U.S. Bank Loan Capital Markets – Market Snapshot

U.S. Bank Loan Capital Markets – Market Snapshot
April 2, 2012
Peter Kline 312-325-8983 Richard Jones 312-325-8906 Kavian Boots 312-325-8723
Daniel Chapman 877-673-2258 Jeffrey Duncan 704-335-4570 Michael Mahoney 314-418-2661
Market Commentary: The IG Loan market has settled in to 2012 at a
steady pace, with volumes low due to less refinancing activity and a
limited M&A calendar. As many issuers refinanced in 2011 resulting in
record volumes, refinancing is limited to those issuers that failed to
take advantage of the improved market in 2011, or to those that
refinanced in 2010 or early in 2011 when pricing was higher. On the
M&A front, the market awaits a $1.8 billion bridge loan for Sara Lee’s
coffee and tea business spin-off and a cross border financing for
Watson Pharmaceuticals’ potential acquisition of Swiss drug maker
Actavis Group. However, new money opportunities are limited,
dampening lenders’ enthusiasm. Pricing is largely holding steady,
though banks are increasingly focused on ancillary business and are
becoming more price sensitive. Syndicate structures are in flux, even
for deals that were put in place just last year. A case in point is Western
Digital which put together a $3 billion financing to back its acquisition
of Hitachi Global Storage Technologies in April 2011. When asked to
recommit to the transaction before a closing deadline in early March
2012, three foreign banks dropped out of the deal including two
Europeans
Noteworthy Deal:
General Mills Inc.
Consumer Products /
Food
Baa1 (p) / BBB+ (s)
Investment Grade Loan Market
Europeans and one Taiwanese bank, while another European bank reduced its exposure to the credit and lent through a U.S. depositary subsidiary. This is
evidence of the reduced appetite for large funded loans in non-core markets as dollars remain scarce and expensive for most European banks.
Cereal maker General Mills is in market with $2.7 billion in credit facilities that will refinance existing debt. The facilities consist of
a $1 billion, three-year revolver and a $1.7 billion, five-year revolver. Undrawn pricing on the three-year opens at 10 bps with a
margin of L+102.5 for an all-in drawn cost of L+112.5. Undrawn pricing on the five-year opens at 12.5 bps with a margin of L+100
for an all-in drawn cost of L+112.5. General Mills last tapped the loan market in October 2010 with a $1.1 billion, three-year
Revolver, which was priced with a 22.5 bps facility fee and an all-in drawn cost of L+175 at Baa1/BBB+ ratings.
Mid-Corporate Loan Market
Market Commentary: Pricing in the mid-corporate space generally remained flat during
the first quarter, but for attractive club deals with eager existing bank groups, recently
there has been a decline in drawn spreads at the bottom tiers of pricing grids. Since mid-
February there have been several deals for smaller, moderately levered, unrated
corporates with drawn spreads below 100 bps (typically 87.5 bps) at the bottom end of
their pricing grids. The combination of a lack of new deal volume and aggressive bidding
by multiple banks for arranger roles, has resulted in smaller bank groups and an increase
in the number of joint bookrunners in most deals. The amount of non-credit business
available within a bank group continues to be a driving factor in determining syndication
strategies and upfront fees, with most borrowers slotting the banks with the most noncredit
business at the highest commitment tiers. In general, upfront fees have also
become more compressed, with fewer levels of fee tiers and smaller differentials between
the tiers.
Noteworthy Deal:
Black Box
Corporation
Sales – $1.1 billion
TD/EBITDA – 1.55x
Indicative Corporate Investment Grade Pricing Grid
Undrawn Cost (bps) Drawn Cost (bps)
Traditional Grid CDS-Based Grid
Rating 364-day Multi-year Drawn* Floor* Cap*
AA 2-5 4-7.5 70-87.5 10-15 75-87.5
A+ 4-6 6-8 75-87.5 25-30 87.5-112.5
A 5-7.5 7.5-10 87.5-100 30-35 100-125
A- 8-10 10-15 100-125 N/A N/A
BBB+ N/A 12.5-17.5 112.5-137.5 N/A N/A
BBB N/A 17.5-22.5 125-150 N/A N/A
BBB- N/A 22.5-30 150-175 N/A N/A
BB+ N/A 30-37.5 175-200 N/A N/A
Source: U.S. Bank National Association * Spread to LIBOR
This grid is subject to change and is indicative in nature only.
