From: Paul Morris
Sent: 11/18/2015 9:16:55 AM
To: Vahe StepanianI
CC: Stewart Oldfield l; Daniel Sabba ; Ariane Dwyer
Subject: RE: Ill
Classification: For internal use only
Thanks give us a call when you free up
Paul Morris
Managing Director
Deutsche Bank Private Bank
From: Vahe Stepanian
Sent: Tuesday, November 17, 2015 5:43 PM
To: Paul Morris
Cc: Stewart Oldfield; Daniel Sabba; Ariane Dwyer
Subject: RE: [I]
Classification: For Miami use only
Paul — as discussed, please find a list of relevant ideas for Southern Financial on the back of the client's ask below. The
CMS desk analyst looking at CoCos will be sending us a few specific issues in the morning, which we will send along to
you once available. In addition to Petrobras, I've attached a piece with top AWM Fixed Income ideas — pgs. 33-44 are
specific to top HY ideas. We can highlight the most relevant ideas — planning on speaking to the desk tomorrow.
Give us a call if you have questions.
Thank you,
Vahe
1) Buy Petrobras '17s. Rationale:
• Since May 2015, Petrobras 10yr spreads have widened by -400bps and in September S&P downgraded
Petrobras to BB
• In October, domestic fuel prices increased and Petrobras announced significant capex and opex cuts for 2015
and 2016. These can be seen as positive signs for the company's future, but may not mitigate its large long term funding
gap: Petrobras will need to roll $60bn and $104bn of debt maturities in the next four and nine years respectively and
sovereign support is not guaranteed
• DB's Brazil credit analyst believes that the company can meet its short term debt maturities through 2017
without resorting to direct support from the government. DB has revised its forecasts and has upgraded the 3.25% and
3.5% '17s to a Buy rating (please find attached DB Research report). The bonds are currently yielding 7.06% and 7.10%
respectively
• Petrobras is one of the largest integrated oil companies worldwide and aims to be one of top 5 globally by 2030
Indicative Terms (as of 11/17/2015):
Client buys PETBRA 3.250% Notes '17
CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0087976
CONFIDENTIAL SDNY_GM_00234160
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