls off a cliff
                                    The frequency of merger announcements began the year at a solid pace, with a significant impact on the
                                    trends of rating changes and debt issuance. But soon after, the incidence of M&A activity was inhibited by
                                    Europe’s failure to lift economic results, event risks derived from Cyprus, and the Italian election results. The
                                    count of 2,419 global M&A deals in January was 5% ahead of last year’s monthly average. The count sank
                                                                                                                      below 2,000 in both February and
   Figure 1: Special Events Linked to Rating Reviews for Downgrade for US Corporate &                                 March, levels not seen since 2009.
                                              Financial Issuers                                                       Companies seeking both stable financial
                                                                                                                      markets and more predictable earnings
           Number of Reviews Linked To Each Factor and % of Total Downgrades, Cash in $Billions                       trends are inclined to wait out the latest
                                            Downgrade Reviews linked to….                                             bout of risks emanating from the
                  M&A                  Shareholder Payments     Litigation & Accounting    Raw Materials Inflation    eurozone. The increased likelihood of
           #     % of total $ total    #     % of total $ total  #      % of total $ total #     % of total   $ total capital markets disruptions occurring
2005         110     44% $195.4          34      14%      $74.1     43       17% $106.8      24      10% $37.6 between the announcement and closing
2006         124     44% $168.1          53      19% $91.6          46      16% $209.3        13       5% $93.5 of a deal gives reason for pause.
2007#           165        51% $247.9         78      24%     $161.9   28    9%    $13.4   16      5%     $10.7
2008#            69        15% $799.2         12       3%      $23.8   28    6%    $88.2   46     10%     $86.5    In the US, the slowing of M&A was
2009#            27         9% $84.4           7       2%       $2.9    11   4%     $0.4    4      1%      $0.7    evident in a warning signal of future
2010             47        33% $53.3          19      13%       $6.7    11   8%    $18.6    2      1%      $1.9    rating actions. In the first half of last
2011             51        43% $187.8         13      11%     $23.2    10    8%    $22.7    5      4%      $0.9
                                                                                                                   quarter, 20 US corporate and financial
2012             54        39% $75.9          19      14%      $85.0     9   6%     $2.3    2      1%      $2.6
                                                                                                                   issuers were placed on watch for a
Quarter:                                                                                                           rating change by Moody’s at least in
08Q2#            17        18% $47.3            2      2%      $3.3    10    11%    $1.6    13    14%      $9.2    part because of merger activity. The
08Q3#            26        22% $489.0           0      0%      $0.0     5     4%    $3.5    21    18%     $51.4    number of companies placed on watch
08Q4             14         9% $128.3           5      3%      $7.9     2     1%   $80.1     8     5%     $23.1    related to mergers sank to just three in
09Q1#             8         5%   $9.1           1      1%      $0.2     2     1%    $0.0     2     1%      $0.7    the second half of the quarter. M&A
09Q2#             7        10% $15.6            2      3%      $0.1     4     6%    $0.2     0     0%      $0.0
                                                                                                                   linked downgrade reviews accounted
09Q3              4        10% $54.9            1      3%      $0.0     2     5%    $0.0     2     5%      $0.0
09Q4              8        25%   $4.8           3      9%      $2.6     3     9%    $0.2     0     0%      $0.0    for 75% of all negative reviews in the
10Q1              8        31%   $4.7           4     15%      $2.2     0     0%    $0.0     1     4%       $1.1   first half of the quarter, which was a
10Q2              9        30%  $21.1           4     13%      $0.7     6    20%   $15.7     0     0%      $0.0    record breaking pace at the time. Yet
10Q3             21        39% $19.0            7     13%      $1.3     4     7%    $2.4     0     0%      $0.0    the share for the entire quarter ending
10Q4              9        29%   $8.5           4     13%      $2.5     1     3%    $0.5     1     3%      $0.8    up dropping to 52%, which was still a
11Q1              9        60% $95.4            3     20%      $4.5     0     0%    $0.0     0     0%      $0.0
                                                                                                                   seven-quarter high (Figure 1). Large
11Q2             18        64% $43.5            1      4%      $3.7     1     4%    $0.2     2     7%      $0.0
11Q3             12        39% $30.1            3     10%      $1.7     3    10%    $1.3     3    10%      $0.9
                                                                                                                   corporations such as Dell and Heinz
11Q4             12        26% $18.8            6     13%     $13.3     6    13%   $21.2     0     0%      $0.0    that are subject to takeovers impair the
12Q1              9        24% $15.6            2      5%     $10.1     1     3%    $0.0     0     0%      $0.0    credit quality of many billions of dollars
12Q2             13        43%  $11.5           6     20%      $8.1     2     7%    $0.2     0     0%      $0.0    of their existing borrowings by piling on
12Q3             17        43% $25.5            4     10%      $4.4     5    13%    $1.8     1     3%      $0.0    new debt. In recent weeks, concerns
12Q4             15        45% $23.3            7     21%     $62.4     1     3%    $0.3     1     3%      $2.6    that debt investors had about M&A
13Q1             14        52% $32.7            4     15%     $37.7     1     4%    $0.3     0     0%      $0.0
                                                                                                                   were replaced by broader worries of
#percentages exclude financial guarantor linked downgrade reviews
                                                                                                                   slower business sales growth.

5          APRIL 4, 2013                                                                         CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                                                CAPITAL MARKETS RESEARCH

    Topic Week Ahead
     The of the Week      Financials lead cutback in bond issuance
                          As with M&A, debt issuance by corporate and financial issuers took a step backward in the last couple of
                          months. Global bond issuance of $985 billion in the first quarter was 19% behind the $1.2 trillion sum in the
                          same quarter last year (Figure 2). March issuance of $326 billion was notably limited, down 24% year-over-
                          year to the lowest sum for that month since 2008. The largest sources of these declines came from
                          financial issuers and debt denominated in euros. First-quarter global financial company issuance of $415
                          billion was down 39% year-over-year, while the $231 billion in euro-denominated bonds represented the
                          same percentage point decline. The transmission channel between European sovereigns and financial
                          institutions is alive and well, as uncertain political outcomes weigh on investor confidence in banks. Highly
                          accommodative monetary policy can encourage both debt issuance and investment by limiting a rise in
                          interest rates, yet significantly higher volumes will only come when the economy is doing substantially
                            Figure 2: Corporate and Financial Bond Issuance by Currency
                                     Industrial        Financial









                                  USD IG USD IG               USD HY USD HY          EUR IG EUR IG         Rest of Rest of
                                  Q1 12 Q1 13                  Q1 12 Q1 13            Q1 12 Q1 13          World IGWorld IG
                                                                                                            Q1 12 Q1 13
                           Sums in $billions, sources: Dealogic, Moody's Analytics

                          The eurozone effect
                          The timeline for Europe’s recovery was made cloudier as the slump appeared to deepen: the Markit Eurozone
                          Manufacturing PMI fell to a three month low of 46.8 in March. This figure lies firmly under the reading of 50
                          that divides economic expansion and contraction; by this measure, the eurozone has fallen short of
                          expansion for 20 consecutive months. This PMI low follows news of the eurozone unemployment rate
                          reaching a record high of 12.0% in both January and February. Some moderation for the recession is seen in
                          a slower rate of increase for the unemployment rate, up 1.1% yearly to February from the recent high of
                          1.4% last June (Figure 3). Moody’s Analytics expects unemployment to crest around 12.4% in the third
                          quarter, as industrial sector and labor market decline proceeds, if at a slower pace. These weak conditions
                          heighten the probability of extreme political actions that imperil financial market stability. Though it may
                          appear that connections between US and European financial markets are not as strong as in the recent past,
                          tail risks present a reason for investors to tread carefully.
                           Figure 3: Eurozone Manufacturing PMI vs Change in Unemployment
                                     Eurozone Manufacturing PMI ( L )
                                     Eurozone Unemployment Rate: YoY change in % VALUES INVERTED ( R )

                             61                                                                                         -1.4


                            46                                                                                          0.6


                           Sources: Eurostat, Markit

6         APRIL 4, 2013                                                                              CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                                                     CAPITAL MARKETS RESEARCH

     The Week Ahead       The US retains an appetite for risk
    Topic of the Week
                          Resistance to Europe’s malaise is seen in solid demand for high risk US dollar financial assets. Growing US
                          dollar volumes of high yield bonds and loans contrast with the falling sums of most other classes of
                          corporate debt issues. USD high yield bond issuance of $125 billion in the first quarter was up 20% year-
                          over-year, while the $144 billion of Moody’s-rated bank credit facilities for US high yield issuers rose 60% in
                          the same time frame (Figure 4). March’s $57 billion worth of high yield bank credit facilities is a five-year
                          high that includes in part the previous pick up in M&A. Along with stock market highs, the ongoing bulge in
                          high yield origination reflects the mild default environment and the assumption of a long-term positive
                          trend for corporate earnings. To maintain these trends the US must hold steady in the face of fiscal
                          tightening while avoiding the foreign-derived financial shocks that have perennially undermined market
                           Figure 4: USD HY Bond Issuance vs US HY Bank Credit Facilities
                                   USD High Yield Bond Issuance         Moody's Rated US High Yield Bank Credit Facilities