Black Box is a network services infrastructure provider offering design, installation and maintenance of voice, data and integrated
communications systems. The Company just closed on a refinance and upsizing (to $400 million) of its $350 million five-year
revolver, that had been set to mature in January 2013. The prior facility was put in place before the financial crisis and carried
aggressive pricing (L+75 with a 15 bps undrawn fee at the < 2.0x tier on its cash flow leverage-based pricing grid). The drawn
spread of the new five-year revolver is priced higher at L+112.5 at the same tier of the pricing grid, but the unused fee remains
unchanged at 15 bps. The deal demonstrates the willingness of some borrowers to carry aggressively priced credit facilities into
the last year of their tenor, and in fact, a number of borrowers have been willing to come within several months of maturity before
refinancing, in order to benefit from low pricing. Existing lenders provided 60% of the commitments in the new deal.
This information represents the opinion of U.S. Bancorp and is not intended tobeaforecastoffutureevents,aguaranteeoffutureresultsorinvestment advice. It is not intended to
provide specific advice or to be construed as an offering of securities or recommendation to invest. The factual information provided has been obtained from sources believed to be
reliable, but is not guaranteed as to accuracy or completeness. This report is intended for institutional investors only. Please send an email to andrew.hensel@usbank.com if you
wish to be removed from the mailing list for this document.
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Indicative Mid-Corporate Grade Pricing Grid
Leverage Unused Fee (bps) All-In Drawn (bps)
>3.0 35-45 200-250

U.S. Bank Loan Capital Markets – Market Snapshot
April 2, 2012
Peter Kline 312-325-8983 Richard Jones 312-325-8906 Kavian Boots 312-325-8723
Daniel Chapman 877-673-2258 Jeffrey Duncan 704-335-4570 Michael Mahoney 314-418-3571
Leveraged Loan Market
Market Commentary: Activity in the leveraged loan market continues to build,
with issuance jumping 71% to $106 billion in 1Q12 from $62 billion in 4Q11.
Despite this sequential improvement, leveraged loan issuance dropped some 25%
Indicative Leveraged Pricing
Average New-Issue Pricing (YTM)
in 1Q12 versus the same period in 2011. Much like the year ago period, the
majority (52%) of 1Q12 volume supported refinancing activity, and M&A volume
Ratings Jun-11 Sep-11 Dec-11 Mar-12
remained noticeably light at $26 billion or 25% of 1Q12 issuance and 10% below BB/BB- 4.57% 5.92% 4.43% 4.55%
4Q11. The relative lack of M&A activity - although some promising situations loom
on the horizon - continues to mystify, as the European crisis moves to the back
pages and economic indicators continue to show improvement domestically.
Modest net new issuance, combined with surging demand for the asset class, has
B+/B 6.27%
Source: Standard & Poor's LCD
8.37% 7.20% 6.12%
contributed to an issuer friendly technical environment. Opportunistic deal flow, including loan repricings, amend-to-extend deals, and dividend dealsare
now widely accepted for quality issuers, and comprised 45% of 1Q12 volume. Moreover, the supply/demand imbalance continues to pressure yields, now
hitting their lowest level since last June. Overall, leveraged loan pricing in 1Q12 tightened the most in the single-B space, while double-B pricing remained
relatively flat. The BB/BB- and B+/B indices came in at 4.55% and 6.12%, respectively, in March, from 4.43% and 7.20%, respectively, in December.
Noteworthy Deal:
Dispensing Dynamics
International
City of Industry,
California
Asset Based Finance Market
Market Commentary: Asset-based loan volume continues to be light since the peak in
2Q11 making for the third straight quarter of declining volumes. The market continues to
be dominated by refinancings versus new money transactions, with little news of additional
LBO transactions being added to the forward calendar. One industry that seems to be
active is the Metals Industry, in which we’ve seen at least four borrowers come to market to
increase their line of credit to support tuck-in acquisitions and working capital growth,
including O’Neal Steel, Olympic Steel, Steel Pipe & Supply, and McJunkin Red Man. Even
with a slow pipeline, most lenders expect pricing to stabilize during the year with
anticipation of bank regulation and Basel III liquidity requirements impacting banks’ pricing
models.
