EFTA01378139

From: Sent: To: CC: Vahe Stepanian 11/17/2015 5:43:01 PM Paul Morris Stewart Oldfield Daniel Sabba J; Ariane Dwyer Subject: RE: Attachments: 0ZLM Manager Pitchbook_September 2015.pdf; Global Research Fl Top Ideas November 2015.pdf; Petrobras - Buy the 17s DB Research.pdf Classification: For Internal use only Paul — as discussed, please find a list of relevant ideas for Southern Financial on the back of the client's ask below. The CB&S desk analyst looking at CoCos will be sending us a few specific issues in the morning, which we will send along to you once available. In addition to Petrobras, I've attached a piece with top AWM Fixed Income ideas — pgs. 33-44 are specific to top HY ideas. We can highlight the most relevant ideas — planning on speaking to the desk tomorrow. Give us a call if you have questions. Thank you, Vahe 1) Buy Petrobras '17s. Rationale: • Since May 2015, Petrobras 10yr spreads have widened by - 400bps and in September S&P downgraded Petrobras to BB • In October, domestic fuel prices increased and Petrobras announced significant capex and opex cuts for 2015 and 2016. These can be seen as positive signs for the company's future, but may not mitigate its large long term funding gap: Petrobras will need to roll $60bn and $104bn of debt maturities in the next four and nine years respectively and sovereign support is not guaranteed • DB's Brazil credit analyst believes that the company can meet its short term debt maturities through 2017 without resorting to direct support from the government. DB has revised its forecasts and has upgraded the 3.25% and 3.5% '17s to a Buy rating (please find attached DB Research report). The bonds are currently yielding 7.06% and 7.10% respectively • Petrobras is one of the largest integrated oil companies worldwide and aims to be one of top 5 globally by 2030 Indicative Terms (as of 11/17/2015): Client buys Maturity Amount O/S Rating Price Mid Yield Client Maturity Amount O/S Rating Price Mid Yield PETBRA 3.250% Notes '17 03/17/2017 $1.6bn Ba2 / BB / BBB- (Mdy/S&P/Fitch) 95.25 7.06% buys PETBRA 3.500% Notes '17 02/06/2017 $1.75bn Ba2 / BB / BBB- (Mdy/S&P/Fitch) 95.875 7.10% CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0075300 CONFIDENTIAL SDNY_GM_00221484 EFTA01378139