UK Debt Capital Market Forum

1st March 2019

Join the discussion at slido.com #DebtForum Key Highlights from 2018 Bond listings surpassed 1,000 transactions for the first time since 2012

Innovation & Efficiency New bond issuances on - New rules tailored for insurance linked LSE in 2018, the second securities highest in Europe, - Integrate value-add products in Issuer 1,068 raising an equivalent of Services, including new emerging $452 billion. technologies - SONIA linked securities

Key wins Switches Commitment 20 to the Future Key bond wins for LSE in 2018 The number of high profile include IDB’s largest ever bond corporates and sovereigns that (USD4bn), IFC’s debut green have added a London listing or - Issuer Services for Debt Sterling bond (GBP350m), Kingdom of Saudi moved their listing to London in Issuers - Product Innovation, Arabia’s debut sovereign issuance on LSE (USD the past 18 months citing: 2bn), Lloyds 1st SONIA linked bond (GBP750m), including leading on rules for ICBC’s largest green bond on LSE (USD500m), - Increased global investor new products Wijaya Karya debut Komodo bond (IDR5.4bn), base - Efficient review process st and CCB’s 1 sustainability bond on ISM - Higher visibility and timelines for admission (USD1bn) - Added value services

Source: Dealogic, LSE, January 2019 2 Business Overview

Overview for 2019 Developing DCM at LSE

Dr Darko Hajdukovic Head of Fixed Income, Funds & Analytics

Join the discussion at slido.com #DebtForum Global Funding Trends in Debt Capital Markets (1/2)

Aggregate global bond volumes and deal count Aggregate global bond volumes (USD terms) – regional breakdown

14 45k 100%

40k 90% 12 35k 80% 10 RoW 30k 70% Australasia 8 25k 60% Volume Volume ($ trillion) No.deals East Asia 50% 6 20k Japan 15k 40% 4 Europe 10k 30% 2 5k 20% North America 0 0k 10% 2014 2015 2016 2017 2018 2019 YTD 0% 2014 2015 2016 2017 2018 2019 Volume ($ trillion) Deal count (RHS) YTD

Source: Dealogic, February 2019 4 Global Funding Trends in Debt Capital Markets (2/2)

Sterling Denominated Global Bond issuance (£bn) - 2018 Sterling Denominated Global Bond issuance (£bn)

200

150

UK 100 41%

59% Outside UK 50

0 2014 2015 2016 2017 2018 2019YTD Financials Corporates SSAs

China Offshore Bond issuance ($bn) Global Green Bond issuance ($bn)

300 250 Forecasted issuance* 250 200 200 150 150 100 100 50 0 50 2014 2015 2016 2017 2018 2019 YTD 0 USD CNH EUR Other currencies 2015 2016 2017 2018 2019YTD

Source: LSE Data, Bloomberg, Dealogic, Climate Bond Initiative, February 2019 *Forecast data according to CBI 5 1Forecast 2019 issuances based on 2018 issuances volumes in January and February as a proportion of total annual issuance Momentum in London Listings Continues The strongest year for bond issuance in the past five year period

— 1,068 bonds were issued on London Stock Exchange in 2018 and accounted for $452bn in debt capital raised. — This amounts to the strongest year - in terms of bonds issued - in the past 5 year period. — LSE ranks second in debt capital raised among leading global bond listing venues in 2018.

No. of Bonds Issued on LSE since 2013* Capital Raised by Leading Bond Listing Venues in 2018 Domestic 1,200 1,200 46% International 1,068 54% 990 972 1,000 932 1,000 Breakdown of 897 864 902 issuers in London, 2018 800 800

600 600 452

No.Bonds Issued 400 400 315 Capital Capital Raised ($bn) 205 200 200

0 0 2013 2014 2015 2016 2017 2018 LUX LSE DUB SGX

Source: Bloomberg, as of Jan 3, 2019 Note: Based on individual tranches issued. Duplicates for 144A and RegS are consolidated. Structured Products are excluded 6 Access to the Broad Investor Pools UK investors play a crucial role in global bond offerings

