Jefferies Maritime Group...2014/08/25 · Tanker Companies S&P 500 Tanker Market Update Week of...

Jefferies LLC

Member SIPC

INVESTMENT BANKING

Jefferies Maritime Group

Maritime Market Update August 25, 2014

IN THIS ISSUE

Maritime Update Tanker Market Update Tanker Universe Equity Comparables Tanker FFA Curve Dry Cargo Market Update Drybulk Universe Equity Comparables Drybulk FFA Curve Gas Carrier Market Update Gas Carrier Universe Equity Comparables

Equity Market Conditions U.S. Equity Market Overview U.S. IPO Market Overview – Summary of Issuance U.S. Industrials IPO Market Overview U.S. Follow-on Market Overview

Debt Market Update Debt Market Overview Maritime Bonds

Maritime Market Update August 2014 /

Disclosure

Important Disclosures This communication is being provided strictly for informational purposes only and is not intended as a recommendation or an offer or solicitation for the purchase or sale of any security referenced herein. This material has been prepared by Jefferies LLC (“Jefferies”) a U.S.-registered broker-dealer, employing appropriate expertise, and in the belief that it is fair and not misleading. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified, therefore, we do not guarantee its accuracy. This is not an offer or solicitation of an offer to buy or sell any security or investment. Any opinion or estimates constitute our best judgment as of this date, and are subject to change without notice. Jefferies and Jefferies International Limited and their affiliates and their respective directors, officers and employees may buy or sell securities mentioned herein as agent or principal for their own account. This report was created by members of the investment banking division of Jefferies, and has not been reviewed by or discussed with, any member of Jefferies’ research department. This report is not intended to be, and in no way constitutes a “research report”, as such term is defined in Rule 137 promulgated under the Securities Act of 1933, as amended. Jefferies’ investment banking department has done, and may continue to do business with, companies included in this report. This report is a marketing communication and is not and should not be construed as investment research. Reproduction without written permission of Jefferies is expressly forbidden. Additional Information This material is approved for distribution in the United Kingdom by Jefferies International Limited, which is authorised and regulated by the Financial Services Authority ("FSA") and is located at Vintners Place, 68 Upper Thames Street, London EC4V 3BJ; telephone +44 (0) 20 7029 8000; facsimile +44 (0) 20 7029 8010. While we believe this information and materials upon which this information was based are accurate, except for any obligations under the rules of the FSA, we do not guarantee its accuracy. In the UK, this publication is directed solely at persons who have professional experience in matters relating to investments falling within Articles 19(5) and 49(2)(a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) or at persons to whom it can be otherwise lawfully distributed. For Canadian investors, this material is intended for use only by professional or institutional investors. None of the investments or investment services mentioned or described herein is available to other persons or to anyone in Canada who is not a "Designated Institution" as defined by the Securities Act (Ontario). For investors in the Republic of Singapore, this material is intended for use only by accredited, expert or institutional investors as defined by the Securities and Futures Act and is distributed by Jefferies Singapore Limited which is regulated by the Monetary Authority of Singapore. Any matters arising from, or in connection with, this document should be brought to the attention of Jefferies Singapore Limited at 80 Raffles Place #15-20, UOB Plaza 2, Singapore 048624, telephone: +65 6551 3950. Recipients of this document in any other jurisdiction should inform themselves about and observe any applicable legal requirements in relation to the receipt of this report. All logos, trademarks and service marks appearing herein are property of Jefferies. Member SIPC • © 01/2014 Jefferies LLC

i


Table of Contents

Maritime Update 1

Equity Market Conditions 10

Debt Market Update 15

ii


Maritime Update

1


90%

100%

110%

120%

130%

8/22/13 10/21/13 12/21/13 2/20/14 4/22/14 6/22/14 8/22/14

Tanker Companies S&P 500

Tanker Market Update Week of August 18, 2014

Regulatory Filings

8/19: Navios Maritime Acquisition reported second quarter 2014 earnings of $0.00 per share (loss of $0.01 per share consensus)

8/18: Scorpio Tankers purchased an MR product tanker for $37.1 million, with delivery expected in September 2014

Source: Bloomberg, Capital IQ and SEC filings.

Recent Sector News

West Texas Intermediate crude prices decreased 3.8% on the week from $97.35 per barrel to $93.65

Brent Crude prices decreased 1.2% on the week from $103.53 per barrel to $102.29

Weekly moving average for fixtures of VLCCs from West Africa to Asia rose to a record high of 9 last week, compared with an average of 5 per week over the past 12 months

Persian Gulf oil tanker surplus remained fairly steady, with 16 percent more VLCCs than cargos anticipated over the next 30 days, compared to 15 percent last week and an average surplus of 19 percent in 2013

China’s gasoline exports rose 12 percent year-over-year to 349,676 tons in July, while LNG imports rose 36 percent to 1.84 million metric tons

Chinese refiners bought 40 cargos or 1.27 million barrels per day of West African crude loading in September, the most since at least August 2011

Recent News (August 17, 2014 – August 23, 2014)

Last Twelve Months Indexed Performance

Indexed to 100

(0.5%) (0.5%)

1.1% (3.0%)

