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2010 Interest Rate Outlook
Citation preview
Money does not perform. People do.
Money does not perform. People do.
Press conference: Fixed Income Markets – Outlook 2010
Nicolas Forest, Head of Interest Rate Strategy
Koen Van de Maele, CFA, Global Head of Fixed Income
12 January 2010 - Brussels
2
Agenda
I. Interest Rate Outlook
II. Currency Outlook
III. Credit Outlook
IV. Synoptic Table
3
Illiquidity
What are the legacies of the crisis ?The end of the global recession…
US Zone Euro Zone
Economic Data End of 2008 End of 2009 End of 2008 End of 2009
Manufacturing PMI 32.90 53.60 33.90 51.60
Inflation 0.10% 1.80% 1.60% 0.50%
Unemployment Rate 6.80% 10.00% 8.00% 9.80%
Budget Deficit -4.70% -10.00% -2.00% -6.35%
US Zone Euro Zone
Market Data End of 2008 End of 2009 End of 2008 End of 2009
3 Months Libor Rate 1.43% 0.25% 2.83% 0.71%
10Y Government Yield 2.07% 3.83% 2.94% 3.38%
Equity Market 898.00 1115.00 4900.00 5957.00
Implied Volatility 38.87 21.68 38.00 20.16
Systemic Risk
Housing Crisis
Global Recession
Return of Liquidity
Market Normaliza
-tion
Rebound of
Housing Prices
Global Recovery
Explosion of Government
Debt
Source : Bloomberg – IMF – European Commission – Dexia Asset Management
4
Global Public Debt (as a percentage of nominal GDP)
20%
40%
60%
80%
100%
201020092008200720062005200420032002200120001999
Emerging Economies Developed Economies
What are the legacies of the crisis ?
Global Public Debt(in billion of USD)
10 000
20 000
30 000
40 000
50 000
201020092008200720062005200420032002200120001999
Net Borrowing in US credit Markets(as a percentage of GDP)
-30%
-20%
-10%
0%
10%
20%
30%
40%
70 72 74 76 79 81 83 85 88 90 92 94 97 99 01 03 06 08
Government Non-Government
…and the explosion of government debt
x 2.25 in 10 years
Evolution of Central Banks Balance Sheets(basis 100 in 2003)
0
100
200
300
400
500
600
700
800
900
1000
2003 2004 2005 2006 2007 2008 2009
Euro Area
United Kingdom
United States
Emerging Economies
120%(2014)
40%(2014)
Source : Bloomberg – IMF – European Commission – Dexia Asset Management
5
Inflation Risk
Inflation risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible.
Buy inflation linked bonds
In 2010, the exit timing will be crucialExiting too late will increase the inflation & sovereign risks
Too
Lat
e (Q
1 20
11)
Too
Ear
ly (
Q1
2010
) M
on
etar
y
Budgetary TighteningToo Early (Q1 2010) Too Late (Q1 2011)
Double Dip(no sovereign & inflation risk)
The tightening will derail the recovery. A double dip scenario could support government debt.
Buy core countries
Sovereign & Inflation Risks
The explosion of deficits is strongly bearish and the inflation
risk could support the steepening of the curve
Sovereign Risk
The restrictive monetary policy could reinforce the sovereign risk with risk of downgrades
Sell government bonds
Source : Bloomberg – IMF – European Commission – Dexia Asset Management
6
The Federal Reserve could be too late… A schedule for the Fed
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
To
o L
ate
(Q
1 2
01
1)
To
o E
arl
y (Q
1 2
01
0)
Mo
ne
tary
Tig
hte
nin
g
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
FED ?
ECB ?
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
To
o L
ate
(Q
1 2
01
1)
To
o E
arl
y (Q
1 2
01
0)
Mo
ne
tary
Tig
hte
nin
g
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
FED ?
ECB ?
Q4 2009 :End Treasury Buying
February 1 :End Lending Facilities
June 30 :End Credit Easing
H2 2010Draining Reserves ?
20102009
Federal Reserve - Holdings of Assets
52% 65%
100%
23%
39% 35%
9%
76%
1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec-07 Dec-08 Dec-09 Jun-10
LT Assets (Treasury Debt)
LT Assets (Agency Debt & MBS)
Temporary Assets
Federal Reserve Balance Sheet
0
500
1 000
1 500
2 000
2 500
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09Apr-09 Jul-09 Oct-09
-1.0
-0.5
0.0
0.5
1.0
Federal Reserve Balance SheetSpread Target-Effective Rate
Programs Ending 01-Feb-10
0
200
400
600
800
1 000
1 200
1 400
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09
CB LiquiditySw apsCPFF
TSLF
ABCP MMMFLF
Primary DealerCredit Facility
FED Holdings of Long Term Assets (Treasuries, Agency Debt & MBS ; $ Bln)
0
500
1 000
1 500
2 000
2 500
2007 2008 2009 2010 2011 2012 2013 2014 2015
Source : Bloomberg – IMF – European Commission – Dexia Asset Management
7
The Federal Reserve could be too late…
Taylor Rules - Main ScenarioCore CPI NFP FF
T 1.50 -11.00 0.25
T+1 1.50 -11.00 0.24
T+2 1.50 -11.00 0.23
T+3 1.50 0.00 0.23
T+4 1.50 0.00 0.22
T+5 1.50 0.00 0.22
T+6 1.50 50.00 0.25
T+7 1.50 50.00 0.28
T+8 1.50 50.00 0.32
T+9 1.50 50.00 0.36
T+10 1.50 50.00 0.40
T+11 1.50 50.00 0.44
T+12 1.50 50.00 0.47
A schedule for the Fed
Taylor Rules - Alternative ScenarioCore CPI NFP FF
T 1.50 -11.00 0.25
T+1 1.50 0.00 0.25
T+2 1.50 0.00 0.24
T+3 1.60 40.00 0.27
T+4 1.60 40.00 0.30
T+5 1.60 80.00 0.36
T+6 1.70 80.00 0.43
T+7 1.70 120.00 0.52
T+8 1.70 120.00 0.62
T+9 1.80 180.00 0.77
T+10 1.80 180.00 0.91
T+11 1.80 230.00 1.09
T+12 1.80 230.00 1.28
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
To
o L
ate
(Q
1 2
01
1)
To
o E
arl
y (Q
1 2
01
0)
Mo
ne
tary
Tig
hte
nin
g
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
FED ?