Noteworthy Deal:
Titanium Metals
Corporation
Dallas, Texas
Metals
U.S. Bank was the Sole Book Runner and Administrative Agent on a new $83 million senior secured set of facilities for
Dispensing Dynamics International, a California-based manufacturer of paper-towel and soap dispensers. Kinderhook Industries,
LLC is the sponsor. The $15 million revolver and $68 million term loan, both five-year facilities, backed the purchase of The
Colman Group, parent of the San Jamar (an international supplier of food safety tools and disposable dispensers) and Chef
Revival (a supplier of chef and crew apparel, kitchen gloves, towels, and insulated bags) brands. Pricing on the deal, which
closed at the end of February, was L+500 bps, with a 1.50% LIBOR floor, and a 98.5 issue price.
U.S. Bancorp served as Sole Bookrunner and Administrative Agent on a new $200 million, 5-year, syndicated ABL revolving
credit facility for Titanium Metals Corporation. The new facility will help support working capital growth anticipated in the
commercial aerospace industry, which the company primarily serves.
This information represents the opinion of U.S. Bancorp and is not intended to be a forecast of future events, a guarantee of future results or investment advice. It is not intended to
provide specific advice or to be construed as an offering of securities or recommendation to invest. The factual information provided has been obtained from sources believed to be
reliable, but is not guaranteed as to accuracy or completeness. This report is intended for institutional investors only. Please send an email to andrew.hensel@usbank.com if you wish
to be removed from the mailing list for this document.
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Indicative Asset Based Pricing Grid
LIBOR Spreads
Deal Size
Credit Fundamentals $125mm
Strong/Stable 150 – 200 175 – 225
Storied Credits 225 – 275 250 - 300
Undrawn pricing typically ranges from 37.5 to 50.0 bps, with a grid t hat is
to usage of the facility.

U.S. Bank Debt Capital Markets – Market Snapshot
April 2, 2012
Terry Martin 646-935-4581 Violet Grecu 877-673-2289 David Wood 312-325-8745
Michael Dullaghan 612-336-7629 Amanda Lamberti 314-325-2025
Private Placements Market
Market Commentary: Private Placement Market issuance activity continues at
a moderate pace. During the month of February, we saw a solid $3.5 billion in
issuance, following the robust $4.9 billion in volume seen in January. Total YTD
2012 volume now stands at over $8.4 billion. Investor liquidity continues to be
strong, and is driving favorable, issuer-friendly structures such as attractive
pricing, lengthening tenors and delaying funding options. U.S. Treasury yields
experienced some volatility in March and increased above 2.0% for the 10-year,
a level not seen since October 2011. In reaction to increasing Treasuries, credit
spreads are expected to modestly decline. Regardless, coupons remain
attractive and near historical record low levels. Transactions for foreign issuers
continue to dominate the new issue calendar. YTD 2012, cross-border
transactions have represented over 65% of issuance. Given the continued
heightened levels of cross-border issuance, investors are particularly eager to
invest in transactions for domestic issuers presently.
Noteworthy Deal:
Financial Services
U.S. Bancorp is serving as Joint Lead Placement Agent on a $64 million senior notes offering for a financial services company. The
company is a holding company with an NAIC 1 rating profile. The company seeks two tranches: (1) an $11 million 5-year bullet;
and (2) a $53 million 20-year final / 10.25-year average life amortizing tranche. Proceeds will be used to support capital
expenditures. The transaction will include a partial delayed funding of 6 months.
High Grade Market Commentary (for the week ended March 30 th )
Public Debt Market
Private Placement Spreads to U.S. Treasury
NAIC
Rating
5-Year (bps) 7-Year (bps) 10-Year (bps)
1 180-200 175-225 175-200
2 225-250 225-275 250-300
3
475-575
(if available)
525-650
(if available)
525-650
(if available)
Source: Private Placement Monitor (as of February 2012)
Please note that actual pricing will be sector and issuer specific. Given this and the market’s volatility;
drastic spread changes could occur at anytime. Please contact Terry Martin at (646) 935-4581 to
review and discuss potential individual basis.