                           Sources: Dealogic, Moody's Analytics, Moody's Investors Service

                          The broad global decline in capital markets transactions is tracked by falling interest rates and higher stock
                          market volatility. The negative correlation between the 10-year Treasury yield and the VIX index of options
                          prices on the S&P 500 intensified to -0.67 over the past two quarters compared to a weaker historical
                          relation of -0.25 (Figure 5). The general rise in interest rates from mid-November through mid-February
                          came in the context of more sanguine opinions about global economic growth. That reflected some degree
                          of risk-on trading patterns and the idea that the Federal Reserve was nearing a transition away from QE3. At
                          1.83% the current yield on the 10-year Treasury has fallen 24 bp in the last few weeks as investors seek an
                          alternative to European sovereign debt while the Fed appears to have shifted into wait-and-see mode.
                            Figure 5: 10-year Treasury Yield vs VIX Index

                                     10-year Treasury Yield: % ( L )        VIX Index VALUES INVERTED ( R )


                           2.03                                                                                              12.3

                           1.93                                                                                              14.3




                           Sources: Federal Reserve, CBOE

                          More IPOs would accompany improved financial conditions
                          Smoother sailing for the financial markets would allow companies to improve their ability to service debts
                          via common stock issuance. There were five rating reviews for upgrade linked to IPOs or secondary stock

7         APRIL 4, 2013                                                                                   CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                                         CAPITAL MARKETS RESEARCH

     The of the Week
    TopicWeek Ahead       offerings last quarter, equaling the highest count of the last 11 quarters (Figure 6). January’s $7.2 billion in
                          new stock issuance by nonfinancial firms was the largest monthly total since Facebook’s IPO last May. Stock
                          issuance trends remain muted compared to apex of the dotcom boom, with the $68 billion of nonfinancial
                          stock issued in the past year well behind the peak of $145 billion in the year ending April 2000. Given the
                          minimal volume of US IPOs relative to the size of the corporate debt market, new stock issues are not
                          indicative of broad improvements in credit quality. Yet they can be taken to imply a coming broader
                          financial market recovery that is receptive to high volumes of bond and loan issuance at ever tighter spreads.

                                 Figure 6: Special Events Linked to Rating
                                           Reviews for Upgrade
                            Number of Reviews Linked To Each Factor and % of Total
                                         Upgrades, Cash in $Billions
                                            Upgrade Reviews linked to…

                                                  M&A                  Common Equity Infusions
                                       #        % of total   $ total    #        % of total   $ total
                          2005             55       38% $72.9               14       10%        $8.9
                          2006             58       41% $83.7               13        9%        $5.2
                          2007             57       44%  $61.7              10        8%        $4.2
                          2008             29       41% $377.6               1        1%        $0.0
                          2009             29       45% $60.7                7       11%       $35.6
                          2010             40       44%  $72.1              13       14%       $38.6
                          2011             45       58% $32.9                8       10%        $9.8
                          2012             37       43% $24.8                6        7%        $5.0

                          08Q2             11       46%  $14.7              0          0%       $0.0
                          08Q3              6       43% $192.8              0          0%       $0.0
                          08Q4              8       73% $135.7              0          0%       $0.0
                          09Q1              6       55% $21.2               0          0%       $0.0
                          09Q2             10       63%  $15.1              1          6%       $0.0
                          09Q3              5       33%   $1.7              3        20%       $34.5
                          09Q4              8       35% $22.7               3        13%         $1.1
                          10Q1             10       45%  $13.7              0          0%       $0.0
                          10Q2              8       31%  $17.4              9        35%       $22.1
                          10Q3             11       52%  $17.4              1          5%       $3.2
                          10Q4             11       52% $23.6               3        10%       $13.3
                          11Q1             11       55% $13.0               5        25%        $9.2
                          11Q2             12       44%   $5.7              3         11%       $0.6
                          11Q3              9       60%   $6.6              0          0%       $0.0
                          11Q4             13       81%   $7.6              0          0%       $0.0
                          12Q1              9       47%   $2.7              4        21%        $3.1
                          12Q2              5       17%   $4.8              0          0%       $0.0
                          12Q3             12       63% $10.2               0          0%       $0.0
                          12Q4             11       58%   $7.1              2         11%       $1.9
                          13Q1              8       36% $13.9               5        23%        $2.7

8         APRIL 4, 2013                                                                       CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                              CAPITAL MARKETS RESEARCH

    The Week Ahead

                        The Week Ahead
                        THE US
                        By John Lonski and Ben Garber
                        Moody’s Capital Markets Research Group
                        Estimates are consensus views. Release times are US Eastern Daylight Time.

                        FRIDAY, APRIL 5

                        Employment Report – March
                        Time: 8:30 am
                        Forecast: 198,000 nonfarm payrolls, 7.7% unemployment rate
                        Sinking jobless claims point to no near-term setbacks for employment growth. Claims averaged 343,000
                        over the past four weeks—near the lowest such figure in five years. Much labor market slack remains,
                        however, as the 1.8% growth in average weekly earnings show little pressure on wages and prices. Federal
                        government cutbacks that can cost in excess of 500,000 jobs this year will further drag out the labor market

                        Trade Balance – February
                        Time: 8:30 am
                        Forecast: -$44.6 billion
                        Import growth and higher commodity costs will prevent any narrowing of the trade deficit in February. Oil
                        and industrial metals prices rose modestly that month, though subsequent March data brought some price
                        declines. Emerging market demand is needed to keep US exports afloat, as expectations for growth in
                        Europe continue to be marked lower.

                        WEDNESDAY, APRIL 10

                        FOMC Meeting Minutes
                        Time: 2:00 pm
                        Minutes of the March FOMC meeting will likely highlight an economic outlook that is slightly more negative
                        than the previous quarter. Chairman Bernanke stated at his press conference that a substantial pause is
                        likely between the end of QE3 and the start of interest rate hikes. That implies that easy monetary policy is
                        here for the long haul, particularly with the yearly change in the core PCE Price Index falling short of 1.5%.

                        THURSDAY, APRIL 11

                        Import Price Index – March
                        Time: 8:30 am
                        Forecast: -0.1%
                        Softer global growth will likely take the sting out of foreign-derived inflation, with the March Import Price
                        Index projected to decline for the first time in three months. Moody’s Industrial Metals Price Index sank
                        6.5% in March, the largest decline in 17 months. That swung the year-over-year change for the metals index
                        from a 7.6% gain in December to a 4.5% decline in March, which leaves the US economy far removed from
                        the threatening commodity price jumps seen in 2011.

                        FRIDAY, APRIL 12

                        Retail Sales – March
                        Time: 8:30 am
                        Forecast: 0.0% overall, 0.0% ex auto
                        A modest downtick for vehicle sales limits the upside for retail sales in March. Recent monthly sales figures
                        have shown some consumer resilience in the face of higher taxes and future government spending cuts. Yet

9       APRIL 4, 2013                                                              CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                           CAPITAL MARKETS RESEARCH

     The Week Ahead      longer-term trends are showing much less strength, with sales excluding autos and gasoline growing only
                         2.8% yearly to the quarter ending February, a two-year low.

                         Producer Price Index – March
                         Time: 8:30 am
                         Forecast: 0.1% overall, 0.2% core
                         The Producer Price Index in March may expand at the slowest rate in three months as price trends for
                         intermediate goods remain restrained. Though it equaled a ten-month high, the yearly change of prices on
                         core intermediate goods only expanded 0.7% in February. Recent commodity price declines and limited
                         wage growth also serve to keep business cost growth in check.

                         University of Michigan Consumer Confidence – April Preliminary
                         Time: 9:55 am
                         Forecast: 80.0
                         Confidence in the April Michigan can continue its recent upswing, following a sharp increase from the initial
                         March reading of 71.8 to the final reading of 78.6. Consistent job growth and the buoyant stock market
                         have overcome concerns about congress’s inability to moderate the sequester cuts. Yet despite setting a
                         four-month high, the March confidence figure lags the average of the 2001-2007 economic expansion by

                         Business Inventories – February
                         Time: 10:00 am
                         Forecast: 0.4%
                         Business inventories are forecast to rise at a moderate pace in February following January’s strong increase.
                         The weak pace of inventory growth that weighed down GDP at the end of last year is picking up as business
                         confidence increases. Orders for core durable goods rose 17% annualized in the quarter ending February,
                         giving businesses evidence of a solid recovery for demand.