ECB ?
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
To
o L
ate
(Q
1 2
01
1)
To
o E
arl
y (Q
1 2
01
0)
Mo
ne
tary
Tig
hte
nin
g
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
FED ?
ECB ?
Treasury Yield & Fed Fund Expectations
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10-Year Treasury Yield
Fed Fund Rate expected in 12 months
Jun 91 Jun 94 Jun 97 Jun 00 Jun 03 Jun 06 Jun 09
Liquidity Premium Slope
Jun 91 Jun 94 Jun 97 Jun 00 Jun 03 Jun 06 Jun 09
Term Premium
Source : Bloomberg – IMF – European Commission – Dexia Asset Management
8
… but the ECB too early
Composition of ECB Open Market Operation
85%
39%
17% 14%
100%
15%
12%
13%
4%
82%
70%
49%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec-08 Jun-09 Oct-09 Dec-09 Dec-10
12M
6M
3M andBelow
A schedule for the ECB
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
To
o L
ate
(Q
1 2
01
1)
To
o E
arl
y (Q
1 2
01
0)
Mo
ne
tary
Tig
hte
nin
g
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
FED ?
ECB ?
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
To
o L
ate
(Q
1 2
01
1)
To
o E
arl
y (Q
1 2
01
0)
Mo
ne
tary
Tig
hte
nin
g
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
FED ?
ECB ?
0
50 000
100 000
150 000
200 000
Dec-09
Projected Excess Liquidity
Jun-10 Sep-10 Dec-10Mar-10
December 16 Last 1y LTROEONIA = 0.35%
March 31Last 6m LTROEONIA = 0.35%
April 13 End Full Alloc.
EONIA = 0.50%
July 1€ 442 bln mature
EONIA = 1.00%
September 30€ 75 bln mature
EONIA = 1.05%
2009 2010
Average Duration of ECB Open Market Operations
0
50
100
150
200
250
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09
(day
s)
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
(Spr
ead)
Average Duration
Refi-EONIA
Refi-EONIA Moving Avg (15)
Source : Bloomberg – IMF – European Commission – Dexia Asset Management
9
German Yield & ECB Expectations
0.0
1.0
2.0
3.0
4.0
5.0
6.0
10-Year German Yield
ECB Rate expected in 12 months
Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09
Liquidity Premium Slope
Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09
Term Premium
… but the ECB too early
Taylor Rules - Main ScenarioCPI U RATE ECB RATE
T 0.31 7.80 1.00
T+1 0.50 7.80 1.06
T+2 0.50 7.80 1.11
T+3 1.00 7.80 1.16
T+4 1.00 7.80 1.22
T+5 1.50 7.80 1.29
T+6 1.50 7.80 1.35
T+7 1.30 7.80 1.39
T+8 1.30 7.80 1.43
T+9 1.00 7.80 1.48
T+10 1.00 7.80 1.53
T+11 1.00 7.80 1.58
T+12 1.00 7.80 1.63
A schedule for the ECB
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
To
o L
ate
(Q
1 2
01
1)
To
o E
arl
y (Q
1 2
01
0)
Mo
ne
tary
Tig
hte
nin
g
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
FED ?
ECB ?
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
To
o L
ate
(Q
1 2
01
1)
To
o E
arl
y (Q
1 2
01
0)
Mo
ne
tary
Tig
hte
nin
g
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
FED ?
ECB ?
