Erste Group Research

Erste Group Research Credit Markets Weekly | Credit | & CEE May 12, 2021

Credit Markets Weekly Sovereign Austria, Sub-Sovereigns & Agencies, Financials & Covered Bonds, Corporate Bonds

Analyst: Ralf Burchert, CEFA The base effect [email protected]

Base effects originating from the very low levels last year especially in energy prices (oil in particular from March to May) have repeatedly led EUR Market overview inflation fears to re-emerge. This would actually be a good recipe for rising sorted by yield yields: surprisingly strong Q1 2021 earnings growth in the corporate sector Ø Ø Ø ASW Debt Type Ø Rating Term Yield (in BP) both in the US (+50% y/y) and in Europe (+90%), an optimistic outlook DE Sovereign AAA 8.3 -0.08% -33.6 towards further growth in Q2, repeated supply issues of upstream products Covered Bonds AAA 5.3 -0.05% 1.0 such as semi-conductors in the industrial sector, and worldwide significantly AT Agencies AA+ 5.3 0.03% 5.8 rising inflation figures, driven mainly by energy prices. However, the ECB Bank Senior A 4.5 0.32% 51.1 has so far successfully prevented any drastic increase in yields on the back SSAs AA+ 8.8 0.35% 16.6 of the stepped-up asset purchases as announced already in March and AT Sovereign AA+ 13.2 0.45% 21.7 verbal interventions. IG Corporates A- 6.3 0.55% 56.9 IG Corp Hybrids BBB 5.2 1.65% 184.2 HY Corporates BB- 4.7 2.84% 307.2 Outlook remains stable

Source: Market data provider, Erste Group Research (own There is still a lack of strong fundamental arguments that would suggest a calculations) sustainable and broadly-based increase in prices. For example, the latest US job market data have been a let-down, and the share of people working reduced hours remains high in Europe as well. The 10Y German benchmark Major Markets & Credit Research yield has cautiously tested the territory above -0.2% and is thus now back Gudrun Egger, CEFA (Head) (“up”) at early 2020 levels. The German ZEW index has recently been Sovereign Austria supportive, jumping to 84.4 from its April level of 70.7 (and also exceeding Margarita Grushanina the consensus estimate of 69.0 by a significant degree). But in view of the largely solid liquidity situation the primary market supply on the credit Sub-Sovereigns & Agencies Ralf Burchert, CEFA markets has recently been clearly falling (and is also down relative to the referential period of 2020). Financials & Covered Bonds Heiko Langer Whereas corporate spreads in the investment grade segment remained Carmen Riefler-Kowarsch stable, they widened slightly in the high-yield segment. In view of the rally so Corporate Bonds far, this is a healthy development. Due to the good economic outlook, the Peter Kaufmann, CFA good company results, and the loose monetary policy we regard any Bernadett Povazsai-Roemhild, CEFA significant widening in the near future as rather unlikely. Elena Statelov, CIIA

On the financial calendar In the USA, retail sales (for April; a growth rate of 1% is being projected

Last updates: month-on-month), industrial production (April, also +1% m/m), and Corporate Credit Monitor Austria consumer confidence indicators will give us more insight into the speed of (available in German only) the recovery, which to date has progressed much farther in the USA than in Corporate Credit Monitor CEE Europe.

Week Ahead

Special topics of the week

All data as of May 10, 2021 Sub-Sovereigns & Agencies Note: Past performance is not necessarily Issuer in the focus: EP Infrastructure 4 indicative of future results.

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For the exclusive use of Erste Group Client. (Erste Group) Erste Group Research Credit Markets Weekly | Credit | Austria & CEE May 12, 2021

Market overview

Sub-Sovereigns & Agencies

German 10Y government bond The 10Y German benchmark yield has recently edged higher and is now above -0.2% hovering above -0.2%. SSA spreads recorded a small bounce, which confirms our notion that the narrowing trend has turned into a sideways movement.

SSA primary market: focus on The SSA activity remains tepid. At least the few issuers that bring the sovereigns transactions to the market do so at good volumes. Last week and in accordance with its schedule, Greece (Ba3/BB/BB) placed its new 5Y EUR 3bn bond at mid-swap +47bps, at a yield of 0.172%. This was the third time the country raised capital this year, and demand was yet again very good at EUR 20bn. In the ongoing week, (Aaa/AAA/AAA) issued its second green bond at EUR 6bn (30Y). The order book was closed at almost EUR 39bn, and the issue yield was 0.411%. The EIB (Aaa/AAA/AAA) issued a new 7Y bond of EUR 3bn at mid-swap -10bps and created demand of EUR 7bn. Kreditanstalt für Wiederaufbau (KfW, Aaa/AAA/AAA) priced a new 15Y bond of EUR 3bn at mid-swap -3bps.

Financials & Covered Bonds

Covered bond issues with long At a total issue volume of about EUR 36bn in the year to date (and mainly maturities due to the restrained months of January and February) the covered bond segment remains clearly below its long-term average. The segment recorded an issue volume of EUR 2.5bn last week. The trend towards long maturities remain intact. For example, Berlin Hyp issued a 12Y EUR 750mn mortgage covered bond on the primary market. Investor interest remains high. The order book was closed at EUR 1.6bn, and the original issue spread was reduced by 4bps to 2bps below mid-swaps. The Australian ASB Finance also issued a EUR 750mn covered bond with a maturity of 10Y. The issue spread amounted to 12bps above mid-swap, and the order book was closed at EUR 1.1bn.

Investors still interested in After EUR 3.3bn worth of issues last week, we have seen on Monday the green issues Irish AIB entered the primary market this week with a (green) senior bond. The green credit portfolio of the bank consists mainly of projects to finance wind power plants and green commercial real estate. Investor demand for the EUR 750mn issue amounted to EUR 1.1bn, and the issue spread was reduced by 20bps to 75bps above mid-swap.

Minor widening of spreads Covered bond spreads extended their stable tightening trend on the among senior bonds secondary market. Senior spreads, on the other hand, recorded a slight widening across all countries. Despite the slight increase, spreads are still at or slightly below pre-corona levels.