Geographic investor breakdown Selected LSE debt issuance with strong UK investor presence for recent LSE listed debt issuances (>$500m size)

1% 1% IFC, July 2018 - GBP350m EBRD, February 2019 - GBP800m

14% 12% 4% 2% 5%

52%

25% 29% 41% 86%

Republic of Nigeria, Nov 2017 - US$3bn Prudential, January 2015 - GBP300m

7% 3% 32%

22% 48% 28%

68% 20%

UK Europe (ex UK) Americas Asia MENA Other

Source: Dealogic, Bloomberg, January 2019 7 2018 Listings Summary Diversity in London Stock Exchange debt listings

Currency split of LSE 2018 listings Industry split of LSE 2018 listings

4% Financials EUR 3% 10% 2% USD 3% 2% Government 2% 3% 2% 28% GBP 4% SEK Utilities 2% CNY Consumer Staples 6% NOK 24% Consumer Discretionary JPY 61% TRY Communications 20% 24% AUD Other Others

Geographical split of LSE 2018 listings Tenor split of LSE 2018 listings

2% UK 9% 0-3y 23% 12% 26% EU (ex UK) 3-5y 13% Oceania 19% 5-8y Supranational 8-10y North America 4% 17% 10-30y 14% Asia 17% Africa 30y+ 16% 28%

Source: LSE, Bloomberg, January 2019 Currently listed bonds are captured only 8 Based on individual tranches issued. Duplicates for 144A and RegS are consolidated. Structured Products are excluded ISM - Innovative Solutions for our Clients Momentum Building

56 bonds 30 issuers $18.7 billion 14 countries — $18.1 billion has been raised listed on London’s Sovereigns and Money raised on Diverse global on ISM since its launch, 75% International corporates International reach of which was raised in 2018 Securities Market Securities Market (ISM) — Q3 was a record quarter for ISM with $4.7 billion raised

— 2018 saw a number of ‘firsts’ Across multiple continents ($bn)* Across multiple sectors ($bn)* for ISM including: — CCB’s $1bn issuance, the first sustainability 0.7 1.3 1.0 0.5 1.3 bond issued on ISM 0.4 Energy Africa — The first JPY- 2.1 Financials denominated bond to 5.4 APAC Government be admitted to ISM Health Care — Seplat Petroleum Europe Industrials became the first 11.8 Nigerian ISM issuer Utilities North 12.9 America

Source: LSE Data, FactSet, February 2019 *Sector and region graphs are based on the capital raised 9 Benefits of ISM An Efficient and Expedient Process

Simplified disclosure regime for certain issuers

Local GAAP accepted

Enhanced incorporation by reference provisions

ISM Common derogations hardwired into Rulebook

Applicable Sensible treatment of SPV structures MTF Market Regulation No equity-like requirements for convertibles London Stock Reviewer Enhanced flexibility on inclusion of information Exchange in pricing supplements

Listing Documents Admission Particulars Following enhancements to ism are planned in 2019, ― new rules tailored for insurance linked fixed income products , ― an extension of existing incorporation by reference provisions to Designation Professional only include MAR 17 related announcements e.g material press announcements Disclosure ― widening of existing hardwired derogations in relation to ISM Rulebook/MAR Obligations guarantor financials

10 London’s Green Bond Market A truly international green bond market

Green bond breakdown*

96 $31bn 12 38 32% Green bonds Total money raised Unique currency Unique bond Government are listed in from green issuances denominations issuers London Financials 15% Utilities Green bond issuance for the last five years 48% 5% Other 10 40

9 35 8 30

7 No. ofbonds 29% 6 25 5 20 EUR 15% 4 15 USD 3 Capital raised($bn) Capital 10 SEK 2 11% 1 5 GBP - 0 2% INR 2014 2015 2016 2017 2018 42% 1% Capital raised ($bn) No. of bonds Other

