Morning report

Nervous Markets
14-Sep-2011
Nervous markets were heavily affected by rumours. Today Moody's downgraded French banks. The financial are very nervous for the time being. Yesterday various rumours heavily affected markets. Yesterday morning stock markets opened briefly positive and the Euro strengthened versus the US Dollar. But markets turned bearish really quickly after a controversial column in the Wall Street Journal, citing an anonymous BNP Paribas executive saying that the bank had run out of dollar-funding options. Not long after the article was released, the company came out and said it was still able to access dollar funding, and that put a floor on the market. A bit later a rumour said that Nicolas Sarkozy and Angela Merkel were going to give a press conference on some matter related to Greece and some even indicated that they were going to announce some sort of action. EURUSD increased on the news. And then not long after that, the also this rumour was denied. But later in the day it was reported and also confirmed that on Wednesday Merkel, Sarkozy, and Papandreou would hold a telephone meeting. Monday market talks about possible Chinese purchase of Italian government bonds contributed to the optimism. Yesterday these talks seemed to be weakly founded. The Chinese seemed more interested in buying Italian industrial asset, not bonds. But yesterday there were some rumours about a bailout of peripheral Europe from the BRICs in a coordinated action, but the confidence in such rumours seemed low. In the US session S&P500 ended up 0.9 per cent. Long-term government bond yields were slightly up. EURUSD is currently down 0.3 per cent from yesterday morning. Early this morning the rating agency Moody's Investor Service has downgraded both Societe Generale and Credit Agricole with one notch each, citing their exposure to Greec's debt. Moody's had put the banks under review for possible downgrade on June 15, citing their exposure to Greece's debt crisis. The ratings agency said it was extending its review of BNP Paribas, but any downgrade was unlikely to be by more than one notch. During the review period, Moody's concerns about the structural challenges to banks' funding and liquidity profiles increased, in light of worsening of refinancing conditions. Moody's cut Societe General's debt and deposit ratings by one notch to Aa3 from Aa2. The outlook on the long-term debt ratings was negative. However, Moody's said it believed Societe General has a level of capital that can absorb potential losses it is likely to incur on its Greek government bonds and to remain capitalized at a level consistent with its Bank Financial Strength Rating even if the creditworthiness of Irish and Portuguese government bonds were to deteriorate further. Credit Agricole's long-term debt and deposit ratings were cut by one notch to Aa2 from Aa1. Yesterday morning the Norwegian Krone had weakened substantially against the Euro and EURNOK was back in the trading range 7.70 to 7.95 and remained above 7.70 for most of the day. Currently EURNOK is quoted at 7.74, up 0.6 per cent from yesterday morning. Also the import weighted currency index (I-44) has weakened to a level consistent with Norges Bank's forecast for Q3 and Q4. The faith in substantial rate cuts from the central bank has thus been dampened. Forward NOK interest rates have increased more than 20 bps during yesterday. 3m NIBOR was fixed at 3.08 per cent yesterday, up 10 bps from the previous day. In Sweden the annual inflation rate was 3.4 percent in August, up from 3.3 percent in July. Higher prices for clothing and footwear and increased interest costs for owner occupied housing contributed upwards. The price increases were counteracted by lower prices for fuel and package holidays. The inflation rate with constant interest costs, CPIF, was 1.6 percent, unchanged from the previous month and in line with forecasts. kyrre.aamdal@dnbnor.no

NOK & 3m NIB OR

8.00 7.80 7.60 7.40 4-Aug 24-Aug 3m ra. 3.20 3.10 3.00 2.90 13-Sep EURNOK

SEK & 3m STIBOR

9.5 9.3 9.1 8.9 8.7 4-Aug 24-Aug 3m ra.
Headquarters 0021 Oslo Stranden 21 Offices Abroad New York London Shanghai Singapore Stockholm Sales Oslo (+47) Equity Fixed Income FX/IR Regional sales (+47) Bergen Bod Fredrikstad Hamar Haugesund Lillehammer Kristiansand Oslo Stavanger Troms Trondheim Tnsberg lesund +47 03000