Corporate Bonds

Significantly less activity on The corporate bond primary market activity is currently at a mediocre level. the primary market than last After a very intensive 1Q (+8.5% y/y) the issuance volume plummeted in year April (-56.2% y/y). We attribute this mainly to companies’ significantly lower liquidity needs compared to the previous year, at the beginning of the pandemic. At the same time, issuers are still likely to be rather cautious and Major Markets & Credit Research Page 2

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have a wait-and-see stance with regard to strategic investments, so that they are currently reluctant to take on additional debt, despite persistently favourable conditions.

ESG issues increasing also in The most recent jumbo issues came from Volkswagen (A3/BBB+/BBB+) at the high-yield segment EUR 3bn, ENI (Baa1/A-/A-) at EUR 2bn, and Emirates Telecom (Aa3/AA- /A+) at EUR 1bn. Verallia (Ba2/BB+/BB+) issued a sustainability-linked EUR 500mn bond, while Rexel (Ba2/BB) increased its sustainability-linked bond issued in April by EUR 100mn. The utility companies Red Electrica (A- /A-) from Spain and Latvenergo (Baa2) from Latvia issued green bonds at volumes of EUR 600mn and EUR 50mn, respectively.

High-yield spreads widening As illustrated by the most recent widening of spreads in the high-yield slightly segment, the good 1Q company results and the further improvement of leading indicators do not impress investors anymore. These developments had been anticipated and thus priced into the spreads.

The capital market environment remains favourable for high-yield issuers. The current average yield in the 5Y range of the high-yield segment is about 80bps below the average coupon of outstanding bonds. This means that on average, high-yield issuers can still reduce their interest expenditure by refinancing expiring bonds by issuing new bonds.

Refinancing is on average attractive to high-yield issuers Average high-yield coupon minus average yield in the high-yield segment*, in basis points

400

200

0

-200

-400

-600

12/2011 12/2012 12/2013 12/2014 12/2016 12/2018 12/2020 12/2010 12/2015 12/2017 12/2019 Ø-HY-Coupon in bps minus Ø-HY-Yield in bps Sources: Market data providers, Erste Group Research, data until 10 May 2021 *at an average remaining time to maturity of 5Y

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Sub-Sovereign & Agencies Ralf Burchert, CEFA [email protected] Issuer in the focus: EP Infrastructure

EP Infrastructure (Group, IFRS, EUR mn, 31/12) 2016 2017 2018 2019 2020 Sales 3,093 3,083 3,101 3,437 3,187 Total revenue 3,124 3,104 3,106 3,476 3,195 EBITDA 1,393 1,509 1,425 1,611 1,622 EBITDA proportionate 768 848 802 887 880 Operating income 1,010 1,164 1,099 1,208 1,162 Earnings before taxes 857 973 928 1,085 1,759 Net income continuing operations 668 689 674 790 1,494 Net income after minorities contin. op. 301 318 329 401 1,111 Operating cash flow 1,211 1,015 1,104 1,264 1,303 Investment cash flow excl. loans given 311 -226 -233 -261 694 Dividends payments -860 -799 -291 -494 -1,234 Loans paid to ow ners -155 -428 -318 -340 -270 Equity capital 1,672 1,188 1,234 2,782 4,081 Equity to ow ners of the parent company 45 -309 -261 411 1,069 Net debt 4,215 4,348 4,479 4,452 3,988 Net debt proportionate 3,213 3,597 3,447 3,481 3,104 Balance sheet total 8,442 8,494 8,144 10,559 11,671 Source: EP Infrastructure, Erste Group Research

Leading energy infrastructure Founded in 2013, EP Infrastructure (EPIF, Baa3/BBB/BBB-) is a leading group in CEE energy infrastructure group in the CEE region, focused on gas transmission, gas and power distribution, heat distribution and generation, power generation and gas storage. 69% of shares are held by EP Holding (EPH) and 31% by Macquarie Infrastructure and Real Assets (MIRA). Its assets offer strategic value, being located in (>92% of fixed assets), the and Germany, operating within long-term contracted and/or highly regulated markets. Key subsidiaries include state-co-owned eustream, SPP distribúcia and Stredoslovenská energetika (each 49%+management control).

Shareholder value focus, EPIF offers good profitability, strong cash conversion and free cash flow- strong results, declining net generation capacity. With roughly 6,400 employees and a balance sheet debt total of close to EUR 12bn, the Group generated revenues of EUR 3.2bn, EBITDA of EUR 1.6bn and net income of EUR 1.5bn including a EUR 784mn gain on disposals. Credit ratios improved thanks to strong results and a revaluation effect of EUR 1.8bn. The equity ratio further improved to 35% (2019: 26%), while gearing fell to 98% (2019: 160%). Net debt has been more or less stable since 2013, in 2020 falling to EUR 4.0bn (2019: EUR 4.5bn), net debt/EBITDA improving to 2.5x, while EBITDA/interest expense advanced to 14.9x, driven by markedly lower interest expenses. Financing of gross debt of EUR 4.5bn is primarily effected by unsecured EUR benchmark bond issues of EPIF a.s. and major Group companies with a target share up to 90% (2019: 76%).

Raising ESG transparency, EPIF has started to embrace ESG with raising transparency, introducing Investment Grade ratings policies and first substantial improvements, being rated “65/100” by S&P and “High Risk/Average Performer” by Sustainalytics. Credit agencies confirmed their ratings throughout the pandemic. Moody´s assigns a Baa3, S&P BBB and Fitch a BBB- rating, each with a stable outlook.

Please read more in our most recent Issuer Profile.

