Вы находитесь на странице: 1из 20

WEEKLY

INVESTMENT NOTES
SWITZERLAND

09.10

09 october 2015

KEY/NEW INVESTMENT IDEAS


Fixed Income
Last year we recommended buying the GM 1.875 % 2019 in EUR. Given the
new issue GM in USD, we would recommend exchanging the old EUR for the
new USD, thus shortening the duration and gaining 20bps yield, adjusted for
currency basis.
Equities
Take advantage of the market rebound to reduce sectors that are uncertain in
the medium term, which is typically the case for commodities (i.e. Glencore)
and stocks, which outperformed and look fairly valued (i.e. AB Foods).

Increase exposure to European banks (i.e. BNP) and US Tech (i.e. Alphabet)
as we believe there is value to extract from these two sectors in Q4.

Invest in a 3-year USD Leveraged Certificate on Abbott (R), Abbvie (R) and
Merck (R) with a barrier 60% at maturity and participation level of 200% to
the basket, following the recent healthcare sell-off, which offers attractive
entry points.

Buy the LO Alpha Japan Fund: the time has come to accumulate Japanese
equities, which suffered from the Chinese turmoil, and are now offering nice
entry levels from a fundamental, technical and valuation perspective.

Also featured - Highlights on


H
 edge Funds, with a quarterly
review from our HF Open
Architecture Team
p. 13

Table of contents
Fixed income

p.04

Equities p.06
Weekly publication of the Specialised Portfolio
Management Team of Lombard Odier
Contacts
CP-ADVISORY@lombardodier.com

important information material


with non personalised recommendations
Authorised for distribution in Switzerland only.
Please see important information at the end of this document.

Currencies p.14

The Q3 earnings kick off


will certainly be the dominant
story next week to judge both
US economic strength and the
impact of the US dollar on
corporates. We reiterate our
message of selectivity
and agility

WEEKLY INVESTMENT NOTES

MARKET UPDATE
THIS PAST WEEK
Stocks continue to recover

Economic data

Global stocks started the quarter on a firm note as participants largely


shrugged aside disappointing service-sector data on both sides of the
Atlantic, focusing instead on the prospect of the US Federal Reserve
leaving interest rates lower for longer, following last Fridays weak
non-farm payrolls report. Indeed, US September payrolls were much
weaker than expected, with downward revisions to prior months. In
addition, expectations have grown that the European Central Bank,
Bank of Japan and Peoples Bank of China could soon ramp up their
current stimulus measures.

In the US, the widening in trade deficit, from USD 41.8bn in July
to USD 48.3bn in August, was not as bad as anticipated. In Europe,
German feeble August IP was in focus, echoing weak factory orders.
Indeed, German industrial orders fell unexpectedly in August, and
were revised down for July, in a sign that the slowdown in emerging
markets is beginning to take its toll on Europes biggest economy.
China FX reserves point to continued outflows as they fell another
USD 43bn last month, better than feared. This will help to reduce
worries that we could see another sharp yuan depreciation in the near
term. Finally, the IMF lowered its global outlook bringing the new
projections in line with the market consensus.

Oil prices move higher


Energy stocks rose sharply as Brent oil climbed back above USD
52 a barrel to a one-month high, supported by a weaker dollar and
continued expectations for lower US crude output amid anticipation
that the countrys rig count could decline again this week. Moreover,
Russia apparently is willing to hold talks with OPEC and non-OPEC
producers to discuss output, and lastly tensions over Syria are also
helping support prices.

US earnings season
Compared to 3Q14, sales are expected to fall 3%, while analysts
expect a decline of p.04 in EPS. Excluding the battered energy
sector, EPS is expected to increase by 2.2%. Given the recent
uncertainty over the global economic backdrop, a reassuring earnings
season would offer clear support to equity markets. Actual earnings
per share for the S&P 500 have exceeded estimates in each of the last
25 quarters. This routine beating of expectations is one of the reasons
why the beginning of the earnings season is often a period of positive
returns for the S&P 500.