0.3% 1.2%

(2.6%) 1.4%

5.4% (1.8%)

0.2% (2.1%)

9.0%

xc Stock Price % of 52 LTM

8/22/2014 Week High Change Weekly Change (%)

Ardmore Shipping 13.00$ 82.1% (7.1%)

Capital Product Partners 10.97 94.3% 25.4%

DHT Holdings 7.31 85.3% 73.2%

Frontline 2.60 50.2% (5.5%)

Navios Maritime Acquisition 3.38 68.3% (9.9%)

Nordic American Tankers 9.09 73.1% 8.0%

Scorpio Tankers 9.39 75.2% (5.4%)

Ship Finance International 19.37 98.6% 18.3%

Teekay Corporation 59.46 94.7% 54.7%

Teekay Offshore Partners 34.65 92.5% 8.4%

Teekay Tankers 4.23 83.3% 61.5%

TORM 0.11 15.8% (70.8%)

Tsakos Energy Navigation 7.54 88.9% 59.7%

Mean 77.1% 16.2%

2


Tanker Universe Equity Comparables ($Millions, except per share data)

Source: Forward calendar year estimates per Bloomberg.

Stock Total TEV / EBITDA P / E Dist Cash Yield Dividend Yield Price / TEV / Price % 52-Week Market Enterprise Adjusted Adjusted

8/22/2014 High Cap Value NAV Asset Value

Ardmore Shipping Corporation 13.00$ 82.1% 339.3$ 375.4$ 15.5x 5.7x NM 11.9x 5.7% 16.6% 3.1% 3.1% 105.4% 104.8%

Capital Product Partners 10.97 94.3% 970.2 1,638.4 13.1x 11.8x NM 20.9x 9.7% 10.5% 8.5% 8.8% NM 160.9%

DHT Holdings 7.31 85.3% 507.4 493.0 15.5x 8.0x NM 23.0x 5.8% 11.7% 1.1% 1.2% 102.6% 102.7%

Frontline 2.60 50.2% 258.3 1,409.4 12.0x 10.0x NM NM 18.4% 24.5% 0.0% 0.1% NM NM

Navios Maritime Acquisition 3.38 68.3% 512.6 1,702.3 11.1x 8.1x NM 8.1x 17.2% 24.5% 5.9% 5.9% 117.2% 104.6%

Nordic American Tankers 9.09 73.1% 810.7 940.9 13.4x 9.7x NM NM 8.6% 11.7% 9.2% 10.5% 151.3% 141.3%

Scorpio Tankers 9.39 75.2% 1,617.0 2,295.0 24.6x 8.1x NM 12.0x 6.1% 17.6% 4.1% 4.2% 123.8% 115.7%

Ship Finance International 19.37 98.6% 1,966.8 4,749.1 9.0x 8.6x 22.3x 17.1x 20.0% 20.3% 8.8% 8.9% NM NM

Teekay Corporation 59.46 94.7% 4,437.5 12,515.5 14.2x 12.1x NM NM 4.5% 12.9% 2.1% 2.6% NM NM

Teekay Offshore Partners 34.65 92.5% 2,968.9 5,512.3 11.6x 9.6x NM 18.8x 9.4% 11.7% 6.3% 6.7% NM NM

Teekay Tankers 4.23 83.3% 372.3 962.6 10.7x 8.2x 16.6x 7.3x 23.4% 23.4% 2.8% 2.8% 145.0% 113.6%

TORM 0.11 15.8% 76.8 1,443.5 12.9x 6.3x NM 1.1x NA NA NA NA NM 169.1%

Tsakos Energy Navigation 7.54 88.9% 644.5 1,880.2 10.5x 8.8x 17.5x 10.0x 24.7% 27.9% 2.7% 2.7% 91.3% 96.8%

Mean 13.4x 8.8x 18.8x 13.0x 12.8% 17.8% 4.5% 4.8% 119.5% 123.3%

2014E 2015E2014E 2015E 2014E 2015E 2014E 2015E

3


Tanker FFA Curve

Source: Bloomberg.

VLCC TD3 FFA ($/Day)

Panamax LR1 TC5 FFA ($/Day)

Suezmax TD5 FFA ($/Day)

Handymax MR TC2 FFA ($/Day)

(August 22, 2014)

$36,982

$24,351 $23,713

-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

Q3 2014 2015 2016

$31,384

$20,515

$16,134

-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

Q3 2014 2015 2016

$13,769 $12,350

$15,741

-

$3,000

$6,000

$9,000

$12,000

$15,000

$18,000

Q3 2014 2015 2016

$3,592 $4,142

$7,000

-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

Q3 2014 2015 2016

4


0.7% 1.8%

3.7% 0.0%

5.5% (2.6%)

(3.9%) 0.0%

(3.1%) 6.7%

0.0% 0.4%

3.5% (17.6%)

(0.7%) 8.7%

0.3%

(9.0%) (3.3%)

3.7% 0.7%

(2.6%) 1.5%

90%

100%

110%

120%

130%

140%

150%

160%

170%

8/22/13 10/21/13 12/21/13 2/20/14 4/22/14 6/22/14 8/22/14

Drybulk Companies Container Companies S&P 500

Recent Sector News

Dry bulk spot rates peaked in December and Panamax rates have since fallen 60 percent; while rates are projected to improve in the second half of 2014 on strong North American grain harvests, robust Chinese demand for commodities and slowed fleet growth