                         By the European staff of Moody’s Analytics
                         Release times are Greenwich Mean Time

                         Focus: Cyprus and Italy Add to Euro Zone Uncertainty
                         Cyprus and Italy will dominate the markets next week. Uncertainty about the haircut imposed by Cyprus
                         on those with large bank deposits increases investors’ fears about the euro zone sovereign debt crisis. The
                         Cypriot government had previously indicated that depositors in the Bank of Cyprus, the island’s largest
                         lender, would lose around 40% of their unsecured savings, and those in Laiki Bank, the second largest
                         bank, would likely lose up to 80%. According to the latest estimates, however, wealthy depositors in the
                         Bank of Cyprus could face losses of as much as 60% as the country scrambles to save what is left of its
                         depressed banking sector. Increasing losses will prompt domestic savers to reduce spending, dragging on
                         the economy.
                         Elsewhere, Italian President Giorgio Napolitano continues to seek a path out of the political impasse
                         created after February’s inconclusive election. Although the president formed a committee of political
                         and private sector leaders to try to build a technocrat government, new elections in a few months is the
                         most likely scenario. This delay drags out the uncertainty over Italy's budget discipline, which could
                         reignite Europe’s debt crisis.
                         Italy’s situation and financial aid for Cyprus will likely top the agenda at the meeting of euro zone finance
                         ministers on April 12 in Dublin.

10       APRIL 4, 2013                                                          CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                          CAPITAL MARKETS RESEARCH

     The Week Ahead      Data out next week are expected to show industrial production has worsened in Italy, Spain, the U.K.,
                         Germany, and the euro zone because of weakening household spending. This is consistent with the euro
                         zone purchasing managers’ index for manufacturing, which fell to a three-month low of 46.8 in March
                         from 47.9 in the previous month, marking 20 straight months below the expansion/contraction threshold
                         of 50. The manufacturing PMI for Germany slipped back into contractionary territory, and industrial
                         production likely improved in France. Pressure on consumer price inflation eased further in France, Italy,
                         Germany and Spain.

                         FRIDAY, APRIL 5

                         Italy – Government Finance – 2012Q4
                         Time: 9:00 AM GMT
                         Forecast: -€8.5 billion
                         The Italian government's fiscal deficit improved on a year-over-year basis in the third quarter of 2012,
                         narrowing to €6.8 billion from €10 billion in the three months to September 2011. The main driver was
                         higher revenues due to slower economic contraction. The electoral revolt against austerity and the
                         deepening recession in Italy, however, have forced the outgoing government to increase its 2013 budget
                         deficit target to 2.9% of GDP from 1.8%. The 2014 target was revised upward to 1.7% of GDP from 1.5%.
                         Although the government may achieve its 2013 fiscal target, the projected decline in the 2014 budget
                         deficit seems too optimistic because of weaker growth. We predict Italy’s output to increase 0.6% next
                         year, while the government expects growth of 1.3%.

                         Euro Zone – Retail Trade – February
                         Time: 10:00 AM GMT
                         Forecast: -0.1% m/m
                         Euro zone retail sales rose by 1.2% in January from the previous month, as sales of both food and
                         nonfood products increased during the month. However, monthly changes are volatile and the
                         underlying trends in retail sales remain weak. Household spending will be soft in the coming months.
                         Euroland households face a number of headwinds that will keep discretionary spending muted for some

                         Germany – Manufacturing Turnover and Orders Received – February
                         Time: 11:00 AM GMT
                         Forecast: -0.2%
                         German manufacturing orders fell 1.9% m/m in January, the largest fall since September, following a
                         revised 1.1% increase in the previous month. The main driver was a fall in orders from other euro zone
                         countries for capital goods. In year-ago terms, orders contracted 2.5%, the largest drop since October,
                         following a revised 1.9% decline in December. Manufacturing orders will remain under pressure in the
                         coming months because the euro zone is in recession, the global outlook remains weak, and the euro
                         remains relatively strong.

                         Monday, April 8

                         France – Fiscal balance – February
                         Time: 7:05 a.m. GMT
                         Forecast: -€20 billion
                         France’s fiscal deficit is expected to have widened, not seasonally adjusted, in February. The fiscal balance
                         is reported in cumulative terms, so it typically widens over the course of the calendar year. Government
                         spending remains high, equal to about 56% of French GDP, because the bulk of fiscal tightening relies on
                         introducing new, and raising existing, taxes. The government has acknowledged it will not meet its target,
                         previously agreed to with the European Commission, to reduce its fiscal deficit to 3% of GDP by the end
                         of this year. The government has asked for a one-year extension.

                         Germany – Industrial Production – February
                         Time: 10:00 a.m. GMT
                         Forecast: -0.4%

11       APRIL 4, 2013                                                         CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                           CAPITAL MARKETS RESEARCH

     The Week Ahead      German industrial production remained flat in month-to-month terms in January after a revised 0.6%
                         increase in the previous month. The outlook deteriorated as the sovereign debt crisis moved back in the
                         spotlight after elections in Italy and the Cypriot bailout. The Markit Germany manufacturing purchasing
                         managers' index declined to 49 in March from 50.3 in February, again entering contractionary territory.
                         Manufacturing orders declined in January, also pointing to weaker industrial production in the near

                         Tuesday, April 9

                         Germany – Foreign Trade – February
                         Time: 7:00 a.m. GMT
                         Forecast: €15.1 billion
                         Germany's trade surplus shrank to €15.7 billion in January from €16.8 billion the previous month. Slowing
                         exports will drag on the balance in coming months, as some of Germany's key trading partners are
                         already in recession. However, net exports will be stable thanks to a broad distribution of global trading
                         partners. We therefore expect the sovereign debt crisis to affect Germany only modestly this year.

                         France – Trade Balance – February
                         Time: 7:00 a.m. GMT
                         Forecast: -€5 billion
                         France’s trade balance is expected to have improved but remained in deficit in February. The weak
                         economy, rising unemployment, and tight credit likely reduced the demand for imports, supporting the
                         trade balance. However, exports also probably waned, dragging on the trade balance somewhat. The euro
                         zone is in recession, which would have reduced demand for exports because France's key trading partners
                         are in the euro zone. Also, the relatively strong euro hurts the competitiveness of French exports on
                         international markets.

                         United Kingdom – Industrial Production – February
                         Time: 8:30 a.m. GMT
                         Forecast: -0.4%
                         Total UK industrial production fell 1.2% m/m and 2.9% y/y in January. Manufacturing contracted 1.5%
                         m/m and 3% y/y. The purchasing managers’ index for the sector fell into contractionary territory in
                         February and remained there in March. Poor weather will have weighed on output in February, and
                         industry is expected to struggle through 2013 amid weak demand from home and abroad.

                         United Kingdom – Foreign Trade – February
                         Time: 8:30 a.m. GMT
                         Forecast: -£9 billion
                         The UK trade deficit narrowed in January to £8.2 billion from £8.7 billion the previous month, primarily
                         because of a narrowing of the oil deficit. The energy deficit is likely to have widened in February on
                         increased home heating demand due to poor weather. Meanwhile, recent weakness in the pound will
                         help bolster exports but will also inflate the import bill. The goods balance will maintain a relatively large
                         deficit at least through the first half of 2013.

                         Wednesday, April 10

                         France – Industrial Production – February
                         Time: 6:45 a.m. GMT
                         Forecast: 0.5%
                         French industrial production likely improved in February because of a pullback after a large fall in the
                         previous month. Nevertheless, demand for local products likely remained under pressure from weak
                         economic activity, tight credit, rising unemployment in France and its key euro zone trading partners, and
                         the relatively strong euro. France’s manufacturing purchasing managers' index, a forward indicator of
                         industrial production, rose in February but remained in the territory associated with contraction for the
                         12th consecutive month.

12       APRIL 4, 2013                                                          CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                         CAPITAL MARKETS RESEARCH

     The Week Ahead      Spain – Industrial Production – February
                         Time: 7:30 a.m. GMT
                         Forecast: -5.5%
                         Industrial production in Spain has failed to grow in year-ago terms for almost two years, and underlying
                         trends remain weak. Although the Markit Spain manufacturing purchasing managers' index in February
                         recorded its best result since June 2011, it remained firmly below the no-change level of 50. Domestic
                         demand will be the biggest drag on industrial production in the coming months.

