In November, European leverage loan issuance was up, high yield was down, while secondary markets for both loans and bonds went up Check out LCD's new, free web sites, LeveragedLoan.com and HighYieldBond.com http://www.leveragedloan.com http://www.highyieldbond.com/ * Job postings * Online Loan Market and High Yield Primer * News and analysis * Market Stats Watch the video http://www.youtube.com/watch?v=K_mQ2ti05oE Connect with LCD Facebook: http://www.lcdcomps.com/facebook Like LCD on Facebook for monthly analysis on LBO/Private equity stats, as well as Default/Restructuring analysis. LinkedIn: http://www.lcdcomps.com/linkedin There are over 9,000 market contacts in LCD's Leveraged Loan Group Twitter: http://www.twitter.com/lcdnews News, commentary, other leveraged finance info Web: http://www.lcdcomps.com Contact: anna_cini@sandp.com

1. Text
European Leveraged Finance Market Update
December, 2012
Sucheet Gupte - Director

3. European Market Trends
Text
• Loan issuance shot up to €4.3 billion from €3.7 billion;
HY issuance came down to €3.4 billion from €3.5 billion
• Estimated inflows into HY funds were €536 million for November,
YTD through the end of November up to almost €6 billion
• Secondary markets are up:
Loan markets went up 48 bps to finish the month at 96.83
High-yield markets are up 84 bps to finish the month at 100.81
• The S&P European Leveraged Loan Index (ELLI) finished the
month up at 0.66% (till the week ending November 29th)
• Default rates stabilized during the month.

4. European Loan Flow Name Prices
100
99
Text
97
96
94
93
91
1/11 3/11 5/11 7/11 9/11 11/17 1/12 3/22 5/12 7/12 9/12 11/12
. Source: LCD - Leveraged Commentary & Data

5. European HY Bond Flow Name Prices
106
102
Text
98
94
89
85
81
1/11 3/11 5/11 7/11 9/11 11/11 1/12 3/12 5/12 7/12 9/12 11/12
. Source: Bloomberg

6. ELLI Multi-Currency Loan Return
2.5% November 2012: + 0.66%
October 2012: + 0.47%
Text Jan-Nov 2012: + 8.7%
Jan-Nov 2011: + 0.71%
1.6%
0.7%
(0.2%)
(1.1%)
(2.0%)
9/11 11/11 1/12 3/12 5/12 7/12 9/12 11/12
. Source: S&P European Leveraged Loan Index

7. Volume: New-issue Loans vs. HY Bonds
10
HY bonds
Text
Loans
8
€billions
€3.4B
5
3
€4.3B
0
9/11 11/11 1/12 3/12 5/12 7/12 9/12 11/12
. Source: LCD - Leveraged Commentary & Data

8. Historical Maturity Schedule by Par Outstanding
50.0
Text
37.5
25.0
12.5
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
YE 2009 YE 2010 YE 2011 Oct 2012
. Source: LCD - Leveraged Commentary & Data

9. Reasons for Reductions in Outstanding Loans
Text
Reductions from Outstanding Loans (€B)
Share of Share of
2011 Jan-Sep 12
Outstandings Outstandings
HY Takeouts 5.9 4% 2.9 3%
Other Full Paydowns 26.9 20% 7.7 7%
Other Partial Prepayments 6.0 5% 1.7 2%
A-to-E 6.4 5% 10.9 10%
Defaults/Restructurings 1.1 1% 5.2 5%
46.3 35% 28.5 25%
Source: S&P European Leveraged Loan Index (ELLI)
. Source: S&P European Leveraged Loan Index (ELLI)

10. ELLI Default Rates – European Leveraged Loans
Default Rate by Principal Amount Default Rate by Issuer Count
16% 16%
13% 13%
10% 10%
6% Text
6%
3% 3%
0% 0%
2/09 3/10 4/11 11/12 2/09 2/10 2/11 11/12
. Source: LCD - Leveraged Commentary & Data

11. Themes to watch for
Text
• No significant changes to the quantative easing policies from the ECB
• Flurry of activity before year-end; otherwise deals getting pushed into the new year
• Bond-for-loan takeouts will continue to keep pace
• Peripheral issuers continue to access the high yield markets
• Issuers will seek ‘add-on’ facilities instead of whole new facilities for their needs
• European issuers increasingly go across the ‘pond’ to the US, to issue loans and bonds
• Sell-side bankers and sponsors optimistic about M&A activity during 1Q of 2013
• Loss of CLOs: almost 85% of CLOs will be past reinvestment periods by end of 2013

12. Text
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