Weekly performance (in USD)


5.00%
4.45%

4.50%

4.13%

4.00%
3.50%
3.00%
2.50%

2.26%

2.00%
1.50%

1.06%

1.00%
0.50%

0.06%

0.00%
Global Bonds

Global Convertibles

Global Equities

Global Commodities

Hedge Funds

Source: Bloomberg, 5 rolling days as of 07 October 2015


Past performance is not a reliable indicator of future performance.

Page 02/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

ECONOMIC CALENDAR

PERSPECTIVES
While the outlook for global growth has been further clouded
by weakness in manufacturing and persistent capital outflows
from EM economies, the negative print on US non-farm payrolls
triggered the classic return of the Bad news is Good news
confusion with a massive run in risky assets as it supported the
view of the Fed staying on hold
The US continues to be the focus of investors attention,
and the Q3 earnings kick off will certainly be the dominant
story next week to judge from both its economic strength and
the impact of the US dollar on corporates. We reiterate our
message of selectivity and agility. Although focus is likely to
be on financials next week (see our Earnings results calendar
tab on the right) we reiterate our conviction regarding the new
tech parent company of Google, Alphabet (see p. 08), and
recommend investors to position before their earnings report
in two weeks.

2015

USA

13/10

14/10 Retail Sales

As recently stated by our Investment Committee, and while


maintaining our defensive bias in equities, we recognize that
recent volatility spikes have created buying opportunities, and
Japan has emerged as one of them in an environment where
central banks are trapped into additional stimulus measures.

Europe

Asia

09/10 Wholesale
Industrial
Inventories MoM Production (FR,
IT)
12/10

15/10 Jobless Claims;


CPI; Empire
Manufacturing
16/10 Industrial
Production;
Michigan
Sentiment

CPI (GE, SW,


UK); PPI (UK);
ZEW (EC, GE)
CPI (FR, SP, IT),
Jobless Claims
(UK)
Unemployment
Rate (SW)
CPI (EC)

We therefore take the opportunity to reiterate our Overweight


Japan preference through the LOF Alpha Japan (USD
Hedged) P A (See p. 10).

Exports (ID);
Home Loans (AU)
Industrial
Production (IN);
Exports (IN)
Trade Balance
(CH)
PPI (CH, JN); CPI
(CH)
Unemployment
(AU); Industrial
Production (JN)
Exports (SI)

Source: Bloomberg, as of 08 October 2015

For fixed income, we reiterate prudence and selectivity with


respect to high beta debt and recommend investors use current
rebound to rebalance risk within portfolios by structurally
reducing the sovereign underweight.

EARNINGS RELEASE
2015

Turning to currencies, the lower US NFPs, and therefore lower


US dollar, supports our recent Neutral view on the greenback (a
downgrade from positive for the first time this year). We keep
our recommendation unchanged to reduce the USD overweight
in portfolios, and look at option strategies to do so (See p. 15
for pricing).
Looking beyond the earnings results and geopolitical tensions in
the Middle East (which cannot be ignored), investors concerned
about China over recent months will have more details on the
authorities plans to boost the domestic economy with Chinas
fifth plenum, which is expected to take place in mid-October.

North America

Europe

09/10
12/10
13/10 Johnson & Johnson; JP
Morgan; Intel
14/10 BlackRock; BoA; Wells
Fargo; Netflix
15/10 Goldman Sachs; Citigroup;
Schlumberger; Philip Morris
16/10 General Electric
Source: Bloomberg, as of 08 October 2015

Past performance is not a reliable indicator of future performance.

Page 03/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

FIXED INCOME
OUTLOOK

PORTFOLIO CONSIDERATIONS
Bad news is (again) good news: the weak NFP report, which sent
the FED rate hike expectations as far as 2016, gave a boost to a
renewed risk-on mood. The move was helped by the rebound
in commodities and the oil complex (up around 10% in just a few
days). After a sharp drop, sovereign yields are now trading at their
low ranges (2% for the US 10yr and 0.60% for the German 10yr),
credit spreads are coming down from their recent year high and
emerging markets are benefitting from positive fund flows. The
tone of the markets is slowly improving and global threats are
diminishing (but for how long?).