Source: Bloomberg, February 2019 *Based on total green bond issuances on LSE 11 Data includes active and matured bonds. All duplicate bonds are consolidated LSEG Leading Market Innovation SONIA-linked products

Amount Issuer Name Issue Date Tenor Industry Issued (£m)

Australia & New Zealand 24/01/2019 750 3 Banks £500m £5tn Banking Group Ltd

Capital Raised Registered per Nationwide Building Society 10/01/2019 1000 5 Banks Month Lloyds Bank PLC 14/01/2019 750 3 Banks In absolute terms, LCH have Record listing by EBRD been averaging £5trillion per Royal Bank of Canada 24/01/2019 400 1 Banks marking the issuers largest month of newly registered sterling bond to date SONIA activity Santander UK PLC 20/09/2018 1000 3 Banks Santander UK PLC 12/02/2019 1000 5 Banks Yorkshire Building Society 19/11/2018 500 5 Banks — LCH has long supported the SONIA market, going back to European Bank for 2009 when it initially launched of OIS product eligibility 18/01/2019 550 3 Supranational Reconstruction & Development — On a relative basis, SONIA volumes are now approaching Lloyds Bank PLC 13/09/2018 750 3 Banks 20% of LCH’s cleared Sterling product volumes on a duration-adjusted basis, compared to slightly over 10% International Finance Corp 18/01/2019 500 3 Supranational one-year ago Coventry Building Society 13/11/2018 500 5 Banks

— Launched on 30 April this year, CurveGlobal’s three- Royal Bank of Canada 12/10/2018 400 1 Banks month SONIA volume has reached notional £139.6bn Commonwealth Bank of 17/01/2019 260 1 Banks Australia — Trades in CurveGlobal’s innovative Inter Contract Spread Commonwealth Bank of 10/12/2018 125 1 Banks (ICS) generates significant volumes, accounting for 49% Australia of three-month SONIA Royal Bank of Canada 13/09/2018 350 1 Banks

Source: Bloomberg, Bank of England, February 2019 Data includes active and matured bonds 12 All duplicate bonds are consolidated LSEG Issuer Services Working with partners to produce premium content for our community

www.lsegissuerservices.com 2,833

Total users of Issuer Services portal Company Profile Data Spark Marketplace

32

Marketplace users

12

LSEG Services for quoted companies

Source: LSE, February 2019 13 Customised Company Profiles Case study: Joules Group

A Wealth of Information Available

Source: LSE, February 2019 14 Sterling bond market: Seizing the opportunities

Marco Baldini, Head of UK, Europe and Japan Debt Syndicate, Barclays Martin Duffell, Head of Dealing, UK Debt Management Office Paul Watters CFA, Head of Corporate Research, European Corporate Ratings, S&P Global Ratings

Moderator: Elena Chimonides, Fixed Income Product Specialist, LSE

Join the discussion at slido.com #DebtForum Historical Sterling Bond Issuance 2009-2019YTD

180

£161bn 160 £150bn £147bn £144bn

140 £128bn

£115bn 120 £109bn £112bn £111bn

100 £93bn

80

60

40 £33bn

20

0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019YTD

Financials Corporates SSAs

Source: Dealogic, February 2019 16 Financing China’s growth through debt capital markets

Nai Zhang, Chief Representative, The Representative Office of Shanghai Clearing House in London Ruixiang Han, CEO, ICBC (London) and General Manager, ICBC London Branch Esther Law, Senior Investment Manager, Emerging Markets Debt, Amundi Asset Management Richard O’Callaghan, Partner, Linklaters

Moderated by: Dr Darko Hajdukovic, Head of Fixed Income, Funds & Analytics, LSE

Join the discussion at slido.com #DebtForum Global Funding Trends in Debt Capital Markets

Sterling Denominated Global Bond issuance (£bn) Sterling Denominated Global Bond issuance (£bn)

200 200

150 150

100 100

50 50

0 0 2014 2015 2016 2017 2018 2019YTD 2014 2015 2016 2017 2018 2019YTD UK Non-UK Financials Corporates SSAs

