Corporate Bond Issuance in Euroclear International Securities Services Philippe Laurensy, Euroclear Euroclear Collateral Conference May 2014

Agenda Corporate Bond Issuance Evolution Euroclear as Issuer CSD Issuance overview through Euroclear

Corporate Bond Issuance Evolution

Financing Options Raise Equity Bank Financing Capital Markets Advantages Performance driven profit sharing No fixed costs Small cap markets Flexible borrowing Well established market Acknowledged expertise Predictable cash flow Sophisticated and more liquid market Robust Investor base Predictable cash flow Tax effectiveness No influence on corporate governance Disadvantages Competitive pricing Corporate governance Banks deleveraging Rates set by lender Reduced lending appetite due to increased capital costs Syndicated loans less liquid Increased regulation Limited access for small/lower rated issuers

Growth of International Corporate Bonds 2008-2013 Bond Issuance Globally Bond Issuance with Euroclear Group The left side graph represents global bond issuance in the world. The right side graph represents bond issuance within Euroclear Group (ICSD + 6 sister CSDs) You will clearly see the growth of corporate bond issuance in comparison with other issuing entity profiles. Source: Dealogic Nov 2013. Outstanding volumes in EUR equivalent millions International debt (Dealogic definition): where the borrower is an off-shore entity or if the security is governed by the rules of more than one market or when the security is a cross-border instrument Source:

Corporate Bond Issuance Corporate entities will continue to be the main drivers of economic growth in the medium and long term What do you need ? Lowest possible cost of funding Secure funding Large scope of instruments Low cost to market

Corporate Bond Issuance Financial markets bring together: Issuers seeking funding to meet their business targets Investors seeking investment returns with well established cash flows Business growth results in: Expansion from domestic to international market focus Increasing multi-currency funding needs The search for a broader investor base International bond markets facilitate cross border participation and trading flexibility for market participants, globally International bond markets enable issuer to access a global pool of investors - not limited to domestic sources as bank loans tend to be. This global coverage is essential for the scale of funding and forex management needed by international conglomerates This vital source of funding develops gives issuers in the developed world access to emerging markets economies and growing pools of investment in Asia, South America, Middle East.

Euroclear as Issuer CSD 8

Euroclear Group Today >€24 trillion >900,000 >99% Assets in custody >99% European domestic debt coverage >900,000 Securities covered >2000 Institutional clients from 90 countries >1 million Transactions settled per day >€570 trillion Transactions settled 2013 data number of eligible secs for Jan'14: 1,167,338 AA+ Rating by S&P and Fitch for the past 10 years >€700 billion Collateral Highway transactions daily 53 Settlement currencies 2013 data ST008 9

Euroclear Around the World… We serve clients in their own language across all time zones Locate the various (I)CSD, Rep offices and the Branch office of Hong Kong Complementing its role as the premier ICSD, Euroclear Bank also provides CSD services to a number of domestic markets. Euroclear CSDs provide the markets with local securities settlement, i.e. stock exchange and Over-The-Counter (OTC) – and custody services, which vary from market to market, depending on the local market conditions and regulations. A brief history of the evolution of the Euroclear Group: Euroclear France, the CSD of France joined the Euroclear group in January 2001 (former Sicovam). Euroclear Nederland, the CSD of The Netherlands, joined the Euroclear Group in May 2002 (former Necigef). Euroclear UK & Ireland Limited, CSD of the United Kingdom and for Irish equities, joined in September 2002 (former CREST). Euroclear Belgium, CSD of Belgium, joined the group in January 2006 (former CIK). Euroclear Sweden, CSD of Sweden (former VPC) and Euroclear Finland (former APK) also joined the group recently in November 2008. Euroclear acquired EMXCo in January 2007. EMXCo operates the EMX Message System, which is the de-facto standard for fund-order routing in the United Kingdom and provides order-routing services throughout Europe. This is an important step in Euroclear’s strategy to improve the efficiency of both domesticand cross-border funds processing. In April 2008, Euroclear Bank has reinforced its local presence in Hong Kong by creating a new operations centre, delivering a wide range of operational services during the Asian time zone to clients in the Asia-Pacific region, the Euroclear Bank SA/NV Hong Kong Branch. Next to this Euroclear Bank also has representative offices where clients can find a commercial group in order to assist them in their own language and time zone. These rep offices can be found in New York, Frankfurt, Tokyo, Beijing and Singapore. In April 2009, Euroclear acquires Xtrakter, owner of the TRAX trade matching system for fixed-income, repo, equity and derivatives transactions, which has an established track record in providing innovative, secure and reliable systems for the financial services sector. TRAX has been awarded Approved Reporting Mechanism (ARM) status by the Financial Services Authority (FSA) of the United Kingdom, Autorité des Marchés Financiers (AMF) of France and the Authority for the Financial Markets (AFM) of the Netherlands in conjunction with Article 25 of the Markets in Financial Instruments Directive (MiFID), and helps clients comply with the National Bank of Belgium’s (NBB) reporting obligations in Belgium. Xtrakter is also authorised by the FSA as a Service Provider. Currently, TRAX processes over 2 million transactions daily on behalf of its trade reporting subscribers. Xtrakter also provides a wide range of market (pricing) data for approximately 12,000 international securities and internationally traded government bonds, as well as securities reference data for more than 150,000 government bonds, corporate bonds, medium-term notes and private derivative issues 10 10

Issuance Overview through Euroclear 11 11

Why International Securities ? Benefits Corporate issuers Your investors Lowest cost of funding Large customer base and direct access to the buy side Robust and well accepted procedures for all asset classes, including multi-listing, multi-currency, multi-governing laws Simultaneous offering to worldwide global investors Single point of contact / relationship for the issuer for ease of information and process flows Full asset servicing for coupon payments, tax certifications, legal certifications, corporate events, etc Full asset optimisation to leverage triparty and banking services Single point of entry to global range of trading partners Internationally recognised asset protection Low cost to market

Why Euroclear? Local Worldwide We help you move from a local to a worldwide issuance and investor base target Local Worldwide Limited to local jurisdiction and governing laws Limited currencies or swaps required Multiple agents required for issuance and asset servicing Limited investor base One standard for multi legal jurisdiction and framework Raise funds in the currency of your choice Single agent point of contact through lifetime of security International investor access

How to Issue International Securities ? Involve Euroclear when discussing your new issues with your legal counsel and arrangers Let us know what is important to you: Worldwide distribution Multi-currency options Business intelligence We will assist you in finding the optimal structure for your needs

International Securities A wide range of financial instruments Issuance regulations we handle Sec Reg Reg S / 144A 144A 3c7 REG D Fixed Income (in Nominal): Medium Term Notes (MTNs) (Euro) Bonds (Euro) Commercial Paper (Euro) Certificates of Deposit Notes Convertible Collateralised Debt Obligations Collateralised Mortgage Obligations Asset Backed Securities Mortgage Backed Securities Global Depositaries Notes Reverse Convertible Bonds Equity Linked Notes Risk Linked Notes Treasury Bills Debentures Extendable Bonds Sukuks (Islamic Financing)