MARKET COMMENTARY the High-Yield Market Priced 12 Bonds Last Week, Bringing Year-To-Date Issuance to More Than $55 Billion

Issue No. 246: February 19, 2013

PIPER JAFFRAY DEBT CAPITAL MARKETS UPDATE Page 1 The Piper Jaffray Debt Capital Markets Update is published weekly and provides a summary and analysis of debt capital markets activity. To subscribe/unsubscribe, visit www.piperjaffray.com/dcmupdate

MARKET COMMENTARY The high-yield market priced 12 bonds last week, bringing year-to-date issuance to more than $55 billion. The middle market launched three new loan transactions last week for Document Technologies, Latisys and SRS Distribution.

Loan and high-yield funds saw $1.42 billion in inflows and $329 million in outflows, respectively. Year-to-date, loan funds have seen $5.6 billion in inflows, while outflows from high-yield funds total $102 million.

The secondary high-yield market was up this week, closing at 105.01% of par to yield 6.65%. Source: Piper Jaffray, S&P LCD, Bloomberg

New Leveraged Loans – InFacility the MarketAmt. LIBOR Senior Total Middle Market ($MM) Floor Spread OID Lev. Lev. Date Lead Arranger Sponsor Company Focus Purpose

Facility Amt. LIBOR Senior Total Middle Market ($MM) Floor Spread OID Lev. Lev. Date Lead Arranger Sponsor Company Focus Purpose Document Technologies (TLB) $198.0 1.25% L + 450 $99.5 NA 4.3x Feb-13 GECC Harvest Partners Services Refinancing Document Technologies (RC) $25.0 TBD TBD TBD NA 4.3x Feb-13 GECC Harvest Partners Services Refinancing Latisys (TLB) $180.0 1.25% L + 550 $99.0 NA 5.1x Feb-13 RBC Not Sponsored Electronics Refinancing Latisys (RC) $20.0 1.25% L + 550 TBD NA 5.1x Feb-13 RBC Not Sponsored Electronics Refinancing SRS Distribution (TLB) $220.0 1.25% L + 450 $99.0 NA NA Feb-13 UBS Berkshire Partners Building Materials LBO SRS Distribution (RC) $100.0 TBD TBD TBD NA NA Feb-13 UBS Berkshire Partners Building Materials LBO