Turnover in Hamburg may reach 145 million tons this year, topping the 2008 record of 140 million tons, as general cargo handling rose 8.8 percent to 51.6 million tons in the first half of 2014, the highest on record

China shipping stocks jumped as the Baltic Dry Index surged to a weekly gain of 31 percent

From February to July, inbound container volume to Los Angeles and Long Beach increased by an average of 7.1 percent per month, suggesting much stronger November-December retail sales than 2013

Grain exports from Rouen, Europe’s largest wheat-shipping hub, climbed to 16 percent to 99,191 metric tons in the week ended August 20, up from 85,847 metric tons last week

Dry Cargo Market Update

Regulatory Filings

8/21: Navios Maritime Holdings reported second quarter 2014 loss of $0.09 per share ($0.15 per share consensus)

8/20: Diana Shipping took delivery of the newly built Capesize dry bulk vessel, “G.P. Zafirakis,” which it agreed to purchase in June 2014

8/20: Star Bulk Carriers reported second quarter 2014 earnings of $0.10 per share ($0.03 per share consensus)

8/19: Star Bulk Carriers agreed to acquire 34 operating vessels from Excel Maritime Carriers for an aggregate price of 29.917 million shares of Star Bulk common stock and $288.39 million in cash

8/18: Global Ship Lease agreed to repurchase all outstanding Series A Preferred Shares for $36.4 million, a discount to their liquidation value at maturity of $45.0 million

Source: Bloomberg, Capital IQ and SEC filings.

Indexed to 100



Week of August 18, 2014

Stock Price % of 52 LTM

8/22/2014 Week High Change Weekly Change (%)DrybulkBaltic Trading 5.88$ 74.1% 25.6%Diana Shipping 10.88 78.1% (2.6%)DryShips 3.32 66.4% 53.0%Euroseas 1.16 64.4% 1.8%FreeSeas 0.75 16.2% (21.2%)Globus Maritime 3.40 74.2% (70.7%)Goldenport 5.92 70.0% (43.5%)Hellenic Carriers 0.61 79.9% (38.1%)

Knightsbridge Tankers 12.27 75.2% 50.4%

Navios Maritime Holdings 9.43 77.8% 50.6%Navios Maritime Partners 20.07 98.1% 40.4%Paragon Shipping 5.19 55.2% (8.8%)Safe Bulkers 8.63 75.2% 38.5%Scorpio Bulk 8.00 74.6% NASeanergy Maritime 1.42 54.6% 3.7%Star Bulk Carriers 13.77 86.7% 104.3%Ultrapetrol 3.32 83.4% (9.0%)

Mean 70.8% 10.9%

ContainerBox Ships 1.32$ 28.3% (89.0%)Costamare 22.68 90.9% 89.0%Danaos 5.82 75.1% 27.9%Diana Containerships 2.76 61.1% (81.9%)

Global Ship Lease 3.73 58.2% (18.9%)

Seaspan 23.24 92.6% 9.1%

Mean 67.7% (10.6%)

5


Drybulk Universe Equity Comparables ($Millions, except per share data)


xc Stock Total TEV / EBITDA P / E Dist Cash Yield Dividend Yield Price / TEV / Price % 52-Week Market Enterprise Adjusted Adjusted

8/22/2014 High Cap Value NAV Asset Value

DrybulkBaltic Trading 5.88$ 74.1% 338.5$ 477.5$ 22.3x 8.9x NM 15.7x 7.3% 15.6% 1.3% 3.6% 117.6% 111.9%

Diana Shipping 10.88 78.1% 893.4 1,135.0 19.4x 9.7x NM 24.6x 5.5% 12.9% 0.0% 0.0% 95.3% 96.2%

DryShips 3.32 66.4% 1,510.1 8,278.8 8.3x 7.0x NM 9.0x 55.0% 75.0% 0.0% 0.0% 108.7% 101.5%

Euroseas 1.16 64.4% 66.0 110.4 NA 7.3x NM NM NA NA 11.2% 6.9% 76.7% 84.6%

FreeSeas 0.75 16.2% 18.4 96.9 NA NA NM NM NA NA NA NA NM 133.9%

Globus Maritime 3.40 74.2% 34.8 118.1 NA NA 6.0x 4.9x 47.3% NA NA NA 52.3% 78.9%

Goldenport 5.92 70.0% 55.4 211.0 8.2x 8.0x NM 17.9x NA NA NA NA 61.9% 86.1%

Hellenic Carriers 0.61 79.9% 27.8 98.4 7.1x 5.2x NM NM NM 50.9% NA NA 74.2% 91.1%

Knightsbridge Tankers 12.27 75.2% 1,365.6 1,457.5 32.9x 7.8x NM 10.1x 8.5% 9.6% 6.5% 6.3% 154.9% 149.7%

Navios Maritime Holdings 9.43 77.8% 984.5 2,498.0 12.6x 8.4x NM 12.1x 11.7% 20.9% 2.5% 2.5% 137.4% 112.0%