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EUR primary market

Total market Issue volume in annual comparison 2016-2021 YTD, in EUR bn 1,600 1,400 1,200 1,000 800 600 400 200

0

2021 2016 2017 2018 2019 2020

Agency Corporate Financial Muni/Local Gov't Sovereign Supra

Total market Issue volume, by rating … and by country 2019-2021 YTD 2019-2021 YTD

Other Other; 9% HY 1% CAN; 2% DEU; 20% 9% AAA FIN; 2% 20% BBB- AUT; 2% 7% LUX; 2% SWE; 3% BEL; 3% BBB 10% AA+ 9% NLD; 5% FRA; 16%

GBR; 5% BBB+ AA 8% 8% ITA; 6% AA- USA; 9% A- 4% Multi-Nationals; A A+ ESP; 7% 12% 7% 7% 5%

Source: Market data provider, Erste Group Research (own calculations)

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Total market

EUR issues Current Launch Volume Spread (ASW) Issue Spread/ ISIN Issuer Industry Rank Date Tap (in m) Currency Coupon Maturity S&P Moody's Fitch (Mid) Yield XS2342706996 VOLVO Manufacturing Senior 10.05.2021 N 500 EUR 0.000 18.05.2026 A- A3 NR 35 MS+38 XS2343459074 BANK Banking Sub 10.05.2021 N 1,000 EUR 0.625 18.08.2031 A- Baa1 A - MS+92 FI4000507132 FINNAIR Transport & Logistics Senior 10.05.2021 N 400 EUR 4.250 19.05.2025 NR NR NR - MS+472.3 XS2343340852 ALLIED IRISH Banking Senior 10.05.2021 N 750 EUR 0.500 17.11.2027 BBB- Baa2 BBB 71 MS+75 XS2343540519 RED ELECTRICA Utilities & Pow er Senior 10.05.2021 N 600 EUR 0.500 24.05.2033 A- NR A- 33 MS+38 XS2342638033 GOLDEN GOOSE Consumer Goods & Services Senior 07.05.2021 N 480 EUR E+487.5 14.05.2027 B- B2 B+ 513 0.000% XS2341724172 MAHLE GMBH Manufacturing Senior 07.05.2021 N 750 EUR 2.375 14.05.2028 NR Ba1 NR 245 MS+249.8 XS2338570331 EQT Consumer Goods & Services Senior 07.05.2021 N 500 EUR 0.875 14.05.2031 NR NR A- 81 MS+85 AT0000A2RAA0 ERSTE BANK Banking Senior 07.05.2021 N 500 EUR 0.125 17.05.2028 A A2 A 34 MS+35 XS2342620924 SANTANDER Banking Sub 06.05.2021 N 750 EUR 4.125 Perpetual NR Ba1 NR 413 MS+431.1 XS2342247355 TUI CRUISES Consumer Goods & Services Senior 06.05.2021 N 300 EUR 6.500 15.05.2026 CCC Caa2 NR 599 B+711 DK0030486592 EURONEXT Technology Senior 06.05.2021 N 600 EUR 1.500 17.05.2041 BBB NR NR 104 MS+110 DK0030486402 EURONEXT Technology Senior 06.05.2021 N 600 EUR 0.750 17.05.2031 BBB NR NR 61 MS+65 DK0030485271 EURONEXT Technology Senior 06.05.2021 N 600 EUR 0.125 17.05.2026 BBB NR NR 36 MS+43 FR0014003G27 VERALLIA Manufacturing Senior 06.05.2021 N 500 EUR 1.625 14.05.2028 BB+ NR NR 163 MS+174.9 XS2342206591 WESTPAC BANKING Banking Sub 06.05.2021 N 1,000 EUR 0.766 13.05.2031 BBB+ Baa1 NR 102 MS+105 CORPORATION FR0014003GX7 IMERYS Manufacturing Senior 06.05.2021 N 300 EUR 1.000 15.07.2031 BBB- Baa3 NR 91 MS+95 CH1111393000 ZUERCHER KANTONALBANK Banking Senior 06.05.2021 N 500 EUR 0.000 15.05.2026 AAA NR NR 10 MS+17 XS2342227837 AB SAGAX Infrastructure Senior 06.05.2021 N 300 EUR 1.000 17.05.2029 NR Baa3 NR 104 MS+108 AT0000A2R9G1 KOMMUNALKRED Banking Senior 06.05.2021 N 300 EUR 0.250 14.05.2024 BBB- NR BBB- 67 MS+77 XS2342589582 SPAREBANK 1 BOLIGKREDITT Banking Covered 06.05.2021 N 1,000 EUR 0.125 12.05.2031 NR Aaa NR 2 MS+3 XS2342060360 Banking Senior 05.05.2021 N 1,250 EUR 1.106 12.05.2032 BBB Baa2 A 96 MS+100 XS2342059784 BARCLAYS Banking Senior 05.05.2021 N 750 EUR E+100 12.05.2026 BBB Baa2 A 61 E+65 XS2342057143 ALLIED UNIVERSAL Consumer Goods & Services Senior 05.05.2021 N 813 EUR 3.625 01.06.2028 B B2 BB- 366 B+409 XS2342058117 HIT FINANCE Infrastructure Senior 05.05.2021 N 600 EUR 0.625 14.09.2028 BBB- NR BBB 86 MS+90 GR0114032577 HELLENIC REPUBLIC Sovereign Senior 05.05.2021 N 3,000 EUR 0.000 12.02.2026 BB Ba3 BB 46 MS+47 DE000DL19VZ9 DEUTSCHE BK Banking Sub 05.05.2021 N 1,250 EUR 4.625 Perpetual BB- B1 BB- 460 MS+474.7 XS2341269970 AKER BP ASA Utilities & Pow er Senior 05.05.2021 N 750 EUR 1.125 12.05.2029 BBB- Baa3 BBB- 113 MS+125 XS2341719503 DNB BOLIGKREDITT Financial Services Covered 05.05.2021 N 1,000 EUR 0.010 12.05.2028 AAA Aaa NR 0 MS flat XS2334857138 ENI Basic Materials Sub 04.05.2021 N 1,000 EUR 2.750 Perpetual BBB Baa3 BBB 271 MS+277.1 XS2334852253 ENI Basic Materials Sub 04.05.2021 N 1,000 EUR 2.000 Perpetual BBB Baa3 BBB 222 MS+220.4 XS2340236327 Banking Sub 04.05.2021 N 500 EUR 1.375 11.08.2031 BB Baa3 BB+ 170 MS+165 XS2340854848 BAWAG P.S.K. Banking Covered 04.05.2021 N 500 EUR 0.100 12.05.2031 NR Aaa NR -2 MS-1 DE0001789345 SAXONY Municipality/Local Government Senior 04.05.2021 N 500 EUR 0.400 12.05.2036 AAA NR NR 0 MS flat XS2340137343 LONZA SPECIALTY Basic Materials Senior 30.04.2021 N 460 EUR 5.250 15.05.2029 CCC+ Caa2 NR 531 B+563 INGREDIENTS XS2338545655 CONSOLIS Industrials Senior 29.04.2021 N 300 EUR 5.750 01.05.2026 B- B3 NR 600 B+631 XS2339500170 KEDRION GROUP Consumer Goods & Services Senior 29.04.2021 N 410 EUR 3.375 15.05.2026 B B1 NR 370 OBL+393 FR0014003C70 BPIFRANCE FINANCEMENT Agency Senior 29.04.2021 N 1,250 EUR 0.000 25.05.2028 NR Aa2 AA 6 FRTR+18 FR0014003CJ5 SOCIETE DU GRAND PARIS Agency Senior 29.04.2021 N 2,000 EUR 0.875 10.05.2046 NR Aa2 AA 43 FRTR+20 DE000A3H2YH5 BREMEN Municipality/Local Government Senior 29.04.2021 N 500 EUR 0.500 06.05.2041 NR NR AAA 2 MS+3 XS2339399359 COCA COLA Consumer Goods & Services Senior 28.04.2021 N 500 EUR 0.950 06.05.2036 A+ A1 NR 58 MS+60 XS2339398971 COCA COLA Consumer Goods & Services Senior 28.04.2021 N 500 EUR 0.400 06.05.2030 A+ A1 NR 37 MS+40 FR0014003B55 ORANGE Media & Telecoms Sub 28.04.2021 N 500 EUR 1.375 Perpetual BBB- Baa3 NR 147 MS+148.6 XS2338564870 ZF FRIEDRICHSHAFEN Manufacturing Senior 28.04.2021 N 500 EUR 2.000 06.05.2027 BB+ Ba1 NR 210 MS+219.3 XS2338955805 TOYOTA FIN Manufacturing Senior 28.04.2021 N 1,000 EUR 0.125 05.11.2027 A+ A1 NR 31 MS+35 XS2338193019 EUROBANK Banking Senior 28.04.2021 N 500 EUR 2.000 05.05.2027 B+ Caa1 CCC 231 MS+239.8 XS2339399946 ANDORRA Sovereign Senior 28.04.2021 N 500 EUR 1.250 06.05.2031 BBB NR BBB+ 100 MS+115 FR0014003BW0 CREDIT MUTUEL HOME LOAN Banking Covered 28.04.2021 N 1,250 EUR 0.010 06.05.2031 AAA Aaa AAA -2 MS-1 SFH XS2338991941 QUEBEC Municipality/Local Government Senior 28.04.2021 N 2,500 EUR 0.250 05.05.2031 AA- Aa2 AA- 14 MS+16 DE000A14J0M9 PFANDBRIEFBANK Banking Covered 28.04.2021 N 250 EUR 0.125 05.05.2031 NR Aaa NR -1 MS+1 DE000A289RK2 KfW Agency Senior 27.04.2021 N 3,000 EUR 0.000 17.09.2030 AAA Aaa NR -11 MS-5 FR0014001R34 BANQUE POSTALE Banking Sub 27.04.2021 N 500 EUR 0.750 02.08.2032 BBB- NR BBB 122 MS+123 XS2338167104 BIRKENSTOCK Consumer Goods & Services Senior 27.04.2021 N 430 EUR 5.250 30.04.2029 CCC+ Caa1 B- 514 B+567 XS2332306344 REXEL Technology Senior 27.04.2021 N 300 EUR 2.125 15.06.2028 BB- Ba3 NR 208 B+261 XS2338643740 MORGAN STANLEY Banking Senior 27.04.2021 N 1,750 EUR 0.406 29.10.2027 BBB+ A1 A 62 MS+65 DE000LB2V5T1 LBBW Banking Senior 27.04.2021 N 500 EUR 0.375 07.05.2029 NR A2 A- 44 MS+52 DE000MHB28J5 MUENCHEN HYPBK Banking Covered 27.04.2021 N 500 EUR 0.250 02.05.2036 NR Aaa NR -4 MS-3 XS2338561348 NATIONWIDE BS Banking Covered 27.04.2021 N 500 EUR 0.500 05.05.2041 AAA NR AAA 6 MS+10 DE000A3H2XK1 LOWER SAXONY Municipality/Local Government Senior 26.04.2021 N 1,000 EUR 0.010 08.09.2026 NR NR AAA -7 MS-4 XS2338355014 BLACKSTONE PROP PART Industrials Senior 26.04.2021 N 550 EUR 1.000 04.05.2028 BBB NR NR 115 MS+115