Taylor Rules - Alternative ScenarioCPI U RATE ECB RATE
T 0.31 7.80 1.00
T+1 0.50 7.80 1.06
T+2 0.50 7.80 1.12
T+3 1.00 7.80 1.17
T+4 1.00 7.60 1.24
T+5 1.50 7.60 1.32
T+6 1.50 7.60 1.39
T+7 1.70 7.40 1.44
T+8 1.70 7.40 1.52
T+9 2.00 7.40 1.60
T+10 2.00 7.00 1.68
T+11 2.30 7.00 1.78
T+12 2.30 7.00 1.88
Source : Bloomberg – IMF – European Commission – Dexia Asset Management
10
The surge in public debt will create new imbalances…
Net interest payments to fiscal revenues2014
0
5
10
15
20
25
Indi
a
Tur
key
Uni
ted
Sta
tes
Ital
y
Mex
ico
Bra
zil
Indo
nesi
a
Adv
ance
dG
-20
econ
omie
s
G-2
0C
ount
ries
Em
ergi
ngG
-20
econ
omie
s
Uni
ted
Kin
gdom
Jap
an (
net
debt
)
Arg
entin
a
Fra
nce
Kor
ea
Ger
man
y
Sou
thA
fric
a
Chi
na
Aus
tral
ia
Rus
sia
Sau
diA
rabi
a
Can
ada
Net interest payments to GDP 2014
0
1
2
3
4
5
6
7 It
aly
Indi
a
Tur
key
Uni
ted
Sta
tes
Bra
zil
Adv
ance
dG
-20
econ
omie
s
Fra
nce
Uni
ted
Kin
gdom
G-2
0C
ount
ries
Mex
ico
Arg
entin
a
Jap
an (
net
debt
)
Em
ergi
ngG
-20
econ
omie
s
Ger
man
y
Indo
nesi
a
Kor
ea
Sou
thA
fric
a
Aus
tral
ia
Chi
na
Rus
sia
Sau
diA
rabi
a
Can
ada
The Debt Conundrum
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
Budgetary TighteningToo Early (Q1 2010) Too Late (Q1 2011)
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
GREECE ?IRELAND ?
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
Budgetary TighteningToo Early (Q1 2010) Too Late (Q1 2011)
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
GREECE ?IRELAND ?
General government gross debt to fiscal revenues2014
050
100150200250300350400450500
Jap
an (
net
debt
)
Uni
ted
Sta
tes
Indi
a
Adv
ance
dG
-20
econ
omie
s
Sou
thA
fric
a
Ital
y
Uni
ted
Kin
gdom
G-2
0C
ount
ries
Mex
ico
Ger
man
y
Fra
nce
Indo
nesi
a
Can
ada
Tur
key
Bra
zil
Em
ergi
ngG
-20
econ
omie
s
Kor
ea
Arg
entin
a
Chi
na
Aus
tral
ia
Rus
sia
Sau
diA
rabi
a
+ 105%in 7 years
+ 111%in 7 years
+ 76%in 7 years
Source : Bloomberg – IMF – European Commission – Dexia Asset Management
11
Country Experiences with Large Fiscal adjustments
United States (2000)
United Kingdom (2000)
Sweden (1987)
Spain (2006)
P ortugal (1985)
New Zealand (1995)
Nether (2000)
J apan (1990) Italy (1993)
Ireland (1989)
Greece (1995)
Germany (1989)
Finland (2000)
Denmark (1986)
Canada (1999) Belgium (1998)
Australia (1988)
0
5
10
15
20
25
0 2 4 6 8 10 12 14 16Length (years)
Siz
e of
adj
ustm
ent (
% o
f GD
P)
2030 Debt target
r-g = 0 r-g = 1 r-g = 2
60 percent of GDP
All advanced economies 6.6 7.8 9.1
G-20 advanced economies 6.8 8.0 9.4
High debt 7.1 8.4 9.8
Low debt 0.5 0.9 1.3
80 percent of GDP
All advanced economies 5.2 6.5 7.9
G-20 advanced economies 5.4 6.7 8.1
High debt 5.7 7.0 8.5
Low debt 0.5 0.9 1.3
Pre-crisis levels
All advanced economies 6.5 7.7 9.0
G-20 advanced economies 6.5 7.8 9.2
High debt 7.0 8.3 9.6
Low debt 1.2 1.5 1.9
* r-g indicates the assumed difference betw een the interest rate and the rate of economic grow th
Required adjustment of Structural Primary Balance between 2010 and 2020
… and require large fiscal restrictions The Debt Conundrum
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
Budgetary TighteningToo Early (Q1 2010) Too Late (Q1 2011)
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
GREECE ?IRELAND ?
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
Budgetary TighteningToo Early (Q1 2010) Too Late (Q1 2011)
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
GREECE ?IRELAND ?
Structural Balance(percentage of potential GDP )
-14-12-10-8-6-4-20246
Australia Belgium Finland France Germany Greece Ireland Italy Netherlands Portugal Spain UnitedKingdom
UnitedStates
2007 2008 2009 2010
Source : Bloomberg – IMF – European Commission – Dexia Asset Management
12
The fiscal exit strategy will penalize budgetary excesses…
Public Deficit-20
-15
-10
-5
0
5
10
AUSTRIA BELGIUM FINLAND FRANCE GERMANY GREECE IRELAND ITALY NETHER PORTUGAL SPAIN UK US JAPAN
2008 2009 2010
Unemployment Rate
0
5
10
15
20
25
AUSTRIA BELGIUM FINLAND FRANCE GERMANY GREECE IRELAND ITALY NETHER PORTUGAL SPAIN UK US JAPAN
2009 2010 2011
Euro Area - implosion or political test ?
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
Budgetary TighteningToo Early (Q1 2010) Too Late (Q1 2011)
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
GREECE ?IRELAND ?
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
Budgetary TighteningToo Early (Q1 2010) Too Late (Q1 2011)
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
GREECE ?IRELAND ?