Navios Maritime Partners 20.07 98.1% 1,584.3 1,974.5 11.9x 10.3x 24.3x 17.9x 11.0% 10.3% 8.8% 8.8% NM 183.9%

Paragon Shipping 5.19 55.2% 127.6 288.5 23.5x 6.1x NM 8.7x 6.4% 30.1% NA NA 69.4% 83.7%

Safe Bulkers 8.63 75.2% 720.1 1,217.8 14.6x 8.8x NM 10.1x 11.5% 18.3% 2.7% 3.3% 145.5% 122.7%

Scorpio Bulkers 8.00 74.6% 1,122.0 880.1 NA 10.5x NM NM NM 5.3% NA 1.3% 101.7% 102.1%

Seanergy Maritime 1.42 54.6% 17.2 14.5 NA NA NM NM NA NA 0.0% 0.0% NM NM

Star Bulk Carriers 13.77 86.7% 1,563.1 2,190.3 30.6x 6.5x NM 8.6x 5.6% 19.3% NA NA 103.2% 102.3%

Ultrapetrol 3.32 83.4% 466.9 876.4 8.3x 6.6x NM 12.9x 13.7% 21.1% 0.0% 0.0% NM NM

Mean 16.6x 7.9x 15.1x 12.7x 16.7% 24.1% 3.3% 3.0% 99.9% 109.4%

ContainerBox Ships 1.32$ 28.3% 32.6$ 197.4$ 8.0x 7.3x NM NM NA NA 0.0% 0.0% NM NMCostamare 22.68 90.9% 1,696.5 3,516.0 10.6x 10.5x 13.8x 13.1x 14.5% 17.6% 4.9% 5.0% NM NMDanaos 5.82 75.1% 638.3 3,657.5 9.3x 9.3x 12.3x 6.1x 29.2% 34.4% 0.0% 0.0% NM NM

Diana Containerships 2.76 61.1% 201.9 258.3 12.3x 17.7x NM NM 8.9% 4.3% 3.1% 0.4% NM NM

Global Ship Lease 3.73 58.2% 205.0 584.8 7.1x 7.0x NM NM NA NA 0.0% 0.0% NM NM

Seaspan 23.24 92.6% 2,197.6 6,452.0 12.7x 11.2x 24.7x 17.6x 13.6% 14.9% 5.8% 6.2% NM NM

Mean 10.0x 10.5x 16.9x 12.3x 16.5% 17.8% 2.3% 1.9% NM NM

2014E 2015E2014E 2015E 2014E 2015E 2014E 2015E

6


Drybulk FFA Curve

Source: Bloomberg.

Capesize 4TC FFA ($/Day)

Panamax 4TC FFA ($/Day)

Capesize C7 FFA ($/Ton)

Supramax 5TC FFA ($/Day)

(August 22, 2014)

$25,625

$20,050 $19,450

$10,000$12,000$14,000$16,000$18,000$20,000$22,000$24,000$26,000$28,000

Remaining 2014 2015 2016

$11,350 $10,900 $11,250

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

Remaining 2014 2015 2016

$12,475

$11,150 $11,250

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

$13,000

Remaining 2014 2015 2016

$12.15 $12.40

$11.95

$10.00

$10.50

$11.00

$11.50

$12.00

$12.50

$13.00

Remaining 2014 2015 2016

7


90%

100%

110%

120%

130%

140%

150%

160%

8/22/13 10/13/13 12/4/13 1/25/14 3/18/14 5/9/14 6/30/14 8/22/14Gas Comps S&P 500

Recent Sector News

Henry Hub gas prices increased 2.5% on the week from $3.77 per MMbtu to $3.86

North American spot LNG propane (Mt. Belvieu) prices decreased 0.9% on the week from $11.21 per MMBtu to $11.11

North American spot LNG Butane (Mt. Belvieu) prices decreased 2.0% on the week from $13.12 per MMBtu to $12.86

North American spot LNG Ethane (Mt. Belvieu) prices increased 1.1% on the week from $2.47 per MMBtu to $2.50

Total U.S. working gas in underground storage increased 3.6% on the week from 2,467 billion cubic feet to 2,555

Gas Carrier Market Update

Regulatory Filings

No filings

Source: Bloomberg, Capital IQ, U.S. Energy Information Administration and SEC filings.

Indexed to 100



Week of August 18, 2014

(0.4%) 0.0%

(5.9%) 5.6%

1.5% 3.6%

1.9% (5.1%)

(0.1%)

xc Stock Price % of 52 LTM

8/22/2014 Week High Change Weekly Change (%)

Dorian LPG 19.71$ 79.1% NA

Dynagas LNG Partners LP 23.75 93.1% NA

GasLog 24.31 74.9% NA

GasLog Partners 34.09 91.2% NA

Golar LNG 64.33 97.6% 64.4%

Golar LNG Partners 37.28 96.8% 14.1%

Navigator Holdings 29.16 95.7% 76.7%

Stealthgas 9.73 74.8% 10.6%

Teekay LNG Partners 42.75 90.0% 2.5%

Mean 88.1% 33.7%

8


Gas Carrier Universe Equity Comparables ($Millions, except per share data)


xc Stock Total TEV / EBITDA P / E Dist Cash Yield Dividend YieldPrice % 52-Week Market Enterprise