Source: Market data provider, Erste Group Research (own calculations)

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Sovereigns/Sub-Sovereigns & Agencies Issue volume in monthly comparison … and by country 2019-2021 YTD, in EUR bn 2019-2021 YTD 70

60 Other; 8% NLD; 5% 50 LUX; 7% 40 DEU; 39%

30 FRA; 13% 20

10

0 Multi- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Nationals; 28% 2019 2020 2021 5Y average

Banks Senior (Financials) Issue volume in monthly comparison … and by country 2019-2021 YTD, in EUR bn 2019-2021 YTD 35

30 Other; 9% DNK; 2% USA; 19% 25 CAN; 3% AUS; 4% 20 SWE; 4% 15 CHE; 5% 10 FRA; 15% ITA; 5% 5

0 ESP; 6% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec GBR; 10% NLD; 7% DEU; 9% 2019 2020 2021 5Y average

Source: Market data provider, Erste Group Research (own calculations)

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Covered Bonds Issue volume in monthly comparison … and by country 2019-2021 YTD, in EUR bn 2019-2021 YTD 40 Other; 9% BEL; 3% 35 DEU; 21% AUT; 4% 30 AUS; 4% 25 NOR; 4% 20 GBR; 4% 15 FRA; 16% 10 ESP; 5% 5 ITA; 6% 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec NLD; 7% CAN; 8% SWE; 7% 2019 2020 2021 5Y average