China Offshore Bond issuance ($bn) Global Green Bond issuance ($bn)

300 250 Forecasted issuance* 250 200 200 150 150 100 100 50 0 50 2014 2015 2016 2017 2018 2019 YTD 0 USD CNH EUR Other currencies 2015 2016 2017 2018 2019YTD

Source: LSE Data, Bloomberg, Dealogic, Climate Bond Initiative, February 2019 *Forecast data according to CBI 18 Going Green: Scaling up UK’s Green bond market

Andrew Mason, Senior ESG Analyst, Aberdeen Standard Investments Flora Chao, Global Head of Funding, International Finance Corporation Ines Faden, Treasurer, Tideway London Maximilian Meyer, Director, DCM EMEA,Barclays Peter Cripps, Editor, Environmental Finance

Moderated by: Adrian Rimmer, Senior Advisor, LSE

Join the discussion at slido.com #DebtForum The green, social and sustainability bond markets in www.bonddata.org the United Kingdom

The green bond market by The social bond market by The sustainability bond market $18,614. currency currency by currency

$10,157.0 M $7,337.2 M $1,120.7 M Green bonds Social bonds Sustainability bond

EUR GBP USD CNY ZAR GBP USD AUD BRL NZD TRY MYR USD

Top 5 largest issuers in the green bond market Issuer Volume ($M) The green bond market The social bond market is 95.6% HSBC 3,395 M by issuer types issued by the agency International Finance Facility SSE 1,477 M for Immunisation and 4.4% by Tideway 1,049 M the corporate MORhomes. Thames Water 855 M Utilities The sustainability bond market Anglian Water 799 M Agency Corporate is 100% issued by the financial Financial Institution Municipal institution HSBC. www.bonddata.org The three largest green bond markets in 2018

The US market by issuer types The Chinese market by The French market by issuer types The UK market by issuer types issuer types

$125,140.5 M $100,671.8 M $60,071.8 M $10,157 M

Agency Corporate Agency Corporate Agency Corporate Agency Corporate Financial Institution Municipal Financial Institution Municipal Financial Institution Municipal Financial Institution Municipal Sovereign

The US market by currency The Chinese market by currency The French market by currency The UK market by currency

MXN: 0.007% AUD: 0.04% SEK: 0.003% BRL: 0.03% HKD: 0.3% PLN: 0.002% TRY: 0.02% JPY:0.09% BRL:0.007% RUB: 0.01% IDR:0.001% TWD: 0.009% TWD: 0.03% JPY: 0.08% INR:0.02%

BRL EUR JPY USD CNY EUR HKD USD JPY TWD AUD EUR BRL USD INR JPY MXN CNY EUR GBP USD PLN RUB SEK TRY TWD IDR Switching to SONIA

Isabelle Laurent, Deputy Treasurer & Head of Funding, EBRD Paul Johnson, Markets Policy, Financial Conduct Authority (FCA) Paul Richards, Head of Market Practice and Regulatory Policy, ICMA Sean Taor, Head of DCM and Debt Syndicate, RBC

Moderated by: Andy Ross, CEO, CurveGlobal

Join the discussion at slido.com #DebtForum Pietro Poletto Sarah Ellena Global Head of Fixed Income and Co Fixed Income Sales Associate Head of Equity, Funds & Fixed Income +44 20 7797 3872 – Secondary Markets [email protected] +39 02 72426243 [email protected] Dr. Darko Hajdukovic Omair Mohyal Head of UK Fixed Income, Analytics Fixed Income Product Specialist and Investment Funds +44 20 7797 3913 +44 20 7797 3306 [email protected] [email protected]

Shrey Kohli Alex Imseeh Director, Fixed Income & Funds Fixed Income Sales Associate +44 20 7797 4313 +44 20 7797 3750 [email protected] [email protected]

Elena Chimonides David Ashaolu-Coker Fixed Income Product Specialist Fixed Income Product Specialist +44 20 7797 1509 +44 20 7797 4633 [email protected] [email protected] Legal Disclaimer

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