8/22/2014 High Cap Value

Dorian LPG 19.71$ 79.1% 1,126.0$ 836.8$ NA 6.9x NM NM NA NA 0.0% 0.0%

Dynagas LNG Partners LP 23.75 93.1% 843.7 1,148.1 14.7x 9.0x 15.1x 13.0x 9.1% 9.9% 6.2% 7.1%

GasLog 24.31 74.9% 1,528.2 2,200.7 7.6x 6.5x 20.8x 15.0x 9.5% 12.7% 2.4% 2.6%

GasLog Partners 34.09 91.2% 683.4 931.5 15.1x 9.1x 24.1x 16.4x 6.7% 10.0% 3.3% 5.2%

Golar LNG 64.33 97.6% 6,028.1 6,369.2 NA 33.8x NM NM 0.4% 2.8% 2.8% 2.8%

Golar LNG Partners 37.28 96.8% 2,343.8 3,457.9 11.1x 10.3x 14.5x 14.3x 11.8% 12.1% 5.8% 6.1%

Navigator Holdings 29.16 95.7% 1,613.7 2,029.6 18.4x 12.5x 14.1x 12.6x 10.2% 13.1% NA NA

Stealthgas 9.73 74.8% 423.3 580.6 5.5x 4.9x 8.4x 6.3x 22.8% 30.7% 1.0% 4.1%

Teekay LNG Partners 42.75 90.0% 3,172.6 5,014.0 13.2x 12.3x 18.8x 17.2x 8.0% 8.3% 6.5% 6.7%

Mean 12.2x 11.7x 16.6x 13.5x 9.8% 12.5% 3.5% 4.3%

2014E 2015E2014E 2015E 2014E 2015E 2014E 2015E

9


Equity Market Conditions

10


U.S. Equity Market Overview

Source: Dealogic. CapitalIQ. Bloomberg. (1) 2014E based on S&P 500 consensus price target estimate of 1,955 vs. closing price on 12/31/13. (2) Equity fund flows exclude ETFs.

Recent Profit Taking in Global Equities & Repositioning of Portfolios After Substantial Gains

Inflows Into U.S. Equities Remain Positive(2)

$0.3 $0.4

$0.1 $0.4

($0.2)

$1.5

($0.3)

($1.4) ($1.3)

($2.3)

$0.5

$3.9

($0.4)

$0.5 $0.7

($0.3)

($2.6)

($3.3)

($4.5) ($5)

($4)

($3)

($2)

($1)

$0

$1

$2

$3

$4

$5

8/9

8/1

6

8/2

3

8/3

0

9/6

9/1

3

9/2

0

9/2

7

10

/4

10

/11

10

/18

10

/25

11

/1

11

/8

11

/15

11

/22

12

/6

12

/13

12

/20

Mutu

al F

und F

low

s

- E

quity

ex E

TF

($bn)

Wall Street Analyst Predicting Modest Upside to U.S. Stocks in Q4(1)

(20%)

(10%)

0%

10%

20%

30%

40%

50%

60%

Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun

U.S. Market Volatility Remains Low

0.0

10.0

20.0

30.0

40.0

50.0

60.0

01/11 07/11 01/12 07/12 01/13 07/13 01/14 07/14VIX Index

Peak VIX: 48.0%

Current VIX: 13.2%

19.1%

6.8%

38.2%

30.1%

0% 10% 20% 30% 40% 50%

Off

er-

to-C

urr

en

t

IPOs FOs

U.S. IPOs Are Producing Outsized Returns

Offer-to-Current %

S&P 500: +37.1%

Dow Jones: +27.2%

EuroSTOXX: +17.3%

MSCI EM: +1.8%

Russell 2000: +34.4%

Nikkei 225: +43.3%

Hang Seng: +10.1%

($11.4)

($51.9)

$37.8

$12.0

($60)

($50)

($40)

($30)

($20)

($10)

$0

$10

$20

$30

$40

$50

2011 2012 2013 2014

Mut

ual F

und

Flow

s -

Equ

ity

ex E

TF (

$bn

)

7%

(2%)

34%

20%

31% 27%

20%

(10%) (13%)

(23%)

26%

9%

3%

14%

4%

(38%)

23%

13%

(0%)

13%

30%

6%

(40%)

(30%)

(20%)

(10%)

0%

10%

20%

30%

40%

+1,033.5 +237%

+538.5 +61% +945.1

+105%

2.2%

5.5%

12.2%

19.0%

Last 8Weeks

LTM

IPOs

FOs

11


Growth Sectors Leading Issuance

12

20

23

27

31

71

92

Real Estate

Consumer

Industrials

Energy

Finance

TMT

Healthcare

Most Active U.S. IPO Market Since 2000

$104.3

$46.2

$27.1 $18.2

$51.5

$38.1 $46.8

$53.2

$26.8 $27.0

$44.0 $40.7 $46.7

$60.4

$44.9

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Issu

ance

($

bn)

# 408 86 76 77 233 193 201 214 30 60 155 126 131 216 185

U.S. IPO Market Overview – Summary of Issuance

Source: Dealogic. Excludes transactions less than $20.0 million, BCC/SPACs and re-IPOs.