Corporate Bonds Issue volume in monthly comparison ... and by sector 2019-2021 YTD, in EUR bn 2019-2021 YTD 80 Technology Consumer 70 Other 5% 7% Goods & 60 Basic Services Materials 24% 50 6% 40 Utilities & 30 Power 20 11% 10 0 Media & Manufacturi Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Telecoms ng 21% 2019 2020 2021 5Y average 13% Industrials 13%

Source: Market data provider, Erste Group Research (own calculations)

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EUR secondary market

EUR market International spread comparison Country Type 1-3Y 3-5Y 5-7Y 7-10Y >10Y Total AUSTRALIA Covered 2.9 4.2 3.1 7.8 8.3 4.1 Banks Senior 10.0 54.8 33.5 29.7 19.2 30.1 Corporates Senior 28.6 32.9 50.8 66.2 79.7 47.2 AUSTRIA Sovereign -16.7 -20.5 -18.6 -9.1 27.4 0.5 SSA -4.7 -4.2 -1.9 - 12.8 1.1 Covered -1.5 -2.2 -0.9 -1.0 -0.4 -1.2 Banks Senior 37.2 73.4 68.8 36.1 - 59.5 Corporates Senior 87.8 175.6 93.3 40.8 52.1 100.1 BELGIUM Sovereign -18.1 -19.4 -14.8 -8.5 25.1 6.2 SSA - 9.2 6.1 13.0 43.3 33.1 Covered -1.5 -2.9 -2.1 -1.5 - -2.1 Banks Senior 22.6 55.5 52.3 44.6 - 43.9 Corporates Senior 25.0 27.0 176.7 42.6 84.7 92.2 CANADA SSA 0.0 0.9 5.3 10.0 17.8 5.2 Covered 0.9 0.8 2.6 3.5 - 1.2 CZECH REPUBLIC Corporates Senior 355.2 214.5 171.2 127.7 - 213.5 DENMARK Banks Senior 36.5 70.9 86.5 - - 58.5 Corporates Senior 216.0 45.6 73.6 44.4 - 111.6 FINLAND Sovereign -19.8 -21.0 -17.8 -12.7 -1.2 -12.6 SSA -8.5 -6.9 -6.0 -2.9 4.3 -4.3 Covered -5.3 -6.6 -5.6 -4.6 -2.3 -5.5 Banks Senior 13.6 39.9 31.6 51.6 - 30.3 Corporates Senior 26.6 30.1 203.7 54.9 - 69.7 FRANCE Sovereign -15.9 -15.8 -11.6 -5.0 28.3 3.7 SSA -0.3 2.5 4.2 11.8 41.3 13.3 Covered -2.5 -2.1 -1.9 -1.3 1.9 -1.4 Banks Senior 23.7 50.0 67.0 66.5 76.7 51.3 Corporates Senior 40.3 124.3 101.8 58.8 53.8 81.4 GERMANY Sovereign -22.0 -30.6 -35.4 -35.4 -34.9 -30.7 SSA -8.9 -8.6 -8.8 -6.9 9.1 -4.8 Covered -4.2 -4.3 -3.2 -2.8 -2.6 -3.7 Banks Senior 31.5 52.9 65.1 75.7 134.6 55.7 Corporates Senior 129.6 139.7 103.3 68.9 52.6 106.7 IRELAND Sovereign -11.1 -11.6 -9.5 -0.3 17.1 3.0 Corporates Senior 40.0 62.1 136.1 53.8 71.9 82.2 ITALY Sovereign 19.8 40.6 58.8 80.2 127.9 68.9 Covered 6.6 5.3 8.3 5.1 7.8 6.4 Banks Senior 37.0 68.5 86.3 108.5 - 65.7 Corporates Senior 97.2 185.5 172.5 77.1 99.9 142.5 JAPAN Banks Senior 25.8 35.2 49.9 57.5 65.6 41.4 Corporates Senior 61.5 109.8 145.8 112.9 100.2 107.4 JERSEY Corporates Senior 46.4 191.2 90.9 94.0 115.1 139.3 LUXEMBOURG Corporates Senior 224.2 210.4 219.8 47.7 76.2 173.0 MEXICO Sovereign 44.5 60.3 126.1 157.8 233.4 154.4 Corporates Senior 217.7 153.0 55.4 68.3 94.0 151.6 NETHERLANDS Sovereign -22.9 -25.2 -23.1 -20.9 -20.2 -21.9 SSA -7.6 -8.8 -6.5 -5.9 -0.5 -6.1 Covered -1.3 0.6 1.7 0.7 -2.0 -0.2 Banks Senior 33.8 47.8 54.5 48.6 45.1 43.3 Corporates Senior 58.7 117.7 95.7 67.2 59.5 84.9 NORWAY Covered -1.2 0.4 1.0 1.8 - 0.2 Banks Senior 22.8 38.7 43.8 - - 31.5 Corporates Senior 48.7 113.2 63.1 34.3 43.9 66.9 Sovereign 3.5 9.0 7.8 3.8 46.4 9.9 PORTUGAL Sovereign -11.2 -0.4 6.9 25.0 60.5 26.5 Sovereign 42.4 64.3 96.4 147.7 217.8 156.8 SLOVAKIA Sovereign -11.9 -19.9 -14.8 -11.7 7.1 -9.2 SLOVENIA Sovereign -16.5 -15.8 -4.8 3.7 30.5 6.2 SPAIN Sovereign -4.6 2.6 14.5 29.0 89.9 35.4 SSA 6.8 13.0 29.0 43.0 42.1 21.7 Covered 7.6 6.4 6.6 1.7 7.6 6.3 Banks Senior 48.3 62.7 66.3 122.1 - 60.5 Corporates Senior 92.7 141.8 118.2 92.2 79.1 113.8 SUPRA NATIONAL SSA -13.4 -7.7 -12.0 -9.8 -0.9 -7.4

Source: Market data provider, Erste Group Research (own calculations)