2.60 2.58 2.56 2.54 2.52 13-Sep EURSEK

+1 212 681 3800 +44 207 6211111 +86 21 6132 2888 +65 6220 6144 +46 8 4734850 22 94 89 40 22 01 78 20 22 01 76 50 55 75 69 61 52 61 38 22 51 77 73 33 73 21 55 39 05 72 27 07 01 67 62 58 37 84 95 87 41 14 09 32 28 76 92 96 74 13 60 80 60 50 69 06 27 62 50 69 80 89 00 09

Research Regional Sales (+47) Eirik Larsen 22 01 76 55 Research FX/IR (+47) ystein Drum Kjersti Haugland Ole Andr Kjennerud Knut A. Magnussen Maren Romstad Camilla Viland Kyrre Aamdal Credit Research (+47) Ole Einar Stokstad Mikael L. Gjerding se Haagensen Rolv Kristian Heitmann Thomas Larsen Knut Olav Rnningen 22 22 22 22 22 22 22 22 22 22 22 22 22 01 01 01 01 01 01 01 01 01 01 01 01 01 76 78 78 76 76 77 76 78 77 76 76 77 78 56 03 24 63 64 41 67 37 62 93 77 36 15

Yesterday's key economic events (GMT) 07:30 Sweden CPI 07:30 Sweden CPIF 08:30 UK CPI 12:30 USA Import prices Todays key economic events (GMT) 09:00 EMU Industrial prod. 12:30 USA PPI ex. food&energy 12:30 USA Retailsales ex. Vehicles

As of Aug Aug Aug Aug As of Jul Aug Aug

Unit y/y % y/y % y/y % m/m % Unit m/m % m/m % m/m %

Prior 3.3 1.6 4.4 0.3 Prior -0.7 0.4 0.5

Poll Actual 3.4 3.4 1.6 1.6 4.5 4.5 -0.4 -0.4 Poll DnB NOR 1.0 0.2 0.2

14-Sep-2011

Morning report

Oil spot & N OK TWI

130 110 90 70 4-Aug 100 98 96 94 24-Aug 13-Sep $/b

SPOT R ATES AND FORECASTS (Source: Reuters and DnB NOR Markets)
FX USDJPY EURUSD EURGBP EURCHF EURNOK EURSEK EURDKK USDNOK JPYNOK SEKNOK GBPNOK USDSEK JPYSEK NOKSEK GBPSEK Prior 76.94 1.369 0.867 1.204 7.684 9.132 7.450 5.616 7.305 0.842 8.868 6.685 8.682 1.190 10.540 Last 76.88 1.364 0.866 1.204 7.725 9.176 7.449 5.671 7.366 0.844 8.931 6.726 8.749 1.188 10.599 % -0.1% -0.3% -0.2% -0.1% 0.5% 0.5% 0.0% 1.0% 0.8% 0.2% 0.7% 0.6% 0.8% -0.2% 0.6% In 1 m ...3 m 80 80 1.45 1.50 0.87 0.90 1.20 1.20 7.50 7.80 9.30 9.30 7.45 7.45 5.17 5.20 6.47 6.50 0.81 0.84 8.6 8.7 6.41 5.13 1.24 10.69 6.20 4.96 1.19 10.33 ...6 m ...12 m 80 90 1.45 1.35 0.88 0.82 1.20 1.25 7.70 7.70 9.10 8.80 7.45 7.45 5.31 5.70 6.64 6.34 0.85 0.88 8.8 9.4 6.28 5.02 1.18 10.34 6.52 5.87 1.14 10.73 FX AUD CAD CHF CZK DKK GBP HKD ISK KWD LTL LVL NZD PLN SGD RUB USD 1.0214 0.9910 0.8823 18.02 5.4618 1.5758 7.8074 117.70 0.2758 2.5313 0.5203 0.8170 3.1892 1.2481 30.2910 % -1.02% 0.48% 0.22% 0.33% 0.30% -0.17% 0.03% 0.27% -0.05% 0.29% 0.29% -0.75% 0.66% 0.62% 0.32%

NOK TWI ra.