Of late, the major issue in credit markets has been the


idiosyncratic risk (VW, Glencore, Air France, DB, etc.) and
now the Q3 earnings season is set to start and will offer a better
picture of how corporates have adapted to the recent turmoil. In
the current fragile environment, we recommend taking profits
on names that have rebounded from the recent lows or which
show expensive valuations, and reinvest the proceeds in new
issues that offer interesting yield premiums. In that context, we
recommend switching out of General Motors (GM) 1.875% 2019
in EUR and buying the new GM 3.1% 2019 in USD, benefiting
from the shorter duration and a pick-up in yield (adjusted for the
currency basis).

Credit preferences

Like

Neutral

Dislike

Emerging

Corporate

High-Yield

Indexed-linked

Governement
Source: Bloomberg, as of 08 October 2015

Total return of bond indices YTD


2.50%
1.87%

1.86%

2.00%
1.50%
1.00%

0.80%

0.76%

0.58%

0.26%

0.50%
0.00%
-0.50%

-0.22%

-1.00%
-1.05%

-1.50%

-1.35%

-2.00%
US

EU

US

Inflation linked

EU

Governments

US

EU

Corporates

US

EU

High yield

JPM EMBI

EM

Source: Bloomberg, as of 08 October 2015


Past performance is not a reliable indicator of future performance.

Page 04/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

FIXED INCOME
INVESTMENT IDEAS
SWITCH IDEA: TRADE THE OLD GM IN EUR FOR THE
NEW ONE IN USD
Last year we recommended buying the GM 1.875 % 2019 in EUR.
Given the new issue GM in USD, we would recommend exchanging
the old EUR for the new USD, thus shortening the duration and
gaining 20bps yield, adjusted for currency basis.
On the back of the Volkswagen scandal, the whole automobile
sector suffered, with equities tumbling and credit spreads widening.
The companies most affected were German manufacturers. General

Motors did not suffer as much: spreads did widen but by a smaller
margin, of about 50 bps (5yr USD CDS). Before this event, GM bond
spreads contracted strongly in response to the 2014 case relating to
mechanical flaws discovered between 2003/2011, and which had
been overpriced by the market. During its last business conference
at the end of last month, the company announced a USD 5.5 bn cost
savings program, platform consolidation and development of its
luxury segment. The announcement was received very positively by
investors.

Switch idea GM

Source: Lombard Odier / Bloomberg, as of 08 October 2015

Past performance is not a reliable indicator of future performance.

Page 05/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

EQUITIES
OUTLOOK

PORTFOLIO CONSIDERATIONS
With the main indices having rallied 3% to 5% from recent lows,
some ST consolidation would not be a surprise given that we are
now close to important resistance levels (3300 on the EuroStoxx
50, 2000 on the SP500 and 8800 on the SMI). What follows this
first leg of rally will provide an important clue as to what the
rest of the year might look like for equity markets. In terms of
positioning, we are moderately constructive on the asset class and
reiterate our message of selectivity and agility. We would take
advantage of the recent rebound to reduce sectors we are not
comfortable with in the medium term, which is typically the case
for commodities (i.e. Glencore), or stocks, which performed well
and look fairly priced at current levels (i.e. AB Foods).

On the other hand, we pound the table again on Healthcare


and advise investing in a 3-year USD Leveraged Certificate on
Abbott (R), Abbvie (RF) and Merck (R) with a barrier 60% at
maturity and participation level of 200% to the basket (delta of
150% at inception). We also believe there is value to extract from
European banks (i.e. BNP) and US Tech (i.e. Alphabet) in the
coming weeks.
Last but not least, we think the time has come to accumulate
Japanese equities, which were not immune to the recent Chinese
turmoil, and are therefore offering attractive entry points from a
fundamental, technical and valuation perspective: invest in the LO
Alpha Japan Fund.