Fiscal Adjustment Strategy to achieve debt target 2030 of 60%
0
24
6
8
1012
14
16
AUSTRIA BELGIUM FINLAND FRANCE GERMANY GREECE IRELAND ITALY NETHERLANDSPORTUGAL SPAIN UK USA JAPAN
Source : Bloomberg – IMF – European Commission – Dexia Asset Management
13
… but will offer opportunities to investors
Intra-EMU Scoring
SPAINPORTUGAL
NETHERLANDS
ITALY
IRELAND
GREECE
GERMANY
FRANCE
FINLAND
BELGIUM
AUSTRIA
3
4
5
6
7
8
9
1 2 3 4 5 6 7 8
Fundamental Score
Mar
ket
Sco
re
Government spread against Germany(10y generic yield)
0
50
100
150
200
250
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
0
100
200
300
400
500
600
Average of EMU spreads OAS [R.H.S]
Government spread against Germany(10y generic yield)
-100
0
100
200
300
400
500
600
01 02 03 04 05 06 07 08 09
OAS ITALY GREECE IRELAND
Euro Area - implosion or political test ?
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
Budgetary TighteningToo Early (Q1 2010) Too Late (Q1 2011)
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
GREECE ?IRELAND ?
Inflation RiskInflationist risk will increase due to the accommodative monetary
policy. But sovereign debt remains credible
Buy inflation linked bonds
Budgetary TighteningToo Early (Q1 2010) Too Late (Q1 2011)
Double DipThe combination of the tightening will derail the
recovery. The double dip scenario could support
government bonds
Sovereign RiskInflationist risk and explosion of deficit are strongly bearish even
if curve could remain steep
Worst CaseThe restrictive monetary policy could reinforce the sovereign
risk. Important risk of downgrades
GREECE ?IRELAND ?
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00AUSTRIA
BELGIUM
FINLAND
FRANCE
GERMANY
GREECEIRELAND
ITALY
NETHERLANDS
PORTUGAL
SPAIN
ECONOMY SCORE
DEBT SCORE
Specific risk…
Source : Bloomberg – IMF – European Commission – Dexia Asset Management
* Composed by debt score (public deficit – debt / GDP) and economy score (GDP – unemployment – inflation)
* C
ompo
sed
by s
prea
d ad
just
ed t
o ris
k an
d to
liqu
idity
14
Public debt per capita2010
JAPAN
BELGIUM
ITALY
FRANCE
CANADA
GERMANY
UNITED KINGDOM
UNITED STATES
SPAIN
EMERGING COUNTRIES
0 20 000 40 000 60 000 80 000 100 000
2010
Emerging economies have more favorable debt ratio trends…
Emerging Public Debt as a percentage of total public debt
12%
13%
14%
15%
16%
17%
18%
19%
20%
201020092008200720062005200420032002200120001999
Emerging Nominal PIBas a percentage of total nominal PIB
15%
20%
25%
30%
35%
40%
201020092008200720062005200420032002200120001999
The virtues of the emerging economies
In 2010, the debt of emerging economies
remains relatively stable against the global public
debt…
…but over the last 10 years, its share in the global GDP has
increased with 12%
The public debt per capita ratio of the emerging
countries is clearly below average
Source : Bloomberg – IMF – European Commission – Dexia Asset Management
15
…and remain buyers of Western government bonds
GDP constant prices( as a percentage of GDP)
-6
-4
-2
0
2
4
6
8
10
12
1990 1993 1996 1999 2002 2005 2008 2011 2014
WorldAdvanced economiesEuropean UnionEmerging and developing economiesDeveloping Asia
Gross national savings( as a percentage of GDP)
0
10
20
30
40
50
60
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
WorldAdvanced economiesEmerging and developing economiesDeveloping Asia
The virtues of the emerging economies
General Government Balance(as a percentage of GDP)
-12
-10
-8
-6
-4
-2
0
2
4
6
1990 199219941996 199820002002 200420062008 2010
Major advanced economies (G7)
European Union
New ly industrialized Asian economies
After the financial crisis, emerging economies seem reinforced. They represent more than 35% of the global GDP but their share of the global debt remains low.The Asian savings rates are high and could decrease in a long term perspective (shift from saving
to spending)But in the short term, the Asian savings could support the Western government debt
Source : Bloomberg – IMF – European Commission – Dexia Asset Management
16
2010 Trade recommendationsInterest Rate Trades
Long TIPS The Federal Reserve could continue to buy financial assets in 2010 and therefore increase its balance sheet. To tackle the unemployment issue, the Fed could risk higher inflation. US inflation could therefore face upside risks due to the accommodative monetary policy and higher commodity prices. Buy US inflation linked bonds 7 years segment
Euro curve flattenerThe ECB has already laid out its roadmap for exit strategies. The normalization of liquidity conditions could allow the ECB to envisage the end of the full-allotment in Q2 2010 and the short term maturities could suffer from a rebound of Eonia. Anticipations of a tightening cycle will favor a flattening trade. Buy 10 year relative to 2 year
Long Greece against SpainThe current situation of Greece is critical due to a negative growth and high debt. Despite the recent downgrades by different agencies, we consider that the cheapening of Greece offers a buying opportunity. On the contrary, Spain has become too expensive in regards with the current economic situation. The level of unemployment combined with the critical housing market will weigh on the debt situation. Sell Spain 5 years against Greece