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Sovereigns/Sub-Sovereigns & Agencies: Austria Spread development … and spread overview 2015-2021 YTD, ASW in BP EUR benchmark bonds, ASW in BP 50 60

40 50 40 30 30 20 20

10 10

0 0 -10 -10 -20

-20

30.06.20 30.04.21 30.09.21 28.02.22 31.12.22 31.05.23 31.03.24 31.01.25 30.11.25 30.04.26 31.07.27 31.12.27 31.05.28 31.03.29 31.08.29 30.11.20 31.07.22 31.10.23 31.08.24 30.06.25 30.09.26 28.02.27 31.10.28

12.2015 03.2016 06.2016 09.2016 12.2016 03.2017 06.2017 09.2017 12.2017 03.2018 06.2018 09.2018 12.2018 03.2019 06.2019 12.2019 03.2020 06.2020 12.2020 09.2019 09.2020 03.2021 EUR Sub-Sovereigns EUR Austria SSA EUR Austria SSA Poly. (EUR SSA) Poly. (EUR Austria SSA)

Sovereigns/Sub-Sovereigns & Agencies: Austria Outstanding EUR benchmark bonds Current Volume Minimum Spread (ASW Issue ISIN Issuer (in m) Piece Coupon Maturity S&P Moody's Fitch Mid) Spread XS0542825160 AUTOBAHN SCHNELL AG 1,500 50,000 3.375 22.09.2025 AA+ Aa1 - -4 - XS0790003023 AUTOBAHN SCHNELL AG 1,000 100,000 2.750 11.06.2032 AA+ Aa1 - 5 85 XS1291264775 AUTOBAHN SCHNELL AG 1,000 100,000 0.625 15.09.2022 AA+ Aa1 - -5 - XS1484645616 KAF KAERTNER AUSGLEICHSZ 1,107 1 0.000 14.01.2032 - Aa1 AA+ 22 - XS0307792159 OEBB-INFRASTRUKTUR AG 1,500 50,000 4.875 27.06.2022 AA+ Aa1u - 0 - XS0520578096 OEBB-INFRASTRUKTUR AG 1,500 1,000 3.875 30.06.2025 AA+ Aa1u - -4 55 XS0691970601 OEBB-INFRASTRUKTUR AG 1,000 1,000 3.500 19.10.2026 AA+ Aa1u - -2 65 XS0782697071 OEBB-INFRASTRUKTUR AG 1,350 1,000 3.375 18.05.2032 AA+ Aa1u - 12 95 XS0949964810 OEBB-INFRASTRUKTUR AG 1,000 1,000 2.250 04.07.2023 AA+ Aa1u - -6 29 XS0984087204 OEBB-INFRASTRUKTUR AG 1,000 1,000 3.000 24.10.2033 AA+ Aa1u - 12 30 XS1138366445 OEBB-INFRASTRUKTUR AG 1,000 1,000 1.000 18.11.2024 AA+ Aa1u - -4 8 XS1689595830 OEKB OEST. KONTROLLBANK 1,500 100,000 0.250 26.09.2024 AA+ Aa1 - -5 - XS2152924952 OEKB OEST. KONTROLLBANK 1,750 100,000 0.000 06.04.2023 AA+ Aa1 - -8 -

Source: Market data provider, Erste Group Research (own calculations)

Major Markets & Credit Research Page 10

For the exclusive use of Erste Group Client. (Erste Group) Erste Group Research Credit Markets Weekly | Credit | Austria & CEE May 12, 2021

Banks Senior (Financials): Austria Spread development … and spread overview 2015-2021 YTD, ASW in BP EUR benchmark bonds, ASW in BP 250 250

200 200

150 150

100 100

50 50

0 0

12.2015 03.2016 09.2016 03.2017 06.2017 12.2017 03.2018 06.2018 09.2018 12.2018 03.2019 06.2019 09.2019 12.2019 06.2020 09.2020 12.2020 03.2021 06.2016 12.2016 09.2017 03.2020

30.06.20 30.04.21 28.02.22 31.12.22 31.10.23 31.03.24 31.01.25 30.06.25 30.04.26 28.02.27 31.12.27 31.05.28 31.10.28 31.03.29 31.08.29 30.11.20 30.09.21 31.07.22 31.05.23 31.08.24 30.11.25 30.09.26 31.07.27 EUR Banks Senior EUR Austria Bank Senior EUR Austria Banks Senior Poly. (EUR Banks Senior)

Banks Senior (Financials): Austria Outstanding EUR benchmark bonds

Current Volume Minimum Spread (ASW Issue ISIN Issuer (in m) Piece Coupon Maturity S&P Moody's Fitch Mid) Spread XS2049584084 BAWAG P.S.K. 500 100,000 0.375 03.09.2027 - Baa2 - 71 - XS1982725159 ERSTE GROUP BANK AG 500 100,000 0.375 16.04.2024 A A2 A 24 - XS2000538343 ERSTE GROUP BANK AG 500 100,000 0.875 22.05.2026 A- Baa1 A- 44 - XS2083210729 ERSTE GROUP BANK AG 500 100,000 1.000 10.06.2030 BBB+ Baa2 BBB+ 112 - AT0000A2GH08 ERSTE GROUP BANK AG 750 100,000 0.875 13.05.2027 A A2 A 33 - AT0000A2J645 ERSTE GROUP BANK AG 500 100,000 1.625 08.09.2031 BBB+ Baa2 BBB+ 117 - AT0000A2JAF6 ERSTE GROUP BANK AG 500 100,000 0.050 16.09.2025 A A2 A 26 - AT0000A2KW37 ERSTE GROUP BANK AG 750 100,000 0.100 16.11.2028 A A2 A 43 - AT0000A2N837 ERSTE GROUP BANK AG 500 100,000 0.250 27.01.2031 A A2 A 36 - XS1807409450 HYPO NOE LB NOE WIEN AG 500 100,000 0.875 16.10.2023 A - - 46 - XS2193956716 HYPO NOE LB NOE WIEN AG 500 100,000 0.375 25.06.2024 A - - 36 - XS2320789014 HYPO NOE LB NOE WIEN AG 500 100,000 0.125 30.06.2026 A - - 44 - XS0981632804 RAIFFEISEN BANK INTL 500 100,000 6.000 16.10.2023 BBB Baa3 - 40 385 XS1917591411 RAIFFEISEN BANK INTL 500 100,000 1.000 04.12.2023 - A3 - 29 - XS2049823763 RAIFFEISEN BANK INTL 500 100,000 1.500 12.03.2030 - Baa3 - 132 - XS2055627538 RAIFFEISEN BANK INTL 750 100,000 0.375 25.09.2026 - A3 - 29 - XS2106056653 RAIFFEISEN BANK INTL 750 100,000 0.250 22.01.2025 - A3 - 31 - XS2189786226 RAIFFEISEN BANK INTL 500 100,000 2.875 18.06.2032 - Baa3 - 169 - XS2065593068 RAIFFEISEN LB NIEDEROEST 500 100,000 0.250 16.04.2024 - Baa1 - 42 - XS1720806774 RLB OBEROESTERREICH 500 100,000 0.750 22.05.2023 - Baa1 - 43 - AT000B122080 VOLKSBANK WIEN AG 500 100,000 0.875 23.03.2026 - Baa3 - 103 -