As we close out the first quarter of 2012 we take a look back at the largest 1st quarter on record in terms of new issue supply, and the 3rd largest quarter of
all time. Q1 finishes with a monthly average of $95 billion in new issue supply, and a weekly average of $22 billion, both well above historical averages. We’ll
be focused on whether or not this feverish pace can be sustained over the balance of the year, or if what we are experiencing is the continued advancement
of funding plans which will leave most expecting a slower than normal second half of the year. The consensus would be that we are off to a remarkable start
and at some point the other shoe has to drop. A number of risk factors could potentially lead to a slowdown; Sovereign issues, politics and the upcoming
election, or disappointing economic news here in the states. Market participants will continue to focus on anything that could potentially derail this
impressive run in investment grade credit, and we would not be surprised if we see some profit taking during signs of weakness.
This week finished with just under $20 billion in new supply as the market started experiencing some fatigue late in the week as the book build process was
somewhat slower than what has become the “norm”. New issue concessions started off the week in negative territory but as the week wore on; issuers lost
leverage and were required to pay up (roughly 15 bps NIC for deals Wednesday - Friday vs. flat for deals Monday & Tuesday).
The broader market continues to perform well with the Dow closing just 40 points off the recent 52-week high and finishing Q1 +8.14%; a similar story with
the S&P, closing out Q1 +12%. We continue to see cash pouring into high grade bond funds with an additional $1.5 billion inflow this week making the YTD
figure +$17.3 billion which equates to a weekly average inflow of $1.4 billion. The month of April is typically slower from a volume standpoint as we enter into
Q1 earnings season. The 10-year average for April just above $40 billion, and we would anticipate something in the $45-60 billion range for April.
High Yield Market Commentary (for the week ended March 30th )
Volume in the high yield new issue market picked up this week and we passed the $30 billion mark for the month and the $90 billion market for the quarter.
This makes the first quarter of 2012 the busiest quarter on record, surpassing the fourth quarter of 2010, which held record at $84+ billion. Since the end
of last year, the market environment has created very favorable conditions for high yield issuance. On the supply side, never before seen low rates in the
high yield market has encouraged issuers to continue to refinance their debt. With 2012 and 2013 issues largely refinanced, we are starting to see issuers
refinance their 2014, 2015 and 2016 maturities. On the demand side the record breaking low yields in the US treasury, corporate and other markets has
made high yield one of the few places to find yield, albeit at historically low levels for the asset class.
The secondary market was softer this week, closing Thursday back over 600 bps, at +602. Despite this weakness in the secondary market, new issues
performed well post pricing. All deals broke post pricing either at issue bid or better. The big winner of the week was Lawson Software (Caa1/B-). They
priced over a $1 billion of 7-year non-call 3-year notes at par to yield 9.375% and bonds traded up almost 4 points post pricing. Again we saw another inflow
into the sector with $457 million being put into high yield funds. While this is down from the previous week, it is still the seventeenth inflow in a row for over
$18 billion in that time frame.
Investment Products and Services are available through U.S. Bancorp Investments, Inc., member of FINRA and SIPC, an investment advisor, a brokerage subsidiary of U.S. Bancorp,
and an affiliate of U.S. Bank. U.S. Bank is not responsible for and does not guarantee the products, services, or performance of it affiliates and third party providers. This information
represents the opinion of U.S. Bancorp and is not intended to be a forecast of future events, a guarantee of future results or investment advice. It is not intended to provide specific
advice or to be construed as an offering of securities or recommendation to invest. The factual information provided has been obtained from sources believed to be reliable, but is not
guaranteed as to accuracy or completeness. This report is intended for institutional investors only.