                         Italy – Industrial Production – February
                         Time: 8:05 a.m. GMT
                         Forecast: -0.5%
                         Italy's manufacturing remains under considerable pressure. The weakening industry is consistent with the
                         purchasing managers' index for manufacturing, which fell to a seven-month low in March, reaching 44.5
                         after 45.8 in February. The sharp and accelerated decline in new orders led to further contraction in
                         output and employment. Although domestic demand will remain lackluster amid tight credit and higher
                         unemployment, rising exports, mainly to non-European countries, could boost Italy’s manufacturing a bit.
                         Also, political turmoil in Italy paralyzes fiscal policy and weakens efforts to revive the economy.

                         OECD – Composite Leading Indicators – February
                         Time: 10:25 a.m. GMT
                         Forecast: 100.5
                         The OECD composite leading indicator nudged up to 100.4 in January from 100.3 in December. The
                         measure had risen steadily through the fourth quarter and is expected to increase at least through the
                         near term on a more upbeat global outlook. However, uncertainty continues to cloud the outlook for
                         2013, with troubles in Europe remaining a key concern.

                         Thursday, April 11

                         Germany – Consumer Price Index – March
                         Time: 6:00 a.m. GMT
                         Forecast: 1.6%
                         German consumer price growth was unchanged in February. The national measure of CPI rose 1.6% y/y,
                         the same as in January, while the EU-harmonized measure of consumer prices increased 1.8% after a
                         1.9% gain previously. The European Central Bank kept the monetary policy rate at 0.75% in March.
                         Inflation expectations remain low, according to ECB surveys. Following disappointing GDP data, the
                         likelihood that the ECB will cut interest rates has increased, but a cut is still not part of the Moody's
                         Analytics baseline forecast.

                         France – Consumer Price Index – March
                         Time: 6:45 a.m. GMT
                         Forecast: 0.5%
                         France’s annual EU-harmonized consumer price growth is expected to have eased in March because of
                         the relatively strong euro and the weak economy. The euro’s effective trade-weighted value adjusted for
                         inflation is around 2% above its long-term average, putting downward pressure on the cost of imports.
                         Moody’s Analytics considers the French economy to be in the midst of a mild recession, dampening
                         domestic demand-driven pressures.

                         Russian Federation – Foreign Trade – February
                         Time: 2:30 p.m. GMT
                         Forecast: $31.4 billion
                         According to the Ministry of Economic Development's preliminary estimates, Russia's foreign trade
                         balance amounted to $31.4 billion over the first two months of 2013, which was around 23% lower than
                         the $41 billion surplus registered over the same period last year. The narrowing of the trade surplus was
                         caused by a decline in exports, which are estimated to have contracted 11.4% y/y in February and 6.9 y/y
                         over the first two months of 2013. Weak exports helped cause the Russian economy's deterioration over
                         the last two months.

13       APRIL 4, 2013                                                        CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                               CAPITAL MARKETS RESEARCH

     The Week Ahead      Friday, April 12

                         Spain – Consumer Price Index – March
                         Time: 7:30 a.m. GMT
                         Forecast: 2.4%
                         Annual inflation in Spain increased slightly in February, but the general trend remains weak. Price growth
                         has been slowing in recent months as the economy has fallen deeper into recession, with GDP
                         contracting by 1.4% in 2012. Weak domestic demand will weigh on pricing pressures in the coming

                         Germany – House Price Index – March
                         Time: 8:00 a.m. GMT
                         Forecast: 3.2%
                         The housing market in Germany has started cooling. New-house prices rose 3.8% y/y but were
                         unchanged in monthly terms. Prices of apartments and existing homes declined on a month-ago basis,
                         although they gained in year-to-year terms. Cooling inflation, low interest rates, low unemployment, and
                         strong wage growth previously boosted demand for houses despite the sovereign debt crisis, but this
                         trend appears to be ending.

                         Italy – Consumer Price Index – March
                         Time: 8:05 a.m. GMT
                         Forecast: 1.8%
                         Italy’s consumer price growth slowed again in March on lower energy prices. While national price growth
                         eased to 1.7% from 1.9% in February, EU-harmonised consumer price growth slowed to 1.8% from 2%
                         previously, according to preliminary estimates. The contracting Italian economy and uncertainty after
                         elections will ease inflation pressures in coming months. Italy’s GDP shrank by 0.9% q/q in the fourth
                         quarter, and high-frequency data are consistent with further contraction in the current quarter.

                         Euro Zone – Industrial Production – February
                         Time: 9:00 a.m. GMT
                         Forecast: -0.1%
                         Despite recent stabilization, the outlook for euro zone industrial production is still downbeat. The flash
                         Markit euro zone composite purchasing managers' index for March fell to a three-month low of 46.8
                         from 47.9 in the previous month. Falling demand within the euro zone was the key drag on production at
                         the end of last year and will remain so for at least the opening months of 2013.

                         By Fred Gibson and the Asia-Pacific staff of Moody’s Analytics
                         Release times are Greenwich Mean Time.

                         Chinese producer and consumer price inflation likely strengthened in March. Consumer prices in
                         particular have been on a steady upward trend driven by the recovery in the residential property market.
                         On the trade front, Chinese exports have grown at a steady clip, but will likely slow by midyear.
                         Meanwhile, trade data out for Taiwan and India likely improved in March. Soft electronics manufacturing
                         and a cyclical drop in pharmaceutical production suggest Singapore grew at a softer pace in the opening
                         quarter of 2013, relative to last three months of 2012.

                         FRIDAY, APRIL 5

                         Malaysia – Foreign Trade – February
                         Time: 4:01 a.m. GMT

14       APRIL 4, 2013                                                              CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                          CAPITAL MARKETS RESEARCH

     The Week Ahead      Forecast: MYR4.9 billion
                         Malaysia’s trade surplus likely widened to MYR4.9 billion in February from January’s MYR3.3 billion. The
                         Lunar New Year has biased data in the first two months of the year. The export trend remains choppy, as
                         strong tech demand is being somewhat offset by sagging prices for key products such as palm oil and
                         liquefied natural gas. Imports are on a solid upward trend, reflecting an investment-led surge that is
                         helping the domestic economy expand at a robust pace.

                         MONDAY, APRIL 8

                         Singapore – GDP – 2013Q1
                         Time: 4:00 p.m. GMT
                         Forecast: 1%
                         Advance GDP estimates are likely to show Singapore's first quarter was a deceleration from the previous
                         quarter. Data on industrial production for the first two months of the quarter were underwhelming
                         because of continued weakness in electronics manufacturing and a cyclical drop in pharmaceutical
                         production. The government has a 1% to 3% 2013 forecast, and weak advance estimates could prompt a

                         Taiwan – Consumer Price Index – March
                         Time: 12:30 a.m. GMT
                         Forecast: 1.4%
                         Taiwan's consumer price growth likely returned to more normal levels after the Lunar New Year-induced
                         3% y/y spike in February. Good weather has kept food prices within comfort levels. Elevated house prices
                         have kept the central bank on the sidelines through the latest global downturn despite sustained
                         domestic weakness.

                         Taiwan – Foreign Trade – March
                         Time: 8:00 a.m. GMT
                         Forecast: US$1.7 billion
                         We expect Taiwan's exports continued to recover in March, after growing an average 2.9% y/y in the
                         combined January-February period. We look for a 4.2% y/y gain in exports. The March recovery in exports
                         will see the monthly trade surplus widen from February's US$920 million. Imports grew an average 7%
                         over the period. This is a good sign, as a high proportion of imports are used in the production process to
                         ultimately be exported.

                         TUESDAY, APRIL 9

                         China – Consumer Price Index – March
                         Time: 1:30 a.m. GMT
                         Forecast: 2.2%
                         Consumer price inflation is picking up in China. The headline for March will be lower than in February
                         because of Lunar New Year effects, but will still be higher than in prior months. The recovery of the
                         residential property market is the main concern; it is pushing up prices for housing and related items such
                         as furniture.

                         China – Producer Price Index – March
                         Time: 1:30 a.m. GMT
                         Forecast: -1.6%
                         Producer price inflation came in below expectations in February. Relatively weak inflation pressure on the
                         supply side likely continued in March, judging by surveys of purchasing managers, helped by relatively
                         quiescent commodity price growth. Price pressures will nevertheless remain on an upward trend for the
                         first half of 2013 as the investment cycle upturn shrinks the output gap and spare capacity diminishes.

                         WEDNESDAY, APRIL 10

                         China – Monetary Aggregates – March
15       APRIL 4, 2013                                                         CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                            CAPITAL MARKETS RESEARCH

     The Week Ahead      Time: 4:00 p.m. GMT
                         Forecast: 14.9% y/y
                         Credit conditions in China remain relatively accommodative. This has enabled the investment cycle while
                         preventing the excesses seen after the 2009 credit easing. However, there is still the problem of too
                         much investment flowing to the residential property market, which the government is trying to tackle
                         with regulatory measures. Bank lending is also being reined in, and the monthly total will give some
                         insight to the quotas set for the year.