Regional preferences

Overweight

Neutral

Underweight

Europe

Switzerland

US

Japan

EM Equities

Canada &
Australia

Source: Lombard Odier Investment Strategy, as of 08 October 2015

Major market performances

Index

S&P 500
Euro Stoxx 50
SMI
CAC 40
FTSE 100
Nikkei 225
Shanghai SE Comp.
MSCI Em Ma BRIC
Hang Seng
Bovespa
Sensex
Russia

Value

5 days

1 month

3 months

YTD

1,995.83
3,232.44
8,697.67
4,685.71
6,337.45
18,141.17
3,143.36
237.54
22,367.62
48,914.32
26,794.89
1,679.53

3.9%
5.3%
2.2%
5.9%
4.4%
2.4%
0.0%
8.6%
7.3%
8.6%
2.4%
3.2%

1.3%
0.0%
-0.7%
1.9%
3.1%
4.1%
-0.7%
10.7%
5.2%
4.6%
5.8%
-2.0%

-2.5%
-2.9%
-1.7%
1.0%
-2.4%
-8.1%
-22.5%
-9.5%
-4.9%
-5.5%
-3.2%
5.3%

-3.1%
2.7%
-3.2%
9.7%
-3.5%
4.0%
-2.8%
-9.4%
-5.2%
-2.2%
-2.6%
20.3%

Source: Bloomberg, as of 08 October 2015


Past performance is not a reliable indicator of future performance.

Page 06/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

EQUITIES
INVESTMENT IDEAS
SELL AB FOOD GBP 3382 (REMOVED FROM RESEARCH
LIST TP GBP 3250)

AB Food

Its time to take profits after the recent outperformance (see


chart). Our analyst G. Eggiman removed ABF from the RL.

B Foods is up 9% YTD and +26% since its trough on 21 April,


A
outperforming the European retailing sector by a massive 25%.
The extraordinary growth story of the Primark brand was a key
driver behind ABFs share performance.

ollowing the increased interest in the company, we ended up


F
with a valuation at record-high multiples. In our sum-of-theparts valuation, we attribute an 18x EV/EBITDA multiple to the
Primark division, which generates only 60% of profits. We value
other divisions, which feature lower growth or more volatility,
at 12x EV/EBITDA (grocery) and 7.5x (sugar, agriculture and
ingredients). With almost 18x for the whole company, it is
therefore time to take profits.

Source: Bloomberg, as of 08 October 2015

e recommend investors switch to Pernod (14% upside),


W
recently added to our RL.
BNP Paribas

BUY BNP PARIBAS EUR 73.75 (R PT 72)

NP Paribas management has been strategically bold and also


B
sensible in capital management, and the bank benefits from strong
franchises in its three main activities: Retail Banking, CIB and
Investment Solutions.

The banks domestic French retail network (50% of activities)


is focused on urban, affluent clients and should benefit from the
gradual European economic recovery.

he bank also has a rapidly growing franchise in retail banking


T
overseas. In wholesale banking, BNP is a leader in European fixed
income and has a strong global equity derivatives franchise.

NP outlined an ambitious set of targets for the CIB division last


B
year. These included 6% p.a. revenue growth to 2016E, largely
through balance sheet expansion (e.g. 8% p.a. funded asset growth
in Corporate Banking and a 50 bps market share gain in FICC).
So far, these objectives have mostly been met or exceeded.

Source: Bloomberg, as of 08 October 2015

NP has a pretty strong solvency ratio with a CET1 ratio of


B
10.6% (vs a long term target of 10%) and a leverage ratio of 3.7%.
The management still has room to increase the leverage ratio in the
region of 4% and the CET1 ratio will be strengthened organically
by 40 pb/annum.

Past performance is not a reliable indicator of future performance.