Long Netherlands against GermanyThe economic and debt situation remain robust in the Netherlands. Dutch bonds give a pick-up of 20 bps with a comparable liquidity to Germany. Buy Netherlands 10 year against Germany
Long Emerging debtPerspectives on growth are clearly positive (6% against 4% for the global growth in 2010) and the debt situation is much better and has improved relative to the developed countries. On a long term perspective, emerging markets offer a diversification with attractive yields. Buy Brazil or Russia
Source : Bloomberg – IMF – European Commission – Dexia Asset Management
Too
Lat
eT
oo E
arly
Too Early Too Late
FED
ECB
BOE
Ireland Spain Greece
USA
17
2010 Trade recommendations
-4 -2 0 2 4
USA
Euro Area
UK
Japan
DU
RA
TIO
N
-4 -2 0 2 4
USA
Euro Area
UK
Japan
CU
RV
E
Interest Rate Strategies
-4 -2 0 2 4
USA
Euro Area
UK
Japan
BE
IN
FL
AT
ION
BullishBearish 2s10s Steeper2s10s Flatter HigherLower
Buy Area
Sell Area
Intra-EMU Relative Scoring
ITALY NETHER PORT IRELAND AUSTRIA GREECE FRANCE FINLAND GERMANY SPAIN BELGIUM
Global Relative Scoring
JAPAN
UK
USA
EURO ZONE
-200
-150
-100
-50
0
50
100
2 2.5 3 3.5 4 4.5 5
Fundamental Score
10y
go
vern
men
t sp
read
ag
ain
st G
erm
any
Source : Bloomberg – IMF – European Commission – Dexia Asset Management
18
Agenda
I. Interest Rates Outlook
II. Currency Outlook
III. Credit Outlook
IV. Synoptic Table
19
2010 - the end of a disliked USD ?USD recent appreciation is premature…
Rebound of the leadings, Rebound of the stock markets, Surge of positive data surprises
USD/EUR & US Stock Market
600
700
800
900
1000
1100
1200
J an 09 Apr 09 J ul 09 Oct 09
1.2
1.25
1.3
1.35
1.4
1.45
1.5
1.55
S&P 500 USD/ EUR
End of Year positioning reversal
Recent risk aversion due to Greek downgradesFed Funds Futures
0
0.2
0.4
0.6
0.8
1
1.2
Jan 10 Apr 10 Jul 10 Oct 10Implied Fed Fund rate from FFunds Futures
The market expects the Fed to hike in H2 2010 with a end year target of 1.1%
Implied Speculative USD Positions (against liquid major currencies)
-300000
-200000
-100000
0
100000
200000
Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10
1.15
1.25
1.35
1.45
1.55
Source : Bloomberg - DataStream – Dexia Asset Management
USD/EUR and Risk Aversion
1.21.251.3
1.351.4
1.451.5
1.551.6
1.65
Jul-08 Jan-09 Jul-09 Jan-10
0
50
100
150
200
250
300
350
USD/EUR (l.h.s.) Greece 10Y spread (vs Bund)
20
2010 - the end of a disliked USD ?
2009 Currency changes vs EUR
CHF
NOK
SEK
NZD
AUD
CAD
GBP
JPY
USD
- 10% - 5% 0% 5% 10% 15% 20% 25%
…but the current USD levels remain cheap in a longer term perspective
“Natural Funders”Low yieds with CA surplus
Comeback of the carry trades
USD/EUR and Purchasing Power Parity
0.7
1
1.3
1.6
Feb-86 Feb-91 Feb-96 Feb-01 Feb-06
0.7
1.0
1.3
1.6
USDEUR USDEUR PPP (1980-04 CPI average)
Expensive EUR
The USD follows long term cycles
Hig
h sh
ort r
ates
Sust
aine
d gr
owth
USD
und
erva
lued
Res
trict
ive
mon
etar
y po
licy
New
Eco
nom
yU
SD u
nder
valu
ed
USD Trade Weighted Index
60
80
100
120
140
160
180
1975 1980 1985 1990 1995 2000 2005
Danger Zone
1.40
AU
NZ
NO
JP CHSW
US
UKCA
EMU
0
3
5
-10 -5 0 5 10 15 20
C/A Balance (%GDP)
3M
th D
epos
it R
ate
Source : DataStream – Dexia Asset Management
21
JPY - still a lagging economyJapanese deflation, high public debt and weak internal demand will weigh on JPY
JPY/USD & Monetary Base Growth(from 2000 to 2009)
80
90
100
110
120
130
140
-20 -10 0 10 20 30 40
Relative Monetary Base Growth (US minus J P)
J PY/ USD
US drastic quantitative easing helped to sustain JPY till now but …
J apan GDP : Contribution to Growth
-6
-4
-2
0
2
4
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Private Consumption Public ConsumptionTotal Investment InventoryNX GDP
Japanese export driven growth will not be enough to bring GDP growth above 2% in 2010
CPI - Favorable Scenario
-2
-1
0
1
2
3
4
5
Q1 1999 Q1 2002 Q1 2005 Q1 2008
US J apan Euro area UK
Quantitative easing will persist for a while in Japan due to continuing deflation…
100
Source : DataStream – Dexia Asset Management
22
Norwegian krona benefits from good fundamentals…
Norway - Public Finances
0
5
10
15
20
Jan 99 Jan 02 Jan 05 Jan 08
Public Balance (%GDP)
Norway - Current Account
0
5
10
15
20
25
1989 1992 1995 1998 2001 2004 2007
Current account %GDP
Potential for more appreciation
7.80Unemployment Rates
-2
0
2
4
6
8
10
US EMU UK JP CA AU NZ SWD NW SWS
10Y Avg Last Data
NOK/EUR Fair Value
7
7.5
8
8.5
9
9.5
10
Jan 99 Jan 02 Jan 05 Jan 08NOK/EUR LT Value Actual NOK/EUR
Cheap NOK is not yet back to fair value
Comfortable Norway current account surplus
Still a positive budget account
Unemployment remains low and will sustain internal growth
Source : DataStream – Dexia Asset Management
23
Polish zloty will outperform other Eastern European currencies…
Poland : Convergence criteria
Maastricht criteria Poland current
Fiscal Balance: -6.25% of GDP
Long-term interest rate (12mth avge): 6.10%
HICP inflation: 4%
Public debt : 53% of GDP
1.7%
60%
-3%
6%
Real GDP Growth (%YOY)
-10-8-6-4-202468
10
Dec 99 Dec 01 Dec 03 Dec 05 Dec 07
Poland Hungary Czech Rep.