Not a Deposit ● Not FDIC Insured ● Not Guaranteed by the Bank ● May Lose Value ● Not Insured by any Federal Government Agency
3

U.S. Bank Debt Capital Markets – Market Snapshot
April 2, 2012
Terry Martin 646-935-4581 Violet Grecu 877-673-2289 David Wood 312-325-8745
Michael Dullaghan 612-336-7629 Amanda Lamberti 314-325-2025
Public Debt Market – Recent High Grade New Issues
Date Issuer Industry YKE / DMS Amount Securities Maturity Coupon Price Yield Spread Mdy S&P
3/30/2012 Weatherford International Ltd Energy Domestic $750.0 Senior Notes 4/15/2022 4.500% 99.855 4.518% 230 Baa2 BBB
3/30/2012 Weatherford International Ltd Energy Domestic $550.0 Senior Notes 4/15/2042 5.950% 99.291 6.001% 265 Baa2 BBB
3/29/2012 Sparebank 1 Boligkreditt Bank Yankee $1,250.0 Covered Bonds 6/30/2017 2.300% 99.756 2.350% 133.4 Aaa NR
3/29/2012 Heineken NV Food & Bev Yankee $750.0 Senior Notes 4/1/2022 3.400% 99.731 3.432% 127 Baa1 BBB+
3/29/2012 China Resources Gas Group Utility Yankee $750.0 Senior Notes 4/5/2022 4.500% 97.950 4.760% 260 Baa1 NR
3/29/2012 MassMutual Global Funding II Insurance Domestic $500.0 FA-Backed 4/5/2017 2.000% 99.565 2.092% 110 Aa2 AA+
3/29/2012 Barrick Gold Corp Industrial Yankee $1,250.0 Senior Notes 4/1/2022 3.850% 99.943 3.857% 170 Baa1 A-
3/29/2012 Barrick Gold Corp Industrial Yankee $750.0 Senior Notes 4/1/2042 5.250% 99.820 5.262% 200 Baa1 A-
3/29/2012 Flow ers Foods Inc Food & Bev Domestic $400.0 Senior Notes 4/1/2022 4.375% 99.760 4.405% 225 Baa2 BBB-
3/29/2012 Trustees of the University of Pennsylvania University Domestic $300.0 Senior Notes 9/1/2112 4.674% 100.000 4.674% 145 Aa2 AA+
3/28/2012 Potomac Electric Pow er Co Utility Domestic $200.0 FMB's 4/1/2022 3.050% 99.700 3.094% 90 A3 A
3/28/2012 Svenska Handelsbanken AB Bank Yankee $1,250.0 Senior Notes 4/4/2017 2.895% 99.908 2.895% 187.5 Aa2 AA-
3/28/2012 Vale Overseas Ltd (Re-Open) Industrial Yankee $1,250.0 Senior Notes 1/11/2022 4.375% 101.345 4.205% 200 Baa2 A-
3/28/2012 Bladex Bank Yankee $400.0 Senior Notes 4/4/2017 3.750% 99.271 3.912% 287.5 NR BBB
3/27/2012 Prudential Covered Trust 2012-1 Insurance Domestic $1,000.0 Senior Secured 9/30/2015 2.997% 100.000 2.997% 250 NR A
3/27/2012 MetLife Institutional Funding II Insurance Domestic $750.0 FA-Backed 4/2/2015 1.625% 99.936 1.647% 115 Aa3 AA-
3/27/2012 Health Care REIT Inc Real Estate Domestic $600.0 Senior Notes 4/1/2019 4.125% 99.694 4.176% 260 Baa2 BBB-
3/27/2012 Central Hudson Gas & Electric Corp Utility Domestic $48.0 Senior Notes 4/1/2042 4.776% 100.000 4.776% 147.5 A3 A
3/27/2012 HSBC Holdings PLC Bank Yankee $2,000.0 Senior Notes 3/20/2022 4.000% 99.348 4.080% 190 Aa2 A+
3/27/2012 CEZ AS Utility Yankee $2,000.0 Senior Notes 4/3/2022 4.250% 99.300 4.337% 215 A2 A-
3/27/2012 CEZ AS Utility Yankee $300.0 Senior Notes 4/3/2042 5.625% 99.669 5.648% 235 A2 A-
3/26/2012 Korea National Oil Corp Energy Yankee $1,000.0 Senior Notes 4/3/2017 3.125% 99.706 3.189% 210 A1 A
3/26/2012 Lincoln National Corp Insurance Domestic $300.0 Senior Notes 3/15/2022 4.200% 100.000 4.200% 195 Baa2 A-
3/26/2012 Anglo American Capital Plc Industrial Yankee $600.0 Senior Notes 4/3/2017 2.625% 99.781 2.672% 160 Baa1 BBB+
