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From: Sent: To: CC: Subject: Attachments: Nav Gupta II 7/1/2014 10:39:04 AM Paul Morris [[email protected]]; Vinit Sahni Re: Banco Espirito continued..... pic32604.gif; pic12335.gif; pic32338.gif; pic29126.gif; pic16071.gif; pic24284.gif Classification: Confidential ; Tazia Smith Banco Espirito has 3 issues 1. it is in trouble with regulators after it funded its cash position by issuing bills and bonds to retail and institutional clients who has entrusted funds to the bank on a discretionary basis.market participants worry about the firms ability to raise capital. 2. it has a large exposure (3 to 5bn) with Angola 3. management is in flux after CEO stepped down There is a lot of bad news priced into these bonds Espirito will likely issue more equity the senior unsecured and LT2 debt will all levels of the capital structure of and AT1 debt. as a result it is likely be shielded from loss-absorption Both the LT2 issue the BESPL 7.125 23 and the Senior unsecured BESPL 4.75 18 have been hit hard. they have richened already from the lows of the day (The 23's are around 95 mid (8.6%) although hit an intra-day low in the high 80's earlier today) they still look a decent buy to scale into and are 230bp higher yield than a week ago.The 4.75s 18 yield around 4.4% which is 160bp higher compared to a week ago From: Tazia Smith/ To: Cc: Nay Gupta/ Date: 01/07/2014 15:25 Subject: Banco Espirito continued [C] Classification: Confidential Rich - vinit sathe , Paul Morris vinit highlights the BESP 7.125 2023s LT2 This is subordinated Banco Espirito credit. Trading -94.125x95.375 or 8.4% (bloomberg). DB trader is wide on these given volatility - his indicative market is 93.5x95.5, so we'd clearly work a level if interested. vinit - care to opine further? Thanks, Tazia (Embedded image moved to file: pic32604.gif) (Embedded image moved to file: pic12335.gif) CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0112716 CONFIDENTIAL SDNY_GM_00258900 EFTA01454555