Facility Amt. LIBOR Senior Total Large Cap ($MM) Floor Spread OID Lev. Lev. Date Lead Arranger Sponsor Company Focus Purpose AM General (TLB) $350.0 1.25% L + 675 $98.0 NA NA Feb-13 Citi Not Sponsored Defense Refinancing AM General (RC) $20.0 TBD TBD TBD NA NA Feb-13 Citi Not Sponsored Defense Refinancing Aramark (TLB) $1,000.0 1.00% L + 300 $99.5 NA NA Feb-13 JPMChase Thomas H. Lee Services Refinancing Arizona Chemical (TLB) $532.0 1.25% L + 400 $100.0 NA NA Feb-13 Goldman American Securities Chemicals Refinancing Delphi (TLA) $575.0 TBD TBD TBD NA NA Feb-13 JPMChase Not Sponsored Automotive Refinancing Delphi (RC) $1,425.0 TBD TBD TBD NA NA Feb-13 JPMChase Not Sponsored Automotive Refinancing Deltek Systems (TLB) $450.0 1.25% L + 375 $100.0 NA NA Feb-13 Jefferies Thoma Bravo Electronics Refinancing Deltek Systems (RC) $30.0 TBD TBD TBD NA NA Feb-13 Jefferies Thoma Bravo Electronics Refinancing FLY Leasing Limited (TLB) $395.0 1.25% L + 375 $100.0 NA NA Feb-13 Citi Not Sponsored Services Refinancing HHI Group Holdings (TLB) $505.0 1.25% L + 375 $100.0 NA NA Feb-13 Goldman American Securities Automotive Refinancing Houghton International (TLB) $455.0 1.00% L + 300 $100.0 NA NA Feb-13 RBC Not Sponsored Chemicals Refinancing IASIS Healthcare (TLB) $1,007.0 1.25% L + 325 $100.0 NA NA Feb-13 BA TPG Healthcare Refinancing J.C. Penney Company (RC) $1,850.0 TBD TBD TBD NA NA Feb-13 JP Fleming Not Sponsored Retail Refinancing MGM Resorts Int'l. (TLB) $1,750.0 1.00% L + 275 $100.0 NA NA Feb-13 BA Not Sponsored Gaming & Hotel Refinancing Mitel Networks (1st) $200.0 1.25% L + 600 $98.5 NA NA Feb-13 BA Francisco Partners Telecom Refinancing Mitel Networks (2nd) $80.0 1.25% L + 975 TBD NA NA Feb-13 BA Francisco Partners Telecom Refinancing Mitel Networks (RC) $40.0 TBD TBD TBD NA NA Feb-13 BA Francisco Partners Telecom Refinancing NEP (1st) $530.0 1.25% L + 350 $100.0 4.6x 5.2x Feb-13 Barclays Crestview Partners TV Refinancing Payless ShoeSource (TLB) $175.0 1.25% L + 600 $100.0 2.5x 2.5x Feb-13 MS Golden Gate Retail Dividend Recap Phillips Plastics (TLB) $271.9 1.25% L + 350 $99.5 4.0x 4.0x Feb-13 GECC Kohlberg & Co. Chemicals Refinancing Phillips Plastics (RC) $45.0 1.25% L + 350 TBD 4.0x 4.0x Feb-13 GECC Kohlberg & Co. Chemicals Refinancing Polyconcept Holding (TLB) $440.0 1.25% L + 550 $98.5 NA NA Feb-13 JPMChase Investcorp Services Refinancing PRA International (1st) $57.5 1.25% L + 525 $100.0 NA NA Feb-13 UBS Genstar Capital Services Acquisition PRA International (2nd) $12.5 1.25% L + 925 $100.0 NA NA Feb-13 UBS Genstar Capital Services Acquisition Pro Mach (TLB) $70.0 1.25% L + 375 $99.5 4.5x 4.5x Feb-13 Barclays Jordan Company Manufacturing Dividend Recap RCN (TLB) $775.0 1.25% L + 400 $99.5 4.7x 4.7x Feb-13 SunTrust ABRY Partners Cable Dividend Recap RCN (RC) $40.0 1.25% L + 400 TBD 4.7x 4.7x Feb-13 SunTrust ABRY Partners Cable Dividend Recap Realogy (TLB) $1,820.0 1.00% L + 300 $100.0 NA NA Feb-13 JPMChase Apollo Real Estate Refinancing Realogy (RC) $600.0 TBD TBD TBD NA NA Feb-13 JPMChase Apollo Real Estate Refinancing Revlon Consumer (TLB) $675.0 1.00% L + 300 $100.0 NA NA Feb-13 Citi M&F Consumer Refinancing RSI Home Products (TLB) $75.0 TBD TBD TBD NA NA Feb-13 BA Not Sponsored Home Furnishings Corp Purpose Source: Piper Jaffray, S&P LCD, CIQ

PIPER JAFFRAY DEBT CAPITAL MARKETS UPDATE Page 2

New Leveraged Loans – In the Market

Facility Amt. LIBOR Senior Total Large Cap ($MM) Floor Spread OID Lev. Lev. Date Lead Arranger Sponsor Company Focus Purpose Station Casinos (TLB) $1,625.0 1.00% L + 350 $99.5 NA NA Feb-13 BA Not Sponsored Gaming & Hotel Refinancing Station Casinos (RC) $350.0 1.00% L + 350 TBD NA NA Feb-13 BA Not Sponsored Gaming & Hotel Refinancing Sutherland Global (TLB) $225.0 1.25% L + 500 $99.0 2.7x 2.7x Feb-13 CS Not Sponsored Electronics Acquisition Sutherland Global (RC) $30.0 1.25% L + 500 TBD 2.7x 2.7x Feb-13 CS Not Sponsored Electronics Acquisition TAL Int'l. Container (RC) $300.0 TBD L + 175 TBD NA NA Feb-13 BA Not Sponsored Services Refinancing Univar NV (TLB) $300.0 1.50% L + 350 $100.0 NA NA Feb-13 BA CD&R Chemicals Refinancing Verint Systems (TLB) $650.0 1.00% L + 300 $99.5 NA NA Feb-13 CS Not Sponsored Electronics Refinancing Verint Systems (RC) $200.0 TBD TBD TBD NA NA Feb-13 CS Not Sponsored Electronics Refinancing Waste Industries USA (TLB) $515.0 1.00% L + 300 $100.0 NA NA Feb-13 BA Macquarie Environmental Refinancing Web.com Group (1st) $660.0 1.00% L + 350 $100.0 NA NA Feb-13 JPMChase Not Sponsored Electronics Refinancing World Kitchen (TLB) $180.0 1.25% L + 525 $99.0 NA 2.9x Feb-13 BMO Oak Tree Partners Home Furnishings Refinancing World Kitchen (RC) $90.0 0.00% L + 525 $99.5 NA 2.9x Feb-13 BMO Oak Tree Partners Home Furnishings Refinancing Zayo Group (TLB) $1,612.0 1.00% L + 325 $100.0 NA NA Feb-13 MS Columbia Capital Telecom Refinancing Zayo Group (RC) $225.0 TBD L + 300 TBD NA NA Feb-13 MS Columbia Capital Telecom Refinancing Source: Piper Jaffray, S&P LCD, CIQ

