EFTA01378321

INTERNAL USE ONLY DO NOT DISTRIBUTE IN PART OR IN WHOLE Corporate Credit > U.S. Investment Grade Thomson Reuters Corp. (TRI) Updated: Nov. 1, 2015 Trade Idea: o Buy long dated Thomson Reuters bonds. Investment Rationale: o Following underperformance versus the IG Index in 2013 & early 2014, and pressure on TMT spreads over the past month, we still believe that TRI spreads look compelling. TRI long bonds used to trade flat to through the Index and are now 75-80 bp behind on an OAS basis. TRI has outperformed media peers YTD. While a concession to IG is warranted (primarily event risk — the treasury rally has pushed some bonds well above the $101 Change of Control price), investors appear to be compensated for some of the risks. Stability is aided by the Thomson family ownership. TRI is a relatively stable credit that offers leading data solutions and information services. Barriers to entry are high. Annual revenues are $13 billion and TRI's market cap. is $30 billion. Revenues growth is muted and concentrated in the Financial Services/Legal Sectors (both of which are struggling to find growth which directly impacts TRI's growth trajectory), TRI does benefit from a significant portion of recurring subscription revenues. These revenues account for more than 80% of the total and lend to FCF stability. In 2013, TRI raised its leverage target to 2.5x from 2.0x as many companies have given low interest rates and an improved economic outlook. That combined with operating headwinds drove modest downgrades. With the event seemingly behind us, we believe that there is a carry and spread concession opportunity into 2016. Recommendation(s): Trade Ratings Issue View Horizon Ticker CPN Maturity CCY Size Yield S&P Moody s Outperform 12 mo TRICN 565 11/23/2043 BBB Baal USO 5 13 Spread Entry Target Loss 227 195 Cash Price ISIN 107 6 US88490 3BP96 Detische Asset & Wealth Management 22 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL DB-SDNY-0075490 SDNY_GM_00221674 EFTA01378321