                         China – Foreign Trade – March
                         Time: 4:00 p.m. GMT
                         Forecast: US$19 billion
                         China's exports have been strong in recent months, seemingly passing the Lunar New Year period with
                         little effect. Given the state of the global economy, a deceleration in export growth is expected by
                         midyear, while the upturn in the investment cycle should push up imports. A recovery in imports will
                         keep the trade surplus relatively low.

                         India – Foreign Trade – March
                         Time: 6:30 p.m. GMT
                         Forecast: -$15 billion
                         India has been recording large deficits on the merchandise trade account for many months, and this was
                         the main driver of the fourth quarter current account deficit, which hit a record 6.7% of GDP. That said,
                         the details have been better, with steadily improving exports and imports growing at a solid clip,
                         mirroring India's slow economic recovery.

                         South Korea – Employment – March
                         Time: 11:00 p.m. GMT
                         Forecast: 3.2% Unemployed
                         Korea’s unemployment rate likely fell to 3.2% in March from February’s 3.5%. The average
                         unemployment rate for the first quarter likely came in at 3.3%, which is above the 3% rate reported in
                         the final quarter of 2012. Korea’s labor market has softened a touch, which tends to happen at the start
                         of every year. There are a couple of reasons for this: First, a wave of new graduates enter the job search
                         queue, which lifts unemployment and the labor force. Second, the Lunar New Year affects hiring before
                         and after the festivities, which injects uncertainty into the numbers; this can be seen in the rise and fall of
                         manufacturing jobs. On the positive side, jobs have been added on net in the first two months of the
                         year, which is a welcome development after a string of layoffs in late 2012.

                         OECD – Composite Leading Indicators – February
                         Time: 10:25 a.m. GMT
                         Forecast: 100.5
                         The OECD composite leading indicator nudged up to 100.4 in the first month of 2013 from 100.3 in
                         December. The measure rose steadily through the final quarter of 2012 and is expected to increase at
                         least through the near term on a more upbeat global outlook. However, uncertainty continues to cloud
                         the outlook for 2013 with troubles in Europe remaining a key concern.

                         THURSDAY, APRIL 11

                         Indonesia – Monetary Policy – April
                         Time: 5:00 p.m. GMT
                         Forecast: 5.75%
                         Bank Indonesia will likely keep policy rates on hold at its April meeting. The economy continues to
                         expand around trend, but the depreciating currency and the unexpected upturn in inflation will reduce
                         the likelihood of any near-term rate cuts. To support the rupiah, policymakers could narrow the spread
                         between the policy rate and the rate it pays lenders. Our baseline scenario assumes rate hikes later in the
                         year, as growth remains on a solid trajectory and inflation is expected to heat up.

                         Japan – Machinery Orders – February
                         Time: 11:50 p.m. GMT
                         Forecast: 6%
16       APRIL 4, 2013                                                           CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                          CAPITAL MARKETS RESEARCH

     The Week Ahead      Core private sector machinery orders plummeted in January so we can expect a rebound of sorts in
                         February, possibly related to the Lunar New Year, or possibly just because it is a volatile series. Japan’s
                         corporate sector is improving but firms remain cautious, as evidenced by the first quarter Tankan result.

                         South Korea – Monetary Policy – April
                         Time: 1:00 a.m. GMT
                         Forecast: 2.75%
                         The Bank of Korea will leave its key policy rate on hold at 2.75% for a sixth straight month. The economy
                         is slowly improving, but growth remains below trend. Inflation is low. Korea’s government is planning to
                         institute a fiscal stimulus to prop up the economy and the flagging housing market, which relieves
                         pressure on the BoK to provide additional monetary stimulus.

                         Australia – Employment Situation – March
                         Time: 1:30 a.m. GMT
                         Forecast: 5.4% Unemployed
                         We expect a partial pullback in jobs added in March, after a staggering 71,500 jobs were added in
                         February. This was the largest number of jobs added in a single month in 13 years. Provided the
                         participation rate holds steady, the unemployment rate will remain at a low 5.4%. Forward-looking ANZ
                         job advertisements suggest the labor market is at or close to its trough.

                         Malaysia – Industrial Production – February
                         Time: 4:15 a.m. GMT
                         Forecast: 3%
                         Malaysian industrial production probably decelerated to 3% y/y in February, from January’s 4.6%. The
                         Lunar New Year creates volatility through the opening months of the year, and January’s acceleration in
                         production will be followed by a slowdown in February. Factories remained open for longer in January this
                         year compared with last year, before shutting for the festivities in February. The trend in production is
                         positive, suggesting Malaysia’s industrial sector is holding up well through early 2013.

                         FRIDAY, APRIL 12

                         Japan – Industry Activity Indexes – February
                         Time: 11:50 p.m. GMT
                         Forecast: 1.5%
                         Tertiary activity dipped in January, but it was likely because of Lunar New Year effects, implying that the
                         series should rebound in February. Activity has been growing slowly for the past six months, mirroring the
                         domestic economy, which is barely growing.

                         India – Industrial Production – February
                         Time: 5:30 a.m. GMT
                         Forecast: 1%
                         India’s industrial sector is growing, but at a sluggish pace. Mining activity is contracting and
                         manufacturing is growing only slowly because of weak domestic sales and tepid export demand. The
                         partial release of Indian industrial production pointed to a contraction in February.

17       APRIL 4, 2013                                                         CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                             CAPITAL MARKETS RESEARCH

      Ratings View
     The LongRound-Up

                          The Long View

                          The US: First-quarter 2013’s worldwide issuance of high-yield corporate bonds
                          advanced by 25% annually to a record $167 billion
                          By John Lonski, Chief Economist, Moody’s Capital Markets Research Group,
                          April 4, 2013

                          CREDIT SPREADS
                          As measured by Moody's long-term average corporate bond yield, the recent investment grade corporate
                          bond yield spread of 116 bp was less than its 122-point mean of the two previous economic recoveries. Cash
                          flow growth and an accommodative monetary policy could prevent this spread from widening by much
                          through year-end 2013.

                          The recent high-yield bond spread of 478 bp conforms to what might be inferred from February 2013’s US
                          high-yield default rate of 3.3% and its projected dip to 2.5% by December 2013. A narrowing by the high-
                          yield bond spread requires more confident outlooks for revenue growth and the adequacy of systemic
                          liquidity in the event of an adverse shock. Owing to the financial system’s importance to accessibility to
                          reasonably priced liquidity, the drop by the investment-grade financial company bond yield spread to 142
                          bp, or within a range last observed during the summer of 2007, improves prospects for thinner high-yield
                          spreads. The median high-yield bond spread of the two previous economic recoveries was 418 bp.

                          After rising from December’s 2011’s current cycle bottom of 1.9% to February 2013’s 3.3%, Moody's
                          forecasts that the US trailing 12-month high-yield default rate will ease to 2.5% by December 2013.
                          Thereafter, the default rate is projected to edge up to 2.7% by December 2013. Sufficient liquidity, profits
                          growth, and corporate borrowing restraint should limit defaults for now.

                          US CORPORATE BOND ISSUANCE
                          After sinking by 27% annually in 2010, US-dollar denominated investment grade (IG) corporate bond
                          issuance grew by 6% in 2011, while the annual increase by the sum of high yield bond offerings plus new
                          bank loan programs slowed from 2010’s 106% surge to 2011’s 5% rise. However, the latter owed much to a
                          25% increase by high yield bank loan programs. The amount of dollar-denominated high yield corporate
                          bond issuance plunged by 15% annually during 2011.
                          For all of 2012, US$-denominated IG bond issuance advanced by 33% annually to a record $1.134 trillion,
                          while high-yield bond issuance soared higher by 48% to a record $388 billion.
                          In 2013, US$-denominated IG bond issuance may rise by 1% annually to a new record $1.146 trillion, while
                          high-yield bond issuance grows by 4% to a record $403 billion. Also, newly rated high-yield bank loans may
                          climb higher by 26% in 2013 to $526 billion, which would be well under 2007’s record $661 billion.
                          The final quarter of 2012 recorded year-over-year issuance increases of 58% for investment-grade bonds,
                          211% for high-yield bonds, and 130% for the sum of high-yield bonds plus new high-yield bank loan
                          programs. First-quarter 2013 showed year-to-year percent changes of -16% for investment-grade bond
                          issuance, of 19% for high-yield bond offerings, and of 57% for new high-yield bank loan programs. Q1-
                          2013’s year-over-year percent changes are likely to approximate a 17% decline for investment-grade bond
                          offerings and a 7% rise for high-yield bond issuance. However, Q1-2013’s sum of high-yield bond offerings
                          plus new high-yield bank loan programs should advance by 37% annually. Through the first 14 weeks of
                          2013, the year-over-year percent changes by bond issuance were -17% for US$ investment-grade, 17% for
                          US$ high-yield, -42% for euro-denominated investment-grade, and 36% for euro high-yield.
                          In 2012, the year-over-year percent increases by corporate bond issuance were 4.1% for euro-denominated
                          investment-grade and 18.9% for euro-denominated high-yield. The $820 billion of euro-denominated
                          investment-grade bond issuance was well under the $1.086 trillion annual average of 2006-2007, never
                          mind 2009’s record $1.278 trillion. Euro-denominated high yield bond offerings totaled a relatively small
                          $49 billion in 2012, which trailed its record 12-month sum of $54 billion from the span-ended October
                          2010. Thus far in 2013, euro-priced investment grade bond offerings plunged by 50% annually to $116.3
                          billion, while the issuance of euro-priced high yield bonds increased by 35% annually to $15.0 billion.