Benchmark Yields Previous Previous Benchmark Current Week  (bps) Year  (bps) 2 yr UST 0.27% 0.25% 1.6 0.29% (2.4) 5 yr UST 0.86% 0.83% 3.4 0.86% 0.0 10 yr UST 2.00% 1.95% 5.2 2.00% 0.0 30 yr UST 3.18% 3.16% 1.2 3.15% 2.8 3M LIBOR 0.29% 0.29% (0.2) 0.49% (20.3) Source: Bloomberg

PIPER JAFFRAY DEBT CAPITAL MARKETS UPDATE Page 3

Weekly Corporate New Issue Activity (1)

Investment Grade(2) – Week of 2/11/2013 Ratings Amt Company Moody’s S&P Industry ($MM) Maturity Spread Coupon Yield Transaction Type Johns Hopkins University Aa2 N/A Education $355 7/1/53 + 91 4.083% 4.1% Sr. Unsecured American Honda Finance A1 A+ Financial $750 2/16/18 + 75 1.600% 1.6% Sr. Unsecured E.L. Du Pont de Nemours A2 A Basic Materials $1,250 2/15/23 + 82 2.800% 2.8% Sr. Unsecured E.L. Du Pont de Nemours A2 A Basic Materials $750 2/15/43 + 97 4.150% 4.2% Sr. Unsecured Emerson Electric A2 A Industrial $500 2/15/23 + 70 2.625% 2.7% Sr. Unsecured Praxair A2 A Basic Materials $500 2/21/23 + 72 2.700% 2.7% Sr. Unsecured Praxair A2 A Basic Materials $400 2/21/16 + 35 0.750% 0.8% Sr. Unsecured Walt Disney Company A2 A Communications $800 2/11/15 - 1 FRN FRN Sr. Unsecured Vodafone Group A3 A- Communications $1,600 2/19/23 + 105 2.950% 3.0% Sr. Unsecured Vodafone Group A3 A- Communications $1,400 2/19/18 + 75 1.500% 1.6% Sr. Unsecured Vodafone Group A3 A- Communications $1,400 2/19/43 + 130 4.375% 4.5% Sr. Unsecured Vodafone Group A3 A- Communications $900 2/19/16 + 55 0.900% 0.9% Sr. Unsecured Vodafone Group A3 A- Communications $700 2/19/16 + 39 FRN FRN Sr. Unsecured Kellogg Baa1 BBB+ Packaged Foods $400 3/1/23 + 88 2.750% 2.8% Sr. Unsecured Kellogg Baa1 BBB+ Packaged Foods $250 2/13/15 + 23 FRN FRN Sr. Unsecured National Fuel Gas Baa1 BBB Utilities $500 3/1/23 + 180 3.750% 3.8% Sr. Unsecured Airgas Baa2 BBB Basic Materials $325 2/15/18 + 85 1.650% 1.7% Sr. Unsecured Airgas Baa2 BBB Basic Materials $275 2/15/20 + 105 2.375% 2.4% Sr. Unsecured Citigroup Baa2 N/A Financial $1,500 3/1/23 + 142 3.375% 3.4% Sr. Unsecured Discover Bank Baa3 BBB Financial $750 2/21/18 + 110 2.000% 2.0% Sr. Unsecured Arrow Electronics Baa3 BBB- Technology Distributors $300 3/1/18 + 225 3.000% 3.1% Sr. Unsecured Arrow Electronics Baa3 BBB- Technology Distributors $300 3/1/23 + 263 4.500% 4.6% Sr. Unsecured Banco de Bogota Baa3 N/A Financial $500 2/19/23 + 342 5.375% 5.4% Sr. Unsecured