Source: Market data provider, Erste Group Research (own calculations)

Major Markets & Credit Research Page 11

For the exclusive use of Erste Group Client. (Erste Group) Erste Group Research Credit Markets Weekly | Credit | Austria & CEE May 12, 2021

Covered Bonds: Austria Spread development … and spread overview 2015-2021 YTD, ASW in BP EUR benchmark bonds, ASW in BP 35 40 30 35

25 30 25 20 20 15 15 10 10

5 5 0 0 -5 -5 -10

-10

30.11.20 30.04.21 30.09.21 28.02.22 31.07.22 31.12.22 31.05.23 31.10.23 31.01.25 30.06.25 30.11.25 30.04.26 30.09.26 28.02.27 31.07.27 31.05.28 31.10.28 31.03.29 31.08.29 30.06.20 31.03.24 31.08.24 31.12.27

12.2015 03.2016 09.2016 12.2016 03.2017 06.2017 09.2017 12.2017 06.2018 09.2018 12.2018 06.2019 09.2019 12.2019 06.2020 09.2020 12.2020 03.2021 06.2016 03.2018 03.2019 03.2020 EUR Austria Covered Poly. (EUR Covered) EUR Covered EUR Austria Covered Poly. (EUR Austria Covered)

Covered Bonds: Austria Outstanding EUR benchmark bonds table 1/2 Current Volume Minimum Spread (ASW Issue ISIN Issuer (in m) Piece Coupon Maturity S&P Moody's Fitch Mid) Spread XS1551294926 BAWAG P.S.K. 500 100,000 0.750 18.01.2027 - Aaa - -2 - XS2013520023 BAWAG P.S.K. 500 100,000 0.625 19.06.2034 - Aaa - -2 - XS2058855441 BAWAG P.S.K. 500 100,000 0.010 02.10.2029 - Aaa - -3 - XS2106563161 BAWAG P.S.K. 500 100,000 0.010 21.01.2028 - Aaa - -2 - XS2234573710 BAWAG P.S.K. 750 100,000 0.010 23.09.2030 - Aaa - -2 - XS2259776230 BAWAG P.S.K. 500 100,000 0.010 19.11.2035 - Aaa - -3 - XS2320539765 BAWAG P.S.K. 500 100,000 0.375 25.03.2041 - Aaa - 1 - XS1181448561 ERSTE GROUP BANK AG 500 100,000 0.750 05.02.2025 - Aaa - -3 6 XS1346557637 ERSTE GROUP BANK AG 750 100,000 0.625 19.01.2023 - Aaa - -2 16 XS1550203183 ERSTE GROUP BANK AG 750 100,000 0.625 18.01.2027 - Aaa - -3 - XS1750974658 ERSTE GROUP BANK AG 1,000 100,000 0.750 17.01.2028 - Aaa - -2 - XS1807495608 ERSTE GROUP BANK AG 750 100,000 0.625 17.04.2026 - Aaa - -3 - XS1845161790 ERSTE GROUP BANK AG 750 100,000 0.250 26.06.2024 - Aaa - -3 - AT0000A286W1 ERSTE GROUP BANK AG 500 100,000 0.875 15.05.2034 - Aaa - -1 - AT0000A2A6W3 ERSTE GROUP BANK AG 500 100,000 0.010 11.09.2029 - Aaa - -3 - AT0000A2CDT6 ERSTE GROUP BANK AG 750 100,000 0.100 15.01.2030 - Aaa - -3 - XS0780267406 HYPO NOE LB NOE WIEN AG 500 1,000 3.000 09.05.2022 - Aa1 - -1 88 XS1590565112 HYPO NOE LB NOE WIEN AG 500 100,000 0.375 04.04.2023 - Aa1 - -3 - XS1875268689 HYPO NOE LB NOE WIEN AG 500 100,000 0.500 04.09.2025 - Aa1 - -1 - XS2057917366 HYPO NOE LB NOE WIEN AG 500 100,000 0.010 01.10.2026 - Aa1 - -1 - XS2176710510 HYPO NOE LB NOE WIEN AG 500 100,000 0.010 18.06.2027 - Aa1 - 0 - AT0000A2AYL3 HYPO TIROL BANK AG 500 100,000 0.010 19.10.2026 - Aa1 - 0 - AT0000A2QDQ2 HYPO TIROL BANK AG 500 100,000 0.010 11.03.2031 - Aa1 - 2 - XS1188081936 HYPO VORARLBERG BANK AG 500 100,000 0.750 11.02.2025 - Aaa - -3 7 XS1613238457 HYPO VORARLBERG BANK AG 500 100,000 0.375 17.05.2024 - Aaa - -5 - XS1856342560 HYPO VORARLBERG BANK AG 500 100,000 0.625 17.07.2026 - Aaa - 2 - XS1999728394 HYPO VORARLBERG BANK AG 500 100,000 0.250 21.05.2027 - Aaa - 2 - XS2086861437 RAIFFEISEN BANK INTL 500 100,000 0.125 03.12.2029 - Aa1 - 0 - XS0827597351 RAIFFEISEN LB NIEDEROEST 500 1,000 2.125 12.09.2022 - Aaa - -1 42 XS1196405556 RAIFFEISEN LB NIEDEROEST 500 100,000 0.625 03.03.2025 - Aaa - -2 1 XS1681119167 RAIFFEISEN LB NIEDEROEST 500 100,000 0.375 13.09.2024 - Aaa - -3 - XS1756364474 RAIFFEISEN LB NIEDEROEST 500 100,000 0.875 24.01.2028 - Aaa - -1 - XS1871114473 RAIFFEISEN LB NIEDEROEST 500 100,000 0.625 28.08.2026 - Aaa - -1 - XS1942629061 RAIFFEISEN LB NIEDEROEST 500 100,000 0.875 30.01.2029 - Aaa - 0 -