18        APRIL 4, 2013                                                           CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                                  CAPITAL MARKETS RESEARCH

      Ratings View
     The Long Round-Up
                           Refinancings of both bonds and leveraged loans should be among the primary drivers of bond issuance in
                           2013. A growing number of bond issues and newly-rated bank loan programs will fund acquisitions and
                           shareholder compensation, but only after financial markets stabilize sufficiently. Companies will resort to
                           acquisitions and divestitures in order to better cope with the US’s subpar recovery.

                           US ECONOMIC OUTLOOK
                           In response to a further climb by business sales, jobs growth should continue, albeit sometimes at a subpar
                           pace. The Federal Reserve’s efforts to suppress long term borrowing costs will help to contain downside
                           economic risks. Also, any slowing of economic activity is likely to prompt a remedial drop by Treasury bond
                           yields. In view of how persistently high unemployment will contain wages, low inflation should help to rein
                           in Treasury bond yields. As long as European issues go unresolved and the global economy sags, the 10-year
                           Treasury yield may not climb much above 2.0%. A worsening of Europe’s plight, a pronounced slowing by
                           expenditures in dynamic emerging market countries, the adoption of inhibitory tax and regulatory policies,
                           as well as possible disruptions to the supply of crude oil are among the biggest threats to the adequacy of
                           economic growth going forward. In addition to recently enacted tax hikes, the potential loss of economic
                           activity to spending cuts and tax hikes by financially-stressed state and local governments also deserves

                           By Melanie Bowler and the European staff of Moody’s Analytics
                           April 4, 2013
                           The euro zone economy contracted 0.6% in quarter-ago terms in the final quarter of 2012. A greater than
                           anticipated 0.6% quarter-ago contraction in the important German economy was a key drag. The region’s
                           second largest economy, France, also contracted. Germany and France will perform below potential in 2013,
                           while Spain and Italy, as well as the troubled periphery, will continue to struggle the most. Weak economic
                           conditions, including rising unemployment, will extend at least through the first half of 2013 amid ongoing
                           austerity. Full resolution of the sovereign debt crisis still looks some way off, as highlighted by recent
                           developments in Cyprus. Debt problems will remain the key downside risk in 2013. Economic recovery when
                           it comes will be slow. As such, monetary policy will remain expansionary into 2015. A further interest rate
                           cut by the European Central Bank is possible amid easing inflationary pressures. The rate is currently at the
                           record low of 0.75%.

                           The UK economy shrank 0.3% in quarter-ago terms in the final three months of 2012 after growing 1% in
                           the third quarter. Exports and the extraction sector were key drags. GDP will expand below potential in
                           2013 and will not surpass 2008 levels until early 2015 as fiscal tightening at home and abroad continues to
                           weigh on demand. Although the weaker pound is an upside risk to the outlook, the overall risks remain
                           weighted to the downside this year. The economy is at risk of reporting a “triple-dip” recession; exposure to
                           problems in the euro zone remains a concern; and there is the looming specter of stagflation. Interest rates
                           will remain at 0.5%, where they have been since March 2009, into 2015. Further unconventional monetary
                           policy measures are also anticipated following an extension to the Bank of England’s remit. Amid ongoing
                           austerity — although officials termed it fiscally neutral, the U.K. budget for 2013 continues the austerity
                           begun in 2010 — the onus continues to lie with the BoE to bolster the economy.

                           ASIA PACIFIC
                           By Katrina Ell and the Asia-Pacific Staff of Moody’s Analytics
                           April 4, 2013

                           This year will likely mark Australia's 22nd year of uninterrupted growth. The economy is forecast to expand
                           2.7%, following 2012's solid 3.6% gain. Mining investment remains a principal driver, but domestic industries
                           are also heating up as aggressive monetary easing over the past 18 months boosts the non-mining economy.
                           We expect further gains this year will bring the economy near its trend rate around 3% in the second half.
                           Whether the non-mining sectors will improve enough to offset an expected peak in mining investment
                           remains a question. Growth should shift more noticeably over the next year from mining investment and
                           related activities to domestic industries. Chances that the global economy will dim Australia’s upbeat
                           outlook have eased. Policymakers have avoided a meltdown in Europe, at least for now, while the US
                           recovery is gradually accelerating, and Chinese demand has passed its current trough.

19         APRIL 4, 2013                                                               CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                                                  CAPITAL MARKETS RESEARCH

     Ratings Round-Up

                         Ratings Round-Up
                         By Ben Garber

                         US Balance Goes for Upgrade; Negative Dominates Europe
                         This week’s count of rating upgrades in the US equaled the count of downgrades, roughly in line with last
                         week’s ratio. Though the recent count does not give a strong indication of the direction for credit quality,
                         the amount of debt skewed heavily to positive actions. The weekly 71% share for upgrades out of the total
                         sum of debt subject to a rating change bests every monthly value for this measure since August 2011.
                         In Europe, downgrades swamped upgrades by a count of 15 to 3. With the eurozone unemployment rate
                         setting a new record and signs of industrial output slowing further, there has yet to be a clear signal for the
                         end of the region’s recession. This implies further deterioration for corporate profits in Europe, which will
                         keep rating changes skewed decidedly toward downgrades.

                         FIGURE 1
                         Rating Changes - US Corporate & Financial Institutions: Favorable as % of Total Actions

                                                            By Count of Actions        By Amount of Debt Affected
                          1.0                                                                                                              1.0

                          0.8                                                                                                              0.8

                          0.6                                                                                                              0.6

                          0.4                                                                                                              0.4

                          0.2                                                                                                              0.2

                          0.0                                                                                                              0.0
                            Feb01                Feb03            Feb05            Feb07             Feb09             Feb11           Feb13
                          * Trailing 3-month average
                          Source: Moody's

                         FIGURE 2
                         Rating Key
                            BCF      Bank Credit Facility Rating                    MM      Money-Market
                            CFR      Corporate Family Rating                       MTN      MTN Program Rating
                             CP      Commercial Paper Rating                       Notes    Notes
                            FSR      Bank Financial Strength Rating                 PDR     Probability of Default Rating
                             IFS     Insurance Financial Strength Rating             PS     Preferred Stock Rating
                              IR     Issuer Rating                                 SGLR     Speculative-Grade Liquidity Rating
                           JrSub     Junior Subordinated Rating                    SLTD     Short- and Long-Term Deposit Rating
                            LGD      Loss Given Default Rating                     SrSec    Senior Secured Rating
                           LTCF      Long-Term Corporate Family Rating            SrUnsec   Senior Unsecured Rating
                            LTD      Long-Term Deposit Rating                      SrSub    Senior Subordinated
                            LTIR     Long-Term Issuer Rating                        STD     Short-Term Deposit Rating

20       APRIL 4, 2013                                                                          CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                                                      CAPITAL MARKETS RESEARCH