U.S. IPO Pricing Environment for Issuers Softened in Late July but Remains Constructive

Below Within Above

Average Aftermarket Performance

LTM IPO Issuance (# of Offerings)

GM FB

Visa

LTM Offer-to-Current %

20.0%

34.1%

13.7%

25.8%

4.0%

27.3%

13.6%

Real Estate

Consumer

Industrials

Energy

Finance

TMT

Healthcare

Number of Volume Average Aftermarket Performance

Month Offerings ($bn) Pricing vs. Filing Range T+1 T+30 Current

August 2014 9 0.9 7.0% --- 13.1%

July 2014 32 8.7 11.2% 18.0% 12.0%

June 2014 30 8.8 12.9% 17.8% 11.3%

May 2014 21 5.5 7.9% 27.8% 38.4%

April 2014 27 8.8 8.8% 6.6% 16.6%

March 2014 28 4.3 24.5% 9.6% 5.0%

February 2014 21 2.1 11.0% 31.8% (5.5%)

January 2014 17 5.8 24.1% 36.9% 11.5%

December 2013 12 5.9 26.3% 36.1% 48.8%

November 2013 25 6.3 15.2% 33.8% 37.2%

October 2013 31 12.7 26.6% 38.5% 37.7%

September 2013 22 3.9 25.2% 32.4% 12.9%

LTM 276 $73.8 16.8% 25.9% 19.0% 34%

23%

29%

32%

17%

41%

30%

11%

52%

43%

27%

50%

56%

45%

45%

35%

48%

58%

41%

60%

64%

41%

38%

47%

28%

33%

22%

32%

35%

20%

25%

18%

10%

25%

7%

19%

27%

22%

11%

12


Industrials IPOs Since – Last Twelve Months

U.S. Industrials IPO Market Overview

U.S. Industrials IPO Issuance

Source: Dealogic. Excludes transactions less than $20.0 million.

Summary of issuance, pricing and aftermarket performance of recent Industrials IPOs

U.S. Industrials IPO Pricing vs. Filing Range

U.S. Industrials IPO Aftermarket Performance

$5.8

$2.4 $2.4

$23.4

$4.4 $3.8

$8.1

$5.5

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

2007 2008 2009 2010 2011 2012 2013 2014

38% 43%

67% 57%

38% 59%

47% 36%

50% 29%

25% 32%

44%

35%

27% 55%

13% 29%

8% 11% 19% 6%

27% 9%

0%

20%

40%

60%

80%

100%

2007 2008 2009 2010 2011 2012 2013 2014

Below In Range Above

24 7 12 28 17 30 16

(5.2%) (20.3%)

21.9%

57.3% 45.5%

141.9%

41.2%

5.6%

(25%)

0%

25%

50%

75%

100%

125%

150%

2007 2008 2009 2010 2011 2012 2013 2014

Offer-to-Current %

GM

101.0% Ex. SCTY

22

Pricing Offering Pricing % of Pricing Offer-to- (%)Date Issuer Name Size ($m) vs. Range Subsector Market Cap Metric 1-Day Current

08/07/14 Hoegh LNG Partners LP 221 R Shipping 42.0 2015 EV / EBITDA 11.3 23.9

08/07/14 Ryerson Holding Corp 121 B Metal & Steel 34.3 2015 EV / EBITDA (6.4) (5.9)

07/29/14 Westlake Chemical Partners LP 311 A Chemicals 51.0 Dividend Yield 28.3 21.5

07/24/14 Advanced Drainage Systems Inc 232 B Construction/Building 27.5 2015 EV / EBITDA 0.9 (0.9)

07/24/14 Orion Engineered Carbons SA 351 B Chemicals 34.5 2015 EV / EBITDA (1.4) (3.3)

07/17/14 TerraForm Power Inc 577 A Clean Tech 22.8 Dividend Yield 32.4 24.4

06/25/14 ServiceMaster Global Holdings Inc 702 B Business Services 32.3 2015 EV / EBITDA 5.6 25.7

06/25/14 TCP International Holdings Ltd 79 B Construction/Building 25.8 2015 EV / EBITDA (5.2) (39.6)

06/17/14 Foresight Energy LP 350 R Mining 13.5 Dividend Yield (5.0) (6.5)

06/17/14 Century Communities Inc 103 R Construction/Building 20.9 2015 EV / EBITDA (7.6) (14.8)

06/12/14 Abengoa Yield plc 829 A Clean Tech 35.0 2015 EV / EBITDA 27.6 26.4

06/12/14 Aspen Aerogels Inc 83 B Construction/Building 32.6 2015 EV / EBITDA (2.3) (14.6)

06/11/14 Nordic American Offshore Ltd 94 R Transportation 23.8 2015 EV / EBITDA (4.7) 16.3

06/11/14 Trinseo SA 219 R Chemicals 24.3 2014 EV / EBITDA 6.6 1.0

05/07/14 Dorian LPG Ltd 140 R Shipping 12.8 Price / NAV (1.9) 4.2

05/06/14 GasLog Partners LP 203 R Shipping 48.2 Dividend Yield 24.3 53.8

04/10/14 Farmland Partners Inc 53 R Other 63.9 2015 EV / EBITDA (7.3) (22.6)