Page 07/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

EQUITIES
INVESTMENT IDEAS
BUY ALPHABET (RF PT 750)

Alphabet chart

On 5 October, Google became Alphabet Inc., the holding


company bringing together the groups various activities. Aside
from the company name, little has changed. In effect, the number
of shares, price, voting rights (for A-Class shares), ISIN, and even
Bloomberg ID remain the same. What will, however, change
is the level of transparency and detail to which we will have
access as of mid-January.
Alphabet is now going provide disclosure on two distinct
divisions: 1) Google Core (search engine, Google Maps,
YouTube, Android, and Display), and 2) Google Non-Core,
namely Nest (domotics), Google X (robotics and artificial
intelligence), Calico (Life Science), and Google Ventures.
First, this is going to enable Google to set its decision-making
process in a more disciplined fashion, notably as regards capital
allocation. Second, it is going to give the market the opportunity
to better value the group: the core business currently trades
at a discount versus peers, while non-core activities are simply
unknown and seen as contributing negatively to the groups
earnings. Third and lastly, this opens up the way for possible spinoffs of certain non-core activities over the longer term.
Conclusion: We would buy ahead of 15 October results, as the
company enjoys a strong momentum in its Internet business and
will enjoy significant triggers in the coming months.
Glencore

GLENCORE GBP 121 (REMOVED FROM RESEARCH LIST)

Source: Bloomberg, as of 08 October 2015

Under our base case scenario/spot prices, the company, if able to


execute on the asset disposals, should stay below 3x net debt to
EBITDA, which will ensure investment grade and thus alleviate
fears that the Marketing business could face a strong increase in its
cost of financing.
Given the uncertain commodity price outlook and the timing of the
asset sales, there is a vicious circle, under which Glencore has to
further reduce net debt from the initial USD 20 bn target, and in a
shorter term horizon, or get downgraded to junk with its cost of
financing increasing to unsustainable levels.
Despite Glencores liquidity position, the stock has turned into
a highly speculative instrument. Hence, given the high level of
short-term uncertainties and the unclear asymmetry in the risk/
reward profile combined with heightened volatility, our analyst
removed Glencore from the Research List .
Our exit price target of 120 p is based on a sum-of-the-parts,
which assumes 0.8x NPV for industrial assets and 0.5x NPV for
Marketing.
Take advantage of the recent short squeeze on the commodities
sector to sell Glencore.

Source: Bloomberg, as of 08 October 2015

Past performance is not a reliable indicator of future performance.

Page 08/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

EQUITIES
INVESTMENT IDEAS
FOLLOW-UP ON SGS CHF 1808 (R PT 1985)

SGS chart

Competitor Bureau Veritas has announced a rather ambitious and


positive 5-year plan. Indeed, it believes that the global industry
offers potential sales revenues of over USD 200 bn per year,
and that the focus will lie on those segments that will be able to
generate organic growth of some 5-7%.
Importantly, SGS will also hold its investor days on 2930
October, when the new CEOs strategy will be presented. In office
since March, the new CEO has a very good reputation, and brings
with him the successes of his work in the Consumer Testing and
Industrial Services divisions, respectively. Synergies and group
streamlining are his priorities, as a means of protecting margins.
We are maintaining our confident and optimistic bias in favour
of this excellent company. SGS has a solid balance sheet and
dividend returns of more than 4%.
Technically, the stock is challenging its resistance of CHF 1,800. A
breakout would initially open the door to CHF 1,8701,900.
We advise patience and recommend holders to keep the stock
in their portfolios.

Source: Bloomberg, as of 08 October 2015

Past performance is not a reliable indicator of future performance.

Page 09/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

FUNDS STRATEGY
LO FUNDSALPHA JAPAN (USD HEDGED), P
Important information The Fund referenced in this communication is only registered for public offering in certain jurisdictions

TAKE ADVANTAGE OF THE RECENT CORRECTION TO INVEST IN JAPAN


Shinzo Abes return to power marked a significant turnaround for Japan with a clear
breakaway from the lost decades that started in the early 1990s. Although the economy is
recovering moderately, inflation targets have not yet been reached, meaning Governor Kuroda
could announce an increase in stimulus as soon as the end of October. On the equity front,
while the weak yen has played a significant role in boosting profitability, a second feature
of the Japanese strengthening is a greater focus on corporate governance, shareholders and
returns from companies.

