<table><tr><th>From:</th><th>Vinit Sahni</th></tr><tr><td>Sent:
To:</td><td>Monday, January 27, 2014 1:39 PM
jeevacation@gmail.com</td></tr><tr><td>Subject:</td><td>Jeffrey - HY today vs 2007 quick analysis [C]</td></tr></table>

Classification: Confidential

Jeffrey - picked up something interesting over the weekend, the below explains why we will get a lot more volatility around positions and why we need to pick our spots. EM retracing as expected, will be a noisy year though.

Need to watch a number of new relationships and we are building our analytics around that.

High Yield - 2007 vs today comparison - 1) liquidity is weaker now vs 2007, 2) less investor leverage in the system vs 2007, 2) prices are higher of bonds in general, 3) absolute yields are lower for sure, 4) ratings mix is weaker now vs 2007. The current bull market has lasted 62 months, at 104.22 average price market is already above the median call price of 104.

HY is 111bps tighter to fair value according to one analysis, in 2007 yields bottomed at 7.32% vs 5.46% today !!! spread of 246bps from 2007 is equivalent to 333bps in todays market (taking into account the above factors of differentiation). Here is the breakdown on how we get from 246 bps to 333 bps

HY spread in 2007 : 246bps

Compensation for

1) Lower liquidity: 24 bps

2) Higher $ prices: 28 bps

3) Ultra low yields: 16bps

4) Weaker ratings mix: 4 bps

5) Less availability of leverage: 15bps

An equiv spread to 2007 based on above: 333bps

best

vinit

Vinit Sahni

Managing Director I Global Head - Professional Client Group & Key Client Partners Capital Markets Group

Deutsche Asset & Wealth Management
105/108 Old Broad St (Pinners Hall),
EC2N lEN London, United Kingdom
Tel. +44(20)754-13392
Mobile +447920-138521
Email vinit.sahni@db.com <mailto:vinit.sahni@db.com>

Any proposed ideas are being delivered to you by the DeAWM Key Client Partners ("KCP") London desk for discussion purposes only, and do not create any legally binding obligation on the part of Deutsche Bank AG and / or its affiliates ("DB"). These ideas are for the consideration of the intended recipients of this mail only. The KCP London desk does not provide investment advice. All intended recipients are Professional investors (as defined by MiFID), who understand the strategy, characteristics and risks associated with any ideas proposed herein and will be able to evaluate it independently. All trades on proposed ideas shall be subject to the relevant internal approvals prior to execution.

This e-mail may contain confidential and/or privileged information. If you are not the intended recipient (or have received this e-mail in error) please notify the sender immediately and delete this e-mail. Any unauthorized copying, disclosure or distribution of the material in this e-mail is strictly forbidden.

Please refer to http://www.db.com/en/content/eu_disclosures.htm for additional EU corporate and regulatory disclosures.