02/12/14 Installed Building Products LLC 94 B Construction/Building 29.1 2015 EV / EBITDA 16.4 8.6

02/04/14 Continental Building Products Inc 189 B Construction/Building 30.7 2014 EV / EBITDA 8.5 (0.1)

01/31/14 New Home Company Inc 99 B Construction/Building 54.6 Price / Book 10.9 22.7

01/30/14 Malibu Boats Inc 113 R Transportation 35.9 2014 Price / Earnings 26.8 40.6

01/16/14 CHC Group Ltd 310 B Aero/Def 40.0 2014 EV / EBITDAR (2.0) (38.1)

12/11/13 Scorpio Bulkers Inc 351 A Shipping 26.0 Norway OTC Listed (2.6) (19.6)

11/20/13 Evogene Ltd 85 A Clean Tech 21.6 TASE Listed / DCF 16.8 (11.2)

11/20/13 Navigator Holdings Ltd 262 R Shipping 24.9 2014 EV / EBITDA 5.3 50.7

11/12/13 Dynagas LNG Partners LP 259 B Shipping 48.0 Dividend Yield 0.0 31.9

11/06/13 Avianca Holdings SA 409 B Aero/Def 19.7 2014 EV / EBITDAR (6.7) 6.7

11/06/13 LGI Homes Inc 114 B Construction/Building 53.3 2014 Price / Earnings 17.3 74.5

11/06/13 Norcraft Companies Inc 118 R Construction/Building 45.0 2014 EV / EBITDA (3.1) (0.6)

10/03/13 OCI Partners LP 315 B Chemicals 21.7 2014 EV / EBITDA 4.4 6.6

09/12/13 OCI Resources LP 95 R Mining 25.1 2014 EV / EBITDA (5.3) 27.6

31 Deals Mean: 93 A 16% 32.9 5.9 9.3Median: 18 R 39% 30.7 0.9 6.6

13


U.S. Follow-on Market Overview

LTM Issuance by Sector # of Transactions

Source: Dealogic. Excludes transactions less than $20.0 million.

Follow-on Aftermarket Performance

1.8% 1.8% 2.1%

4.5%

0.6%

21.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2014 2013

Aft

erm

arke

t P

erfo

rman

ce (%

)

T+1 T+30 Current

Summary of issuance, pricing and aftermarket performance of recent FOs

Key Points

File-to-offer pricing discounts have narrowed since 2012:

2014 Average: 3.8%

2013 Average: 5.1%

2012 Average: 6.1%

LTM Follow-on Issuance, Pricing and Aftermarket Performance

Number of Volume Average Aftermarket Performance

Month Offerings ($bn) File-to-Offer Discounts T+1 T+30 Current

August 2014 26 5.3 2.3% --- 3.9%

July 2014 48 11.0 0.8% 2.3% 1.7%

June 2014 66 22.9 1.4% 2.1% (0.9%)

May 2014 69 22.5 1.4% 8.4% 8.1%

April 2014 49 12.2 0.7% (1.6%) 3.1%

March 2014 88 20.4 1.3% (6.2%) (5.2%)

February 2014 52 11.6 2.9% 5.5% (0.7%)

January 2014 62 10.6 4.0% 6.5% (0.8%)

December 2013 47 15.7 0.7% 7.3% 10.1%

November 2013 81 18.8 1.7% 5.6% 16.8%

October 2013 60 19.1 2.2% 3.2% 18.8%

September 2013 80 18.3 2.6% 6.6% 8.5%

LTM 733 $189.8 1.9% 3.5% 5.5% (4.0)%

(3.9)%

(3.8)%

(4.7)%

(5.3)%

(2.8)%

(1.8)%

(5.1)%

(4.4)%

(4.0)%

(2.7)%

(4.2)%

(4.6)%

Consumer 6%

Energy 15%

Finance 11%

Healthcare 21%

Industrials 16%

Real Estate 13%

TMT 18%

LTM Total: 733 Deals / $189.8bn

2014 YTD: 460 Deals / $116.6bn

2013 YTD: 413 Deals / $122.3bn

2013 Total: 688 Deals / $195.4bn

2012 Total: 534 Deals / $184.8bn

14


Debt Market Update

15


Debt Market Overview

Source: Standard & Poor’s LCD, Jefferies Leveraged Finance Group.

New Bank Loan Syndications – Last Twelve Months High Yield Debt Issuance – Last Twelve Weeks

High Yield Mutual Fund Flows – Last Twelve Weeks

Pull from Junk Database;

“Sheet 1”


“Weekly Fund Flows”

Junk Database: J:\01-09-2011 Old Data\LA\CLIENT\HY Data

Pull from Generic Debt Market Overview on Lotus;

Page 4

DONE

$65.6

$47.5 $43.4

$34.4

$55.1

$47.9

$61.7

$51.5

$37.4

$63.6 $59.7

$31.8

-

20

40

60

80

100

120

140

160

-

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

Num

ber of Deals

$Bill

ions

Bank Deals Deals

$4,820

$10,040

$3,885

$7,960

$4,793 $5,530

$5,215 $4,555 $5,465

$3,145 $2,125

$0

-

2

4

6

8

10

12

14

16

18

20

-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

Num

ber of Deals

$Mill

ions

Weekly Issuance Deals

$302 $277

($239)

$619 $90 $107

($1,677) ($2,384)

($1,475)

($7,100)

$680

$2,200

($8,000)

($6,000)

($4,000)

($2,000)

-

$2,000

$4,000

$M

illio

ns

16


Debt Market Overview

Source: Standard & Poor’s LCD, Jefferies Leveraged Finance Group.