     Ratings Round-Up

FIGURE 3 Rating Changes: Corporate & Financial Institutions – US

                                                                                                                             Old    New
                                                                                                         Amount Up/                               Old     New
     Date                    Company                         Sector                   Rating                                 LTD    LTD                          IG/SG
                                                                                                        ($ Million) Down                          LGD     LGD
                                                                                                                            Rating Rating
 3/26/13     DOLLAR GENERAL CORPORATION                     Industrial              SrUnSec/BCF            500          U      Ba2     Baa3                        SG
 3/27/13     TENET HEALTHCARE CORPORATION                   Industrial          SrUnSec/SrSec/LTCF        5,685         U       B1     Ba3                         SG
 3/27/13     VANGUARD NATURAL RESOURCES, LLC                Industrial            SrUnSec/LTCF/PD          550          U       B2      B1                         SG
 3/28/13     EDUCATION MANAGEMENT CORPORATION               Industrial             SrSec/LTCF/PD                        U      Caa2    Caa1                        SG
 3/28/13     EDUCATION MANAGEMENT CORPORATION               Industrial                    BCF                           D                     LGD3       LGD4      SG
 3/28/13     EMPIRE TODAY, LLC                              Industrial                   SrSec             150          U                     LGD4       LGD3      SG
 3/28/13     GREEN FIELD ENERGY SERVICES, INC.              Industrial                   SrSec             256          D                     LGD3       LGD4      SG
 3/28/13     STATER BROS. HOLDINGS INC.                     Industrial                 SrUnsec             540          U                     LGD4       LGD3      SG
 3/29/13     KGB                                            Industrial                 LTCF/PD                          D      B3       B2                         SG
 3/29/13     KGB                                            Industrial                SrSec/BCF                         U      B2       Ba3   LGD4 LGD2            SG
  4/1/13     APRIA FINANCE HOLDINGS INC.                    Industrial                    BCF                           D      B1       B2                         SG
  4/1/13     CROWNROCK, L.P.                                Industrial                 SrUnSec             150          D                     LGD4 LGD5            SG
  4/1/13     CROWNROCK, L.P.                                Industrial           SrUnSec/LTCFR/PD          150          U      Caa1     B3                         SG
  4/1/13     CUMULUS MEDIA INC.                             Industrial                 LTCF/PD            1,220         D       B1      B2                         SG
  4/2/13     AFFINIA GROUP INC.                             Industrial                 LTCF/PD                          D       B2      B3                         SG
  4/2/13     VANGUARD HEALTH SYSTEMS, INC.                  Industrial                 SrUnSec            1,900         D                     LGD4 LGD5            SG
  4/2/13     WEST CORPORATION                               Industrial                    BCF                           D                     LGD2 LGD3            SG
  4/2/13     WEST CORPORATION                               Industrial            SrUnSec/LTCF/PD         1,150         U      Ba3      B1                         SG
Source: Moody's

FIGURE 4 Rating Changes: Corporate & Financial Institutions – EUROPE

                                                                                                                         Old    New
                                                                                                      Amount Up/                      Old New
     Date                       Company                             Sector             Rating                            LTD    LTD           IG/SG             Country
                                                                                                     ($ Million) Down                 FSR FSR
                                                                                                                        Rating Rating
 3/19/13    ERSTE GROUP BANK AG - Erste Bank Hungary Rt            Financial           BFSR/LTD                   D     Ba3      B2     E+    E     SG        AUSTRIA
  4/2/13    TELENET GROUP HOLDING NV                               Industrial          LTCF/PD                    D     Ba3      B1                 SG        BELGIUM
 3/27/13    CYPRUS                                                 Industrial             LTIR                    D      B3     Caa3                SG        CYPRUS
 3/28/13    CYPRUS POPULAR BANK PUBLIC CO LTD                      Financial        SrUnsec/LTBD        155       D     Caa3     C                  SG        CYPRUS
 3/28/13    CENTRES HOSPITALIERS REGIONAUX UNIVERSITAIRES NO.      Industrial            SrSec          346       D     Baa1    Baa2                IG        FRANCE
 3/28/13    CHU JOINT ISSUANCE                                     Industrial            SrSec          214       D      A1      A3                 IG        FRANCE
 3/28/13    COLLECTIVITÉS TERRITORIALES DE FRANCE NO. 1            Industrial            SrSec          154       D      A2     Baa1                IG        FRANCE
 3/28/13    COMMUNAUTES URBAINES DE FRANCE NO 1                    Industrial            SrSec          136       D      A1      A3                 IG        FRANCE
 3/28/13    COMMUNAUTES URBAINES DE FRANCE NO 2                    Industrial            SrSec          132       D      A1      A3                 IG        FRANCE
 3/28/13    COMMUNAUTES URBAINES DE FRANCE NO 3                    Industrial            SrSec          133       D      A1      A3                 IG        FRANCE
 3/28/13    COMMUNAUTES URBAINES DE FRANCE NO 4                    Industrial            SrSec          114       D      A1      A3                 IG        FRANCE
 3/28/13    SANOFI                                                 Industrial        SrUnsec/LTIR     14,938      U      A2      A1                 IG        FRANCE
 3/27/13    EWE AG                                                 Industrial        SrUnsec/LTIR      2,742      D      A3     Baa1                IG       GERMANY
  4/2/13    BUMBLE BEE HOLDCO S.C.A                                Industrial           SrUnsec         755       D      B2      B3                 SG     LUXEMBOURG
  4/2/13    TELENET GROUP HOLDING NV                               Industrial          LTCF/PD        2,569       D     Ba3      B1                 SG     LUXEMBOURG
 3/26/13    AK BARS BANK                                           Financial      SrUnSec/BFR/LTBD      822       D      B1      B2     E+    E     SG         RUSSIA
 3/28/13    CENTRAL NOTTINGHAMSHIRE HOSPITALS PLC                  Industrial            SrSec          532       U     Baa2    Baa1                IG    UNITED KINGDOM
 3/28/13    GALA CORAL GROUP LTD                                   Industrial             LTCF          945       U      B3      B2                 SG    UNITED KINGDOM
Source: Moody's

21          APRIL 4, 2013                                                                            CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                                  CAPITAL MARKETS RESEARCH

     Market Data

                         Market Data

                          Figure 1: 5-Year Median Spreads-Global Data (High Grade)
                                  Aa2             A2      Baa2
                         Spread (bp)                                                                                                    Spread (bp)
                          800                                                                                                                      800

                          600                                                                                                                      600

                          400                                                                                                                      400

                          200                                                                                                                      200

                            0                                                                                                                      0
                             2003          2004        2005       2006        2007    2008     2009      2010       2011      2012      2013
                         Source: Moody's

                          Figure 2: 5-Year Median Spreads-Global Data (High Yield)
                                   Ba2        B2         Caa-C
                         Spread (bp)                                                                                                      Spread (bp)
                          2,000                                                                                                                2,000

                           1,600                                                                                                               1,600

                           1,200                                                                                                               1,200

                            800                                                                                                                800

                            400                                                                                                                400

                                0                                                                                                              0
                                 2003       2004        2005       2006        2007   2008     2009      2010      2011      2012      2013
                         Source: Moody's

22       APRIL 4, 2013                                                                 CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                           CAPITAL MARKETS RESEARCH

     Market Data
                         CDS Movers

                         Figure 3. CDS Movers - US (March 27, 2013 – April 3, 2013)
                         CDS Implied Rating Rises                                 CDS Implied Ratings
                         Issuer                                                  Apr. 3         Mar. 27        Senior Ratings
                         International Business Machines Corporation              Aaa             Aa1               Aa3
                         Time Warner Inc.                                          A1              A2              Baa2
                         UnitedHealth Group Incorporated                           A1              A2               A3
                         Cisco Systems, Inc.                                      Aa3              A1                A1
                         E.I. du Pont de Nemours and Company                      Aa2             Aa3               A2
                         Southern California Edison Company                       A3             Baa1               A3
                         Home Depot, Inc. (The)                                   Aa2             Aa3               A3
                         Cox Communications, Inc.                                 Aa2             Aa3              Baa2
                         NextEra Energy Capital Holdings, Inc.                   Baa1            Baa2              Baa1
                         Norfolk Southern Corporation                             Aaa             Aa1              Baa1

                         CDS Implied Rating Declines                              CDS Implied Ratings
                         Issuer                                                  Apr. 3         Mar. 27        Senior Ratings
                         Goldman Sachs Group, Inc. (The)                         Baa3            Baa2               A3
                         American Express Credit Corporation                      A3               A2               A2
                         Bank of America, N.A.                                   Baa3            Baa2               A3
                         PepsiCo, Inc.                                             A1             Aa3               Aa3
                         Enterprise Products Operating, LLC                      Baa2            Baa1              Baa1
                         Freescale Semiconductor, Inc.                           Caa1              B3              Caa1
                         Hartford Financial Services Group, Inc. (The)           Baa2            Baa1              Baa3
                         ARAMARK Corporation                                      Ba3             Ba2                B3
                         Marathon Oil Corporation                                Baa2            Baa1              Baa2
                         Qwest Corporation                                       Baa2            Baa1              Baa3