Source: Market data provider, Erste Group Research (own calculations)

Major Markets & Credit Research Page 12

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Covered Bonds: Austria Outstanding EUR benchmark bonds table 2/2

Current Volume Minimum Spread (ASW) ISIN Issuer (in m) Piece Coupon Maturity S&P Moody's Fitch (Mid) Issue Spread XS2100569552 RAIFFEISEN LB NIEDEROEST 500 100,000 0.375 15.01.2035 - Aaa - 0 - XS1495631993 RLB OBEROESTERREICH 500 100,000 0.375 28.09.2026 - Aaa - -1 10 AT0000A228U7 RLB OBEROESTERREICH 500 100,000 0.875 12.07.2028 - Aaa - 0 - AT0000A2CFT1 RLB OBEROESTERREICH 500 100,000 0.500 22.01.2035 - Aaa - 0 - AT000B092622 RAIFFEISEN LB STEIERMARK 500 100,000 0.625 20.01.2023 - Aaa - 0 21 XS0942965525 RAIFFEISEN LB STEIERMARK 500 100,000 2.375 14.06.2028 - Aaa - 1 28 AT000B093273 RAIFFEISEN LB STEIERMARK 500 100,000 1.375 11.05.2033 - Aaa - 2 - AT000B066675 RAIFFEISEN LB VORARLBERG 500 100,000 0.500 17.09.2025 - Aaa - 1 - AT000B049465 BK AUSTRIA AG 500 100,000 2.375 22.01.2024 - Aaa - -3 35 AT000B049572 UNICREDIT BK AUSTRIA AG 500 100,000 0.750 25.02.2025 - Aaa - -3 3 AT000B049598 UNICREDIT BK AUSTRIA AG 500 100,000 0.750 08.09.2022 - Aaa - 0 5 AT000B049739 UNICREDIT BK AUSTRIA AG 500 100,000 0.625 16.01.2026 - Aaa - -2 - AT000B049754 UNICREDIT BK AUSTRIA AG 500 100,000 0.625 20.03.2029 - Aaa - -2 - AT000B049788 UNICREDIT BK AUSTRIA AG 500 100,000 0.250 04.06.2027 - Aaa - -3 - AT000B049796 UNICREDIT BK AUSTRIA AG 500 100,000 0.250 21.06.2030 - Aaa - -2 - AT000B049846 UNICREDIT BK AUSTRIA AG 500 100,000 0.050 21.09.2035 - Aaa - -1 - AT000B122031 VOLKSBANK WIEN AG 500 100,000 0.375 04.03.2026 - Aaa - 0 - AT000B122049 VOLKSBANK WIEN AG 500 100,000 0.125 19.11.2029 - Aaa - 0 -

Source: Market data provider, Erste Group Research (own calculations)

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Last publications

Unmistakable signs of an economic upswing – Credit Markets Weekly (May 6, 2021) ▪ ASFINAG: Annual results 2020 ▪ Hypo Vorarlberg: Earnings decline in FY 2020 ▪ : Credit metrics and ESG goals well on track

AT banks are braving the crisis in 2021 as well – Credit Markets Weekly (April 29, 2021) ▪ BIG: 2020 Annual Result ▪ BAWAG Group: Stable trend in the Core Business ▪ Issuer in Focus: Kommunalkredit Austria AG ▪ Corporate Hybrid Bonds: Issuance Boom Continues

CCC-rated Bonds Overheating? – Credit Markets Weekly (April 22, 2021)

Will investors continue to assume risk? – Credit Markets Weekly (April 15, 2021) ▪ Issuer in Focus: OeKB ▪ EP Infrastructure: Results 2020

Light at the End of the Tunnel – Credit Markets Weekly (April 8, 2021) ▪ Public Finances 2020 ▪ Corporate Schuldscheindarlehen: 1Q 2021 snapshot

One Year Anniversary of the PEPP – Credit Markets Weekly (April 1, 2021) ▪ Kommunalkredit: 2020 Earnings grow by 23%

Growth with more sustainability – Credit Markets Weekly (March 25, 2021) ▪ : Annual result 2020 below previous year

‘Rising Stars’ despite pandemic? – Credit Markets Weekly (March 18, 2021) ▪ Issuer in focus: BAWAG Group AG ▪ Issuer in focus: HYPO NOE ▪ Issuer in focus: Insurance Group

One year into the corona crisis: what’s next? – Credit Markets Weekly (March 11, 2021) ▪ Issuer in focus: IIB ▪ Kommunalkredit: Upgrade of Public Sector Covered Bonds ▪ Issuer in focus: VOLKSBANK WIEN AG

ESG: Transparency due to Disclosure Requirements – Credit Markets Weekly (March 4, 2021) ▪ EBA Proposes Green Asset Ratio for Banks ▪ VB Wien Submits Preliminary Results for 2020 ▪ Insolvencies & Default Rates: Trends

Inflation fears: yields rising – Credit Markets Weekly (February 25, 2021)

Focus on the Second Half of 2021 – Credit Markets Weekly (February 18, 2021) ▪ BAWAG: Stable core business – Risk provisioning weighs on results ▪ Platform on Sustainable Finance starts its work

Expectations for Italy are running high – Credit Markets Weekly (February 11, 2021) ▪ ESG reporting for financial services providers

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