Bank Loan Secondary Spreads – Last Twelve Months High Yield Broad Market Index – Last Twelve Months

Market Metrics


“YTW STW Raw Data”

Market Metrics: Pull This Week and Last Week from Bloomberg (US0003M, CT5 Govt, CT30 Govt, Prime)

Pull One Year Ago from Leveraged Finance Weekly

Pull from J:\01-09-2011 Old

Data\LA\CLIENT\HY Data; PPT File; page 22

Done

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

8/13 11/13 1/14 3/14 6/14 8/14

YTW

B BB

This Week Last Week One Year Ago

3 Month LIBOR 0.24% 0.24% 0.26%Prime 3.25% 3.25% 3.25%5 year Treasuries 1.66% 1.54% 1.68%30 year Treasuries 3.16% 3.13% 3.87%

-

L + 250

L + 500

L + 750

Spr

ead

BB B All BB/B

17


Maritime Bonds

Source: CapitalIQ and Bloomberg.

Pull Updated Pricing from Rasta Behrang’s Weekly Pricing Sheet

ShippingPrice YTW STW Maturity Ratings Outstanding

CMA CGM8.875% Sr Nts due '19 105.500 6.57% 651 4/15/2019 Caa2 / CCC 325€

DryShips5% Sr Nts due '14(1)

99.688 6.14% 671 12/1/2014 – / – 610$ Global Ship Lease

10% Sr Notes due '19 105.250 8.28% 661 4/1/2019 B3 / B 420$ Great Lakes Dredge & Dock

7.375% Sr Sub Nts due '19 103.750 5.71% 480 2/1/2019 B3 / B 250$ Hapag-Lloyd

9% Sr Nts due '15 102.580 6.39% 641 10/15/2015 Caa1 / B- 480€ 9.75% Sr Nts due '17 104.375 7.50% 687 10/15/2017 Caa1 / B- 250$

Marquette Transportation10.875% Sec Nts due '17 105.375 3.93% 387 1/15/2017 B3 / B- 250$

Navios Maritime Holdings8.125% Sr Nts due '19 103.750 6.46% 555 2/15/2019 Caa1 / B+ 350$ 7.375% Sr Sec Nts due '22(2)

103.250 6.65% 534 1/15/2022 B1 / BB- 650$ Navios South American Logistics

7.25% Sr Nts due '22 103.250 6.55% 415 4/15/2019 B3 / B+ 375$ Norwegian Cruise Line

5% Sr Nts due '18 102.750 3.83% 290 2/15/2018 B2 / BB- 300$ Royal Caribbean Lines

11.875% Sr Nts due '15 109.000 1.72% 165 7/15/2015 Ba1 / BB 279$ 5.25% Sr Nts due '22 104.750 4.55% 238 11/15/2022 Ba1 / BB 650$

Scorpio Tankers6.75% Sr Notes due '20 99.960 6.87% - 5/15/2020 – / – 50$

Seaspan Corporation6.375% Sr Nts due '19 102.960 6.32% - 4/30/2019 – / – 345$

Ultrapetrol Limited8.875% Sr Sec due '21 106.875 7.16% 553 6/15/2021 B3 / B- 225$

Supply VesselsPrice YTW STW Maturity Ratings Outstanding

Gulfmark Offshore6.375% Sr Nts due '22 100.500 6.27% 386 3/15/2022 B1 / BB- 500$

Hornbeck Offshore Services5.875% Sr Nts due '20 102.000 5.26% 368 4/1/2020 Ba3 / BB- 375$ 5% Sr Nts due '21 97.500 5.46% 352 3/1/2021 Ba3 / BB- 450$

Seacor Holdings7.375% Sr Nts due '19 111.500 4.80% 314 10/1/2019 Ba3 / BB- 234$

TankersPrice YTW STW Maturity Ratings Outstanding

Eletson Holdings Inc.9.625% Secured due '22 102.750 8.97% 710 1/15/2022 – / B 300$

Navios Maritime Acquisition8.125% Sr Nts due '21 104.000 7.19% 536 11/15/2021 B3 / B 610$

Overseas Shipholding Group8.125% Sr Nts due '18 104.000 6.86% 524 3/30/2018 WR / NR 300$ 7.5% Sr Nts due '21 117.250 5.18% 275 2/15/2024 WR / NR 146$

Teekay Corporation8.5% Sr Nts due '20 113.000 5.67% 399 1/15/2020 B2 / B+ 450$

Windsor Petroleum Transport (FRO)7.84% Secured due '21 82.000 13.56% 1,258 1/15/2021 Caa2 / CCC+ 181$

18

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