EUR vs GBP & CHF

1.30 1.20 1.10 1.00 0.90 4-Aug 24-Aug GBP r.a 0.89 0.87 0.85 0.83 0.81 13-Sep CHF

Gov. Bonds, 10y

2.50 2.25 2.00 1.75 4-Aug 24-Aug NOK, ra. 3.00 2.80 2.60 2.40 2.20 2.00 13-Sep SEK

1m 3m 6m 12m 3y 5y 7y 10y

JPY and DowJones

14 12 10 8 4-Aug 24-Aug USDJPY ra. DowJones, 1000 81 79 77 75 13-Sep

10y 10y yield vs bund

SWAP AN D MON EYMARKET RATES (Source: Reuters) N IBOR STIBOR EURIBOR USD LIBOR Prior Last Prior Last Prior Last Prior Last 2.89 2.96 2.31 2.32 1.29 1.28 0.23 0.23 2.98 3.08 2.52 2.51 1.48 1.48 0.34 0.35 3.10 3.19 2.55 2.54 1.69 1.69 0.51 0.52 3.12 3.28 2.60 2.58 1.85 1.85 0.67 0.67 2.91 2.94 1.96 1.96 1.60 1.55 0.67 0.67 3.24 3.24 2.19 2.19 1.95 1.92 1.20 1.17 3.50 3.49 2.39 2.39 2.22 2.22 1.69 1.67 3.76 3.76 2.52 2.52 2.51 2.52 2.19 2.17 GOVERNM ENT BON DS (Source: Reuters) N ORWAY SWEDEN GERMANY US Prior Last Prior Last Prior Last Prior Last 117.4 112.95 116.926 116.93 104.23 104.17 101.1875 101.42 2.23 0.47 2.25 0.46 1.77 1.75 1.76 1.79 0.01 -0.04 INTEREST RATE FORECASTS SWEDEN GERMANY 3m stibor 10y swap 3m euribor 10y swap 2.65 3.00 1.65 3.00 2.85 3.25 1.70 3.25 2.90 3.25 1.70 3.25 1.99 0.23 US 3m libor 10y 0.35 0.30 0.30 1.98 0.19

In 3m 6m 12m
1.49 1.44 1.39 1.34

N ORWAY 3m nibor 10y swap 3.20 4.25 3.50 4.50 3.70 4.50

swap 3.00 3.25 3.25

USD and gold

2000 1900 1800 1700 1600 1500

4-Aug 24-Aug 13-Sep EURUSD ra. Gold

EU RSEK & OMXS

9.4 9.2 9.0 8.8 4-Aug 500 450 400 350 13-Sep EURSEK

FRA NOK SEP DEC MAR J UN FRA SEK SEP DEC MAR J UN

3m 3.08 2.76 2.48 2.45 3m 2.51 2.17 1.89 1.74

Prior 3.09 2.76 2.46 2.45 Prior 2.50 2.17 1.91 1.75

chg -0.01 0.00 0.02 0.00 chg 0.01 0.00 -0.02 -0.01

TWI NOK SEK EUR USD GBP Comm. Brent spot Brent 1m Spot gold

Today 96.66 121.05 106.26 77.26 79.40 Today 116.0 111.4 1820.0

% 0.69 0.45 - 0.13 0.20 Last 116.0 111.9 1820.0

Stock ex. Today Dow Jones 11,105.9 Nasdaq 2,532.2 FTSE100 5,174.3 Eurostoxx50 2,036.6 Dax 5,166.4 Nikkei225 8,509.2 Oslo 349.52 Stockholm 405.21 Copenhagen 439.11

% 0.4% 1.5% 0.9% 2.1% 1.9% 0.0% -0.2% 1.6% 0.2%

24-Aug

OMXS ra.