FUND FACTS
Domicile
Fund inception date
Registered in

Management fee
Distribution fee

Luxembourg/SICAV
22 July 2008
AT, BE, CH, DE, ES,
FR, GB, IT, LI, LU,
NL, SE, SG
0.75%
0.75%

NET PERFORMANCE IN USD*

The recent turmoil in China spread to its main trading partners and Japan was not immune:
it suffered a double digit market correction (-13.45%) in Q3. Recently we confirmed our
country O/W and would be comfortable increasing our allocation at current levels.
The LO Alpha Japan (USD Hedged), P fund (+ 1.12% YTD) should be well-positioned to
take advantage of this opportunity. Its portfolio is comprised of 55-80 stocks with the top ten
typically representing 30-40% of the Net Asset Value (NAV). Lombard Odier has partnered
with Alpha Japan Asset Advisors, a company comprising leading Japanese stock-picking
experts. Stocks are selected for their fundamental merits over the medium to long term, and
actively managed to benefit from sector rotations and flow reversals, a feature of the Japanese
equity market.

YTD
1 month
3 months
1 year
3 years
Total return

Fund

Benchmark

1.12%
-6.68%
-12.23%
5.40%
78.14%
62.13%

1.75%
-7.65%
-13.08%
7.92%
99.27%
83.50%

Data as of 30 September 2015. Past performance is not a


reliable indicator of future performance.
* Net/gross of fees

RISK AND REWARD PROFILE


1

Low

7
High

For more details about risk, see related section Risk Factors
Annex of the prospectus.

REPRESENTATIVE
Austria - Representative: Erste Bank der
oesterreichischen Sparkassen AG. Belgium
- Representative: CACEIS Belgium S.A.
France - Centralising agent: CACEIS Bank
France S.A. Germany - German Information
and Paying Agent: DekaBank Deutsche
Girozentrale. Italy - Paying agents: Socit
Gnrale Securities Services S.p.A., State
Street Bank S.p.A., Banca Sella Holding
S.p.A., Allfunds Bank S.A., Italian Branch,
BNP Paribas Securities Services (with its
registered office in Paris). Liechtenstein Representative: LGT Bank AG. Netherlands
- Representative: Lombard Odier Asset
Management (Europe) Ltd, Netherlands
Branch. Spain - Representative: Allfunds
Bank, S.A. Switzerland - Representative:
Lombard Odier Asset Management
(Switzerland) SA; Paying agent: Bank
Lombard Odier & Co Ltd. United Kingdom
- Representative: Lombard Odier Asset
Management (Europe) Limited.

Net performance and annual performance in USD


May 16, 2011 - September 30, 2015

Source: Lombard Odier, as of 30 September 2015

For illustration purpose only. Past performance is not a reliable indicator of future performance.
IMPORTANT INFORMATION This marketing communication is provided for information purposes only and it is not a recommendation to subscribe to and does not constitute an offer to sell or a solicitation
to or an offer to buy the Funds shares. Any acquisition may only be made on the basis of the official documents of the Fund each in their final form. The articles of association, the prospectus, the Key Investor
Information Document, the subscription form and the most recent annual and semi-annual reports are the only official offering documents of the Funds shares (the Offering Documents). For a comprehensive
understanding of all of the applicable characteristics and risk factors, please refer to the Offering Documents. The Offering Documents are available on www.loim.com and can be requested free of charge at the
registered office of the Fund.

Page 10/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

STRUCTURED PRODUCTS
LEVERAGE CERTIFICATE ON BIOTECH/PHARMA STOCKS 1
In Switzerland, a structured product does not constitute a collective investment scheme governed by the Swiss Collective Investment Schemes Act (CISA) and is, therefore, not subject to the authorization
or supervision by the Swiss Financial Market Supervisory Authority (FINMA). Note that the investor bears default risk of the Issuer (see section General Risks at the back of this document).