High-Yield – Week of 2/11/2013 Ratings Amt Company Moody’s S&P Industry ($MM) Maturity Spread Coupon Yield Transaction Type Delphi Corp Ba1 BB+ Electronics $800 2/15/23 + 305 5.000% 5.0% Sr. Unsecured Flextronics International Ba1 BB+ Industrial $500 2/15/20 + 325 4.625% 4.6% Sr. Unsecured Flextronics International Ba1 BB+ Industrial $500 2/15/23 + 302 5.000% 5.0% Sr. Unsecured PolyOne Corp Ba3 BB- Basic Materials $600 3/15/23 + 323 5.250% 5.3% Sr. Unsecured Triumph Group Ba3 BB- Industrial $375 4/1/21 + 334 4.875% 4.9% Sr. Unsecured RSI Home Products B1 B+ Home Furnishings $525 3/1/18 + 601 6.875% 6.9% Sr. Unsecured American Axle & Manufacturing B2 B Auto Equipment $400 3/15/21 + 473 6.250% 6.3% Sr. Unsecured Fairpoint Communications B2 B Communications $300 8/15/19 + 756 8.750% 8.8% Sr. Secured NII International Telecom B2 CCC+ Communications $750 8/15/19 + 1,028 11.375% 11.4% Sr. Unsecured Neovia Logistics Services Caa2 CCC+ Industrial $125 2/15/18 PIK FRN FRN Sr. Unsecured Burlington Coat Factory Caa2 CCC Apparel Retail $350 2/15/18 PIK FRN FRN Sr. Unsecured Speedy Group Holdings N/A N/A Consumer Finance $125 11/15/17 + 351 12.000% 12.0% Sr. Unsecured

Total Bond Volume Week of 2/11/2013 2013 YTD 2012 YTD YOY Change $MM # $MM # $MM # $MM # Investment Grade $16,405 23 $148,324 171 $166,243 173 (10.8%) (1.2%) High-Yield $5,350 12 $55,343 110 $55,897 95 (1.0%) +15.8% Total Corporates $21,755 35 $203,667 281 $222,140 268 (8.3%) +4.9%

(1)Bold transactions denote Piper Jaffray underwriting participation. Does not include Supranational, Foreign Denominations, Sovereign, Special Purpose Entities or PJC issues. (2)Includes all split-rated issues Source: Piper Jaffray, Bloomberg

PIPER JAFFRAY DEBT CAPITAL MARKETS UPDATE Page 4 LOAN & BOND VOLUME

Leveraged Loan & HY Volume Middle Market Loan Volume

$600 $50 Leveraged Loans High-Yield Bonds $500 $40

$400 $30

$300 $ In BillionsIn $ $ In BillionsIn $ $20 $200

$10 $100

$0 $0

Source: Bloomberg

1998 2011 2013 1997 1999 2001 2010 2012

2000 2002 2003 2005 2007 2009 2004 2006 2008

2011

1998 1999 2001 2003 2005 2007 2009 2013 2000 2000 2002 2004 2006 2008 2010 2012 DEBT CAPITAL MARKETS CONTACTS 1997 Source: S&P LCD

HIGH-YIELD INDEX SPREADS Moody’s Rating: Ba2 Moody’s Rating: B2

+ 700 + 900

+ 600 + 800 High: +531 High: +721 6/5/2012 6/5/2012 + 500 + 700

+ 400 + 600

Current: Worst SpreadTo Spread To Worst SpreadTo Current: +350 +531

+ 500 + 300 Low: +330 Low: +497 1/25/2013 1/25/2013

+ 200 + 400

12 13

12 12

13 12

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Source: Bloomberg -

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Mar Nov DEBT CAPITAL MARKETSMay CONTACTS Source: Bloomberg DEBT CAPITAL MARKETS CONTACTS Theodore Christianson James Chiarelli Head of Equity Private Placements & Debt Capital Markets Principal 612 303-6282 312 267-5122 [email protected] [email protected]

Information contained in this publication is based on data obtained from sources we deem to be reliable, however, it is not guaranteed as to accuracy and does not purport to be complete. Nothing contained in this publication is intended to be a recommendation of a specific security or company nor is any of the information contained herein intended to constitute an analysis of any company or security reasonably sufficient to form the basis for any investment decision.

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