Poland’s prospects remain good for convergence
3Mth Yield Forward Change
-60
-40
-20
0
20
40
60
80
100
Jun 09 Sep 09 Dec 09
Poland Hungary Czech Rep.
PLN/EUR Evolution
3.00
3.40
3.80
4.20
4.60
5.00
J an 00 J an 02 J an 04 J an 06 J an 08 J an 10
Poland is not so bad positioned w.r.t. Maastricht criteria
Polish growth remains positive
Rate hikes will occur in 2010
PLN should recover toward previous crisis level
3.60
Source : DataStream – Dexia Asset Management
24
Agenda
I. Interest Rates Outlook
II. Currency Outlook
III. Credit Outlook
IV. Synoptic Table
25
The rally has just startedDon’t exit credit yet…spreads to tighten further in 2010
0
100
200
300
400
500
600
J an-73 J an-77 J an-81 J an-85 J an-89 J an-93 J an-97 J an-01 J an-05 J an-09
Opt
ion
Adju
sted
Spr
ead
Source : Datastream – Dexia Asset Management
-15
-10
-5
0
5
10
15
20
J an-73 J an-77 J an-81 J an-85 J an-89 J an-93 J an-97 J an-01 J an-05 J an-09
Cum
ulat
ed E
xces
s Re
turn
9 months of rally compared to 40
months of recovery on
average since 1970
Credit market is remunerative on the long term… Outperformance generated 1 year after the bottom
of the crisis (5.79%) exceeds the cumulative loss (-4.99%)
$ Credit over 4 decades and 6 crisis
26
20
30
40
50
60
70
J an-90 J an-93 J an-96 J an-99 J an-02 J an-05 J an-08
US
ISM
New
Ord
ers
-15%
-10%
-5%
0%
5%
10%
Indu
stri
al P
rodu
ctio
n % Y
oY
ISM New Orders IP
Exiting an economical recession context
Source : Dexia Asset Management, Datastream, Moody’s, Federal Reserve, Bankscope
Corporate activity is set to pick up
2-3 % growth has been an ideal environment for credit
Ideal for investment grade credit
Non performing loans cycle to peak at the end of Q2 2010
R² : 46%
-2.50
-2.00
-1.50
-1.00
-0.50
0.00
0.50
1.00
1.50
2.00
-3-0 0-1 1-2 2-3 3-4 >4
Real GDP Bucket
Quar
terl
y Ex
cess
Retu
rn (
%)
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
J un-85 J un-88 J un-91 J un-94 J un-97 J un-00 J un-03 J un-06 J un-09
Empl
oym
ent
Surv
ey Ind
ice
(%)
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Cha
rge
Off
(%)
ISM Manufacturing - Employment Survey US Charge Off Rates
27
Exiting an economical recession context
0
100
200
300
400
500
600
J an-74 J an-78 J an-82 J an-86 J an-90 J an-94 J an-98 J an-02 J an-06
Spre
ad T
o G
over
nmen
t (b
p)
0
5
10
15
20
US
Fede
ral Fu
nds
Rate
(%)
OAS FED
Source : Dexia Asset Management, Datastream
Monetary policy is not a risk
Fed policy rate over the last 40 years
Cumulated Spread changes before & after first rate hike
-50
-40
-30
-20
-10
0
10
20
30
40
50
-12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12
Months
Mon
thly
Spr
ead
Cha
nge
(bp)
1977 1988 1994 1999 2004
28
Balance sheet repairment supports credit in 2010
Source : Dexia Asset Management, Datastream, FDIC, Bankscope
Further strengthening of the capital base
From an ‘intensive care’ year into a ‘back to life’ year
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Dec-
02
Jun-0
3
Dec-
03
Jun-0
4
Dec-
04
Jun-0
5
Dec-
05
Jun-0
6
Dec-
06
Jun-0
7
Dec-
07
Jun-0
8
Dec-
08
Jun-0
9
Dec-
09
Loans Growth Deposits Growth
Deleveraging remains the focusUS commercial banks
Towards a new banking system (BIS, CRD, National regulators)‘More than a stricter regulatory scheme, the philosophy is to ensure that banks are sufficiently sound to refinance the real economy’
New regulation on capital-Higher minimum requirements-Better quality towards Core Tier 1 (equity, retained earnings)-Counter-cyclical provisioning philosophy
New leverage measure-Limit the balance sheet size
New liquidity constraint-30 days liquidity coverage ratio & liquid assets buffer
Implications for Financial debt
Enhanced bondholder protection
Limited grandfathering of the current Tier 1 debt as capital: greater incentive to call
Current callable Lower Tier 2 debt will loose their capital status over time (step-ups will no longer be accepted)
0
50
100
150
200
250
300
350
400
450
Sep-07 Dec-07 Mar-08 J un-08 Sep-08 Dec-08 Mar-09 J un-09 Sep-09 Dec-09
$ bn
7
8
8
9
9
10
10
11
11
12Ti
er 1
cap
ital
rat
io
Total Loss Total Capital Tier 1 Ratio
29
2.00
2.50
3.00
3.50
4.00
4.50
5.00
5.50
6.00
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Deb