                         CDS Spread Increases                                                                CDS Spreads
                         Issuer                                              Senior Ratings      Apr. 3          Mar. 27        Spread Diff
                         Travelport LLC                                          Caa2            1,761            1,568            193
                         Burlington Coat Factory Warehouse Corp                  Caa1             755              588             167
                         MBIA Insurance Corporation                              Caa3            3,717            3,596             121
                         AK Steel Corporation                                      B2            1,273            1,190             83
                         United States Steel Corporation                           B1             687              639              48
                         Energy Future Holdings Corp.                            Caa2            1,162            1,124             38
                         CNH America LLC                                          Ba2             327              297              29
                         Assured Guaranty US Holdings, Inc.                      Baa2             460              431              28
                         YRC Worldwide Inc.                                       Ca             2,576            2,550             26
                         Dish DBS Corporation                                     Ba2             333              315              18

                         CDS Spread Decreases                                                                CDS Spreads
                         Issuer                                              Senior Ratings      Apr. 3          Mar. 27        Spread Diff
                         Toys 'R' US, Inc.                                         B3             762             812               -49
                         Sinclair Broadcast Group, Inc.                            B1             426             474               -49
                         Bon-Ton Stores Inc., (The)                              Caa3             744             767               -23
                         Dell Inc.                                               Baa1             355             376               -21
                         Saks Incorporated                                         B1             278             299               -20
                         Forest Oil Corp.                                          B2             620             636               -16
                         Darden Restaurants, Inc.                                Baa2             220             234               -15
                         Massachusetts Mutual Life Insurance Company              Aa3             82               95               -13
                         Cablevision Systems Corporation                           B1             493             506               -12
                         Belo Corp.                                               Ba1             263             275               -12
                         Source: Moody's, MarkIt

23       APRIL 4, 2013                                                          CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                           CAPITAL MARKETS RESEARCH

     Market Data

                         Figure 4. CDS Movers - Europe (March 27, 2013 – April 3, 2013)
                         CDS Implied Rating Rises                                 CDS Implied Ratings
                         Issuer                                                  Apr. 3         Mar. 27        Senior Ratings
                         Kreditanstalt fuer Wiederaufbau                          Aa3              A1               Aaa
                         Nordea Bank AB                                           A3             Baa1               Aa3
                         Lloyds TSB Bank Plc                                     Baa3             Ba1               A2
                         ING Bank N.V.                                           Baa3             Ba1               A2
                         Intesa Sanpaolo Spa                                       B1              B2              Baa2
                         Instituto de Credito Oficial                             Ba2             Ba3              Baa3
                         Banco Bilbao Vizcaya Argentaria, S.A.                    Ba3              B1              Baa3
                         ING Groep N.V.                                          Baa3             Ba1               A3
                         UniCredit Bank AG                                       Baa3             Ba1               A3
                         ING Verzekeringen N.V.                                   A3             Baa1              Baa2

                         CDS Implied Rating Declines                              CDS Implied Ratings
                         Issuer                                                  Apr. 3         Mar. 27        Senior Ratings
                         Netherlands, Government of                               A2               A1               Aaa
                         ABN AMRO Bank N.V.                                      Baa3            Baa2               A2
                         Deutsche Pfandbriefbank AG                               Aa1             Aaa              Baa2
                         Alpha Bank AE                                            Ca             Caa3              Caa2
                         Banco Sabadell, S.A.                                     B3               B2               Ba1
                         National Bank of Greece S.A.                             Ca             Caa3              Caa2
                         Banco Popolare Societa Cooperativa                      Caa1              B3              Baa3
                         Volkswagen Aktiengesellschaft                           Baa1              A3               A3
                         Fiat S.p.A.                                             Caa1              B3               Ba2
                         Nokia Oyj                                               Caa1              B3               Ba3

                         CDS Spread Increases                                                                CDS Spreads
                         Issuer                                              Senior Ratings      Apr. 3          Mar. 27        Spread Diff
                         Anglian Water Services Financing plc                    Baa2             140              116              25
                         Caixa Geral de Depositos, S.A.                           Ba3             459             435               24
                         Vedanta Resources Plc                                    Ba3             441             423               18
                         Co-Operative Bank Plc                                    A3              239             223               15
                         Tyco International Finance S.A.                          A3               87              75               13
                         ABN AMRO Bank N.V.                                       A2              148             138               10
                         ArcelorMittal                                            Ba1             378             369                9
                         Bankia                                                   Ba2             891             884                7
                         Brisa Concessao Rodoviaria S.A.                          Ba3             616             610                6
                         Voith GmbH                                              Baa2             155             150                6

                         CDS Spread Decreases                                                                CDS Spreads
                         Issuer                                              Senior Ratings      Apr. 3          Mar. 27        Spread Diff
                         Piraeus Bank S.A.                                       Caa2            1,218            1,455            -237
                         Codere Finance (Luxembourg) S.A.                        Caa3            1,888            1,979             -91
                         Yorkshire Building Society                              Baa2             163              246             -83
                         CMA CGM S.A                                             Caa2             940              999              -59
                         Alpha Bank AE                                           Caa2            1,087            1,139             -52
                         Assicurazioni Generali S.p.A                            Baa2             312              362             -49
                         UniCredit SpA                                           Baa2             386              427              -41
                         Banco Santander S.A. (Spain)                            Baa2             306              346             -40
                         Intesa Sanpaolo Spa                                     Baa2             367              404              -37
                         Societe Generale                                         A2              203              235              -31
                         Source: Moody's, MarkIt

24       APRIL 4, 2013                                                          CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                                             CAPITAL MARKETS RESEARCH

     Market Data
                         FIGURE 5:
                         Market Cumulative Issuance - Corporate & Financial Institutions: USD Denominated

                          Issuance ($B)                                2009       2010           2011         2012         2013               Issuance ($B)

                          1,600                                                                                                                    1,600

                          1,200                                                                                                                    1,200

                           800                                                                                                                     800

                           400                                                                                                                     400

                              0                                                                                                                    0
                                     Jan    Feb        Mar       Apr      May   Jun       Jul       Aug      Sep     Oct      Nov       Dec
                          Source: Moody's / Dealogic

                         FIGURE 6:
                         Market Cumulative Issuance - Corporate & Financial Institutions: EURO Denominated

                          Issuance ($B)                                2009     2010            2011         2012          2013               Issuance ($B)

                          1,400                                                                                                                    1,400

                          1,200                                                                                                                    1,200

                          1,000                                                                                                                    1,000

                            800                                                                                                                    800

                            600                                                                                                                    600

                            400                                                                                                                    400

                            200                                                                                                                    200

                              0                                                                                                                    0
                                      Jan   Feb        Mar       Apr      May     Jun     Jul          Aug   Sep     Oct          Nov   Dec

                          Source: Moody's / Dealogic

                         FIGURE 7:
                         Issuance: Corporate & Financial Institutions

                                                                                        USD Denominated
                                                             Investment-Grade              High-Yield                       Total*
                                                                  Amount                    Amount                         Amount
                                                                     $B                        $B                             $B
                                  Weekly                           6.455                     6.800                          13.926
                                Year-to-Date                      302.472                   128.846                        458.099

                                                                                        Euro Denominated
                                                             Investment-Grade               High-Yield                      Total*
                                                                  Amount                     Amount                        Amount
                                                                    $B                          $B                           $B
                                  Weekly                           4.065                      0.000                         4.091
                                Year-to-Date                      200.838                     26.581                       234.066
                         * Difference represents issuance with pending ratings.
                         Source: Moody's/ Dealogic

25       APRIL 4, 2013                                                                          CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                    CAPITAL MARKETS RESEARCH

                     Moody’s Capital Markets Research recent publications

                     4 Apr 2013 Capital One Financial Corp.: All Market Signals Converge with the Moody's Rating
                     3 Apr 2013 Issuance Up 27% from February, but the First Quarter Lags Last Year's Record Pace
                     3 Apr 2013 Bank Risk Report: Implied Ratings Diverge Again for Banks in the US and Europe
                     28 Mar 2013 Reminder from Cyprus: Europe's Financial System Full of "One-offs"
                     28 Mar 2013 The "Not-So-Great Rotation"
                     27 Mar 2013 Assessing Moody's Analytics' 2013 CCAR Estimates for C&I Loan Losses
                     25 Mar 2013 Markets React Positively to New Cyprus Rescue Proposal
                     21 Mar 2013 The ECB May Mimic the Fed and the BoJ
                     18 Mar 2013 Neither Market Signals Nor Improving Economy Disturbed by Sequester
                     18 Mar 2013 J.C.Penney Corporation, Inc. - Market-Based Risk Measures Suggest Time May Be Running Short

                     These and others are also available at:

26   APRIL 4, 2013                                                       CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM
                                                                                                                                              CAPITAL MARKETS RESEARCH

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27   APRIL 4, 2013                                                                                        CAPITAL MARKETS RESEARCH, INC. / MARKET OUTLOOK / MOODYS.COM

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