3/26/2012 DNB Bank ASA Bank Yankee $2,000.0 Senior Notes 4/3/2017 3.200% 99.913 3.219% 215 Aa3 A+
3/26/2012 Canadian Oil Sands Ltd Energy Yankee $400.0 Senior Notes 4/1/2022 4.500% 99.221 4.598% 235 Baa2 BBB
3/26/2012 Canadian Oil Sands Ltd Energy Yankee $300.0 Senior Notes 4/1/2042 6.000% 99.435 6.041% 270 Baa2 BBB
3/22/2012 Tufts University Domestic $250.0 Senior Notes 4/15/2112 5.017% 100.000 5.017% 165 Aa2 AA-
3/22/2012 Zions Bancorporation Bank Domestic $300.0 Senior Notes 3/27/2017 4.500% 94.250 5.843% Ba3 BBB-
3/21/2012 The George Washington University University Domestic $300.0 Senior Notes 9/15/2022 3.485% 100.000 3.485% 112 A1 A+
3/21/2012 Northw estern University University Domestic $200.0 Senior Notes 12/1/2047 4.198% 99.706 Aaa AAA
3/21/2012 Schahin II Finance Coo SPV Finance Yankee $750.0 Senior Secured 9/25/2022 5.875% 100.000 5.875% Baa3 BBB-
3/21/2012 Capital One Financial Co Bank Domestic $1,250.0 Senior Notes 3/23/2015 2.150% 99.916 2.179% 160 A2 A
3/21/2012 Sygenta Finance N.V. Finance Yankee $500.0 Senior Notes 3/28/2022 3.125% 99.838 3.144% 85 A2 A
3/21/2012 Sygenta Finance N.V. Finance Yankee $250.0 Senior Notes 3/28/2042 4.375% 99.834 4.385% 100 A2 A
3/21/2012 American Express Credit Corp Finance Domestic $1,500.0 Senior Notes 3/24/2017 2.375% 99.729 2.433% 130 A2 BBB+
3/21/2012 Caterpillar Financial Services Corp Finance Domestic $325.0 Senior Notes 3/26/2015 1.050% 99.915 1.079% 50 A2 A
3/21/2012 Caterpillar Financial Services Corp Finance Domestic $275.0 Senior Notes 3/24/2017 1.750% 99.819 1.079% 65 A2 A
3/21/2012 Lloyds TSB Bank Plc Bank Yankee $1,500.0 Senior Notes 3/28/2017 4.200% 99.848 4.234% 310 A1 A
3/21/2012 Raymond James Financial Broker Dealer Domestic $250.0 Senior Notes 4/1/2024 5.625% 99.602 5.671% 337.5 Baa2 BBB
3/20/2012 Southw est Gas Corp Utility Domestic $250.0 Senior Notes 4/1/2022 3.875% 99.966 3.879% 150 Baa1 BBB+
3/20/2012 Sempra Energy Utility Domestic $600.0 Senior Notes 4/1/2017 2.300% 99.948 2.311% 110 Baa1 BBB+
3/19/2012 AIG Insurance Domestic $750.0 Senior Notes 3/20/2015 3.000% 99.844 3.055% 245 Baa1 A-
3/19/2012 AIG Insurance Domestic $1,250.0 Senior Notes 3/22/2017 3.800% 99.797 3.845% 265 Baa1 A-
*Shaded transactions represent those in which U.S. Bank played a role.
Source: Bloomberg
Investment Products and Services are available through U.S. Bancorp Investments, Inc., member of FINRA and SIPC, an investment advisor, a brokerage subsidiary of U.S. Bancorp,
and an affiliate of U.S. Bank. U.S. Bank is not responsible for and does not guarantee the products, services, or performance of it affiliates and third party providers. This information
represents the opinion of U.S. Bancorp and is not intended to be a forecast of future events, a guarantee of future results or investment advice. It is not intended to provide specific
advice or to be construed as an offering of securities or recommendation to invest. The factual information provided has been obtained from sources believed to be reliable, but is not
guaranteed as to accuracy or completeness. This report is intended for institutional investors only.
Not a Deposit ● Not FDIC Insured ● Not Guaranteed by the Bank ● May Lose Value ● Not Insured by any Federal Government Agency
4