t To
Profi
ts
0
50
100
150
200
250
300
350
400
Spre
ad
Total Debt/ Operating Income Spread BBB+
Balance sheet repairment supports credit in 2010
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
500000
Jan-9
0
Jan-9
2
Jan-9
4
Jan-9
6
Jan-9
8
Jan-0
0
Jan-0
2
Jan-0
4
Jan-0
6
Jan-0
8
M&A Volume
Source : Dexia Asset Management, Bloomberg, Datastream, Moody’s
Focus on revenues generation
The cyclical rebound of non-financials
Still in deleveraging mode
Opportunistic merger & acquisition can surface again
-40
-20
0
20
40
60
80
100
Q1
1990
Q3
1991
Q1
1993
Q3
1994
Q1
1996
Q3
1997
Q1
1999
Q3
2000
Q1
2002
Q3
2003
Q1
2005
Q3
2006
Q1
2008
Q3
2009
Lend
ing
surv
ey n
et t
ight
enin
g (%
)
0
2
4
6
8
10
12
14
Moo
dy's
Def
ault
Rat
e
US C&I Loan Survey Moody's Default Rate
Corporate health is improving
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Sep-
07
Dec
-07
Mar
-08
Jun-
08
Sep-
08
Dec
-08
Mar
-09
Jun-
09
Sep-
09
Dec
-09
Mar
-10
Jun-
10
Sep-
10
Net
Inc
ome
Gro
wth
( -
1 y)
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Sale
s G
row
th (
-1
y)
Net Income Growth Sales growth
Aggresive costs cutting & capex reduction
Default rate expectation tends
to its long term average 4.8%
30
2%
4%
6%
8%
10%
12%
14%
16%
Jan-9
0
Jan-9
2
Jan-9
4
Jan-9
6
Jan-9
8
Jan-0
0
Jan-0
2
Jan-0
4
Jan-0
6
Jan-0
8
Jan-1
0
Cash
Ass
ets
% T
ota
l (
$%)
Balance sheet repairment supports credit in 2010
15
25
35
45
Q1 1
990
Q2 1
991
Q3 1
992
Q4 1
993
Q1 1
995
Q2 1
996
Q3 1
997
Q4 1
998
Q1 2
000
Q2 2
001
Q3 2
002
Q4 2
003
Q1 2
005
Q2 2
006
Q3 2
007
Q4 2
008Liq
uid
Ass
ets
on S
hort
Term
Lia
bilit
ies
(%)
-50
0
50
100
150
200
250
300
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Eur
Billio
ns
Supply Redemptions Net Supply
Source : Dexia Asset Management, Datastream
US Banks increased liquid assets buffer Aggressive cost cutting & pre-financing increase cash on Non-fin balance sheets
Liquidity stays at the central stage
Non-financials supply – lower than in 2009 huge redemptions and pre-financing
Reopening of the primary market for covered & senior bonds
Desintermediation and liquidity
focus
New regulation will impose a minimum liquidity
requirement
0%
10%
20%
30%
40%
50%
60%
% covered % Govt Guaranteed % Senior Non Guaranteed
2009 2010
Gro
ss 2
60
bn
Net
-31
bn
Gro
ss 2
09
bn
Net
-14
bn
Gro
ss &
Net
27
6 b
n
Gro
ss 2
40
bn
Net
-94
bn
Gro
ss 3
75
bn
Net
-13
bn
Gro
ss 6
0 b
n
Net
38
bn
31
Credit Strategy 2010
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1Ja
n-9
9Ju
l-99
Jan-0
0Ju
l-00
Jan-0
1Ju
l-01
Jan-0
2Ju
l-02
Jan-0
3Ju
l-03
Jan-0
4Ju
l-04
Jan-0
5Ju
l-05
Jan-0
6Ju
l-06
Jan-0
7Ju
l-07
Jan-0
8Ju
l-08
Jan-0
9Ju
l-09
Spre
ad
To
yiel
d R
ati
o (%
)
3.15%
4.98%
6.30%
9.87%
7.09%
0.16%0.73%
1.19%
3.10%
1.71%
0%
2.22%
4.45%
6.43%
4.49%
0%
2%
4%
6%
8%
10%
12%
AAA AA A BBB I nvestmentGradeI mplied Default Rate with Recovery Rate = 30%
Average 5Y Historical Default RateWorst 5Y Historical Default Rate
2
3
4
5
6
7
8
Jan
-05
Se
p-0
5
Ma
y-0
6
Jan
-07
Se
p-0
7
Ma
y-0
8
Jan
-09
Se
p-0
9
Cre
dit
Yie
ld -
Div
iden
d Y
ield
(%
)
Yield Gap
Source: Dexia Asset Management, iBoxx, Datastream
Spreads imply a default rate of 7.09% over the next 5 years versus 1.71% historically
Risk premium accounts for50% of yield
Credit valuation is still attractive…
Technicals favour credit bonds over sovereign bonds Credit - Equity premium is narrowing
Rising dividend expectations will
favour equity, however
demand for credit from
institutionals will remain strong
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
2003 2004 2005 2006 2007 2008 2009 2010
Corp % GDP Govt % GDP
32
Ove
rwei
ght
Source: Dexia Asset Management, iBoxx
Credit Strategy 2010
Auto
Financial services
Health Care
Media
Bank LT2
Bank Upper tier 2
Ins Senior
Ins Sub
BasicChemicals
Construction
Food
IndustrialsOilRetailTelecom
Travel
Utilities
Bank Tier 1
Bank Senior
50
150
250
350
450
550
650
750
850
950
Average Credit Quality
Spre
ad T
o G
ovt
AA- A+ A A- BBB+ BBB BBB-
IssuerNational
Champion
Diversified Earnings
profile
Strong asset quality
Capital & liquidty buffer
Strong franchise- wholesale
market
Potential winner new
regulation
Gain on T1 debt - exit govt support