Morning report
14-Sep-2011
IMPORTANT/DISCLAIMER This email, and any files attached with it, must be seen as marketing material unless the criteria for preparing investment research, according to the Norwegian Securities Trading Regulation 2007/06/29 no. 876, are met. The information contained in this e-mail, and any files attached with it, is confidential and intended solely for the use of the individual they are addressed to. If the reader of this message is not the intended recipient you are hereby notified that you have received this document in error, and that any review, distribution or copying of this message is strictly prohibited. If you have received this communication in error, please contact the sender by return email and destroy all copies of the original message. Please advise the sender immediately if you or your employer do not consent to Internet e-mail messages of this kind. Any attached report is based on information obtained from public sources that DnB NOR Markets believes to be reliable but which DnB NOR Markets has not independently verified, and DnB NOR Markets makes no guarantee, representation or warranty as to its accuracy or completeness. Any opinions expressed herein reflect DnB NOR Markets judgment at the time the report was prepared and are subject to change without notice. Confidentiality rules and internal rules restrict the exchange of information between different parts of DnB NOR Markets/DnB NOR Bank ASA and this may prevent employees of DnB NOR Markets who are preparing this report from utilizing or being aware of information available in DnB NOR Markets/DnB NOR Bank ASA which may be relevant to the recipients decisions. This report is not an offer to buy or sell any security or other financial instrument or to participate in any investment strategy. No liability whatsoever is accepted for any direct or indirect (including consequential) loss or expense arising from the use of this report. Distribution of research reports is in certain jurisdictions restricted by law. This report is for clients only, and not for publication, and has been prepared for information purposes only by DnB NOR Markets - a division of DnB NOR Bank ASA registered in Norway number NO 984 851 006 (the Register of Business Enterprises) under supervision of the Financial Supervisory Authority of Norway (Finanstilsynet) and the Monetary Authority of Singapore, and on a limited basis by the Financial Services Authority of UK. Further information about DnB NOR Markets can be found at website dnbnor.no. Additional information for clients in Singapore This email, and any materials attached with it, has been distributed by the Singapore branch of DnB NOR Bank ASA. It is intended for general circulation and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should seek advice from a financial adviser regarding the suitability of any product referred to in any attached report, taking into account your specific financial objectives, financial situation or particular needs before making a commitment to purchase any such product. Recipients of this report should note that, by virtue of their status as accredited investors or expert investors, the Singapore branch of DnB NOR Bank ASA will be exempt from complying with certain compliance requirements under the Financial Advisers Act, Chapter 110 of Singapore (the FAA), the Financial Advisers Regulations and associated regulations there under. In particular, it will be exempt from: - Section 27 of the FAA (which requires that there must be a reasonable basis for recommendations when making recommendations on investments). Please contact the Singapore branch of DnB NOR Bank ASA at +65 6212 0753 in respect of any matters arising from, or in connection with, any attached report. We, the DnB NOR Group, our associates, officers and/or employees may have interests in any products referred to in this email, and any materials attached with it, by acting in various roles including as distributor, holder of principal positions, adviser or lender. We, the DnB NOR Group, our associates, officers and/or employees may receive fees, brokerage or commissions for acting in those capacities. In addition, we, the DnB NOR Group, our associates, officers and/or employees may buy or sell products as principal or agent and may effect transactions which are not consistent with the information set out in this email, and any materials attached with it. In the United States Each research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the views expressed in this report accurately reflect that research analysts personal views about the company and the securities that are the subject of this report; and (ii) no part of the research analysts compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in this report. This email, any files attached with it, is being furnished upon request and is primarily intended for distribution to Major U.S. Institutional Investors within the meaning of Rule 15a-6 of the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934. To the extent that this report is being furnished, or will be disseminated, to non-Major U.S. Institutional Investors, such distribution is being made by DnB NOR Markets, Inc., a separately incorporated subsidiary of DnB NOR that is a U.S. broker-dealer and a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. Any U.S. recipient of this report seeking to obtain additional information or to effect any transaction in any security discussed herein or any related instrument or investment should call or write DnB NOR Markets, Inc., 200 Park Avenue, New York, NY 10166-0396, telephone number 212-681-3800 or fax 212-681-4119.