BNP v v v v v x xBPCE v v v v v x xCitigroup v v x v v x vCredit Suisse v v v v v x xRBS v v x x v x vSan Paolo IMI v v v v v v xSantander v v v v v v xSoc. Générale v v v v v x x
Be long credit …financial sector remains our core strategy
Relative attractiveness of the financial sector Switch from Non-financial defensive issuers into more cyclical issuers
Te
lec
om
Ita
lia
- T
ele
co
m
Pem
ex
– O
il &
Gas
Veo
lia
– U
tili
tie
s
Sab
ic –
Ch
em
ica
ls
Ber
tels
ma
n –
Me
dia
BA
T –
To
ba
cco
La
farg
e –
Co
ns
tru
cti
on
CE
Z –
Uti
liti
es
Ma
n –
In
du
str
ials
Favour improving fundamentals and better liquidity names within higher beta names
Arc
elo
r –
Bas
ics
0
100
200
300
400
500
Non Fin AAA Non Fin AA Non Fin A Non Fin BBB
Libor
Spre
ad
33
Agenda
I. Interest Rates Outlook
II. Currency Outlook
III. Credit Outlook
IV. Synoptic Table
34
Synoptic Table
Current Q1 2010 Q4 2010
Fed Fund Target 0.25 0.25 0.25
2 Years Interest Rate 1.15 0.80 1.10
10 Years Breakeven Rate 2.40 2.30 2.60
10 Years Interest Rate 3.90 3.60 4.20
2s10s Curve 275 280 310
Eonia Rate 0.35 0.35 1.00
2 Years Interest Rate 1.35 1.20 2.00
10 Years Breakeven Rate 2.00 1.90 2.10
10 Years Interest Rate 3.40 3.30 3.80
2s10s Curve 205 210 180
USD/EUR 1.44 1.52 1.40
JPY/USD 91.00 85.00 100.00
GBP/EUR 0.90 0.95 0.90
AUD/USD 0.89 1.00 0.85
CAD/USD 1.05 1.00 1.10
NOK/EUR 8.35 8.20 7.80
SEK/EUR 10.40 10.10 9.80
PLN/EUR 4.16 4.00 3.80
HUF/EUR 273.00 270.00 290.00
CREDIT Euro Corporate Spread 166.00 145.00 90.00
USA INTEREST
RATE
GERMANY INTEREST
RATE
CURRENCY
Source : Dexia Asset Management
35
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Money does not perform. People do.
36
Disclaimer
Money does not perform. People do.
This document is published purely for the purposes of information, it contains no offer for the purchase or sale of financial instruments does not comprise investment advice and it is not confirmation of any transaction unless expressly agreed otherwise. The information contained in this document was obtained from a number of different sources. Dexia Asset Management exercises the greatest care when choosing its sources of information and passing on this information. Nevertheless errors or omissions in those sources or processes cannot be excluded a priori. Dexia AM cannot be held liable for any direct or indirect damage or loss resulting from the use of this document. The contents of this document may be reproduced only with the prior written agreement of Dexia AM. The intellectual property rights of Dexia AM must be respected at all times.
Warning : If this document mentions the past performances of a financial instrument or index or an investment service, refers to simulations of such past performances or contains data relating to future performances, the client is aware that those performances and/or forecasts are not a reliable indicator of future performances.
Moreover, Dexia AM specifies that:• in the case where performances are gross, the performance may be affected by commissions, fees and other charges;• in the case where the performance is expressed in another currency than that of the investor’s country of residence, the returns mentioned may increase or decrease as a result of currency fluctuations.
If this document makes reference to a particular tax treatment, the investor is aware that such information depends on the individual circumstances of each investor and that it may be subject to change in the future.
This document does not comprise any investment research as defined in article 24, §1 of Directive 2006/73/CE dated 10 August 2006 implementing Directive 2004/39/CE of the European Parliament and Council. If this information is a marketing communication, Dexia AM wants to clarify that it was not designed according to the legal requirements to promote the independence of investment research, and it is not subject to any prohibition on dealing prior to the dissemination of the investment research.
Dexia AM invites the investors to always consult the fund prospectus before investing in a fund. The prospectus and other information relating to the fund are available on our site at www.dexia-am.com.