200% participation in the positive basket performance while


offering a buffer of 40% on the worst of at maturity

Abbott Laboratories

The healthcare sector has been severely hit over the last couple of
weeks amid fears of a Chinese slowdown and US government control
on drug pricing (i.e. Clintons comments). This sell-off needs to be
put into context, as healthcare has outperformed over the last five
years and a majority of generalist portfolio managers have taken
profits. The correction constitutes a buying opportunity for long-term
investors, since the business is doing well, pipelines are stronger than
ever and management boards are much more disciplined in terms of
capital allocation.
We advise investing in a three-year USD leverage certificate
on Abbott (R), Abbvie (RF) and Merck (R) with a 60% barrier at
maturity (conditional protection) and a participation level of 200%
in the basket (delta of 150% at inception).

Source: Bloomberg, as of 08 September 2015

Abbvie

Source: Bloomberg, as of 08 October 2015

UNDERLYING ASSETS
Bloomberg Ticker Strike Date
ABT US 1
ABBV US
MRK US

Merck & Co
Reference Price

Strike
Level (60%)

13.10.2015

100%

60%

13.10.2015

100%

60%

13.10.2015

100%

60%

Abbott Laboratories
Abbvie
3
Merck & Co
1
2

Source: Bloomberg, as of 08 October 2015


(not issued): All terms and conditions mentioned here are set out for illustrative purposes only and will be confirmed or adjusted, if the Product is issued, in the final documentation of the Product prepared
by the Issuer and setting forth the complete and legally binding terms and conditions of the Product (including the simplified prospectus according to Swiss law) (the Original Documentation). There is no
assurance that the Product will be issued on the basis of the above indicative terms and no specific issuer shall be obliged to issue any security or instrument on such indicative terms. A copy of the Original
Documentation and any other documentation on the Product may be obtained free of charge from your Relationship Manager.
2
(issued): For further information on the Product, please refer to the final terms of the Product and any other documentation of the Issuer setting forth the complete and legally binding terms and
conditions of the Product (the Original Documentation). These documents are available free of charge from Bank Lombard Odier & Co Ltd.
Past performance is not a reliable indicator of future performance.
1

Page 11/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

STRUCTURED PRODUCTS
LEVERAGE CERTIFICATE ON BIOTECH/PHARMA STOCKS 1
In Switzerland, a structured product does not constitute a collective investment scheme governed by the Swiss Collective Investment Schemes Act (CISA) and is, therefore, not subject to the authorization
or supervision by the Swiss Financial Market Supervisory Authority (FINMA). Note that the investor bears default risk of the Issuer (see section General Risks at the back of this document).

General Risks
Investing in this product represents a potential loss similar to a
direct investment in the worst-performing underlying asset and
could thus result in a total loss of the invested capital. If the final
level of the worst-performing underlying asset at maturity date is
zero, you will lose your invested capital.
You are fully exposed to the default risk of the issuer (see General
risks section on the next page). In the worst-case scenario, a
default of the issuer could lead to the loss of the entire invested
capital.
You are aware that if one of the underlying assets trades at or
below the respective barrier level at maturity, the capital is at
risk. You may lose some or all of the invested capital as you are
fully exposed to any decline in the level of the worst-performing
underlying asset. You will not receive the benefit of dividends or
other income that may be paid on the underlying asset.
The lead manager intends, but is not obliged, to provide a daily
(off-exchange) secondary market under normal market conditions.
The assessment of normal market conditions and the provision of
a secondary market are at the issuer / lead managers discretion. In
the case of listed notes, exchange rules should be followed where
listed. By selling in the secondary market you may receive less
than the capital invested.

HOW DOES IT WORK


The product provides a 200% upside participation in the underlying basket
(equally weighted) while offering a 40% buffer on the worst of at maturity.

AUTOMATIC EARLY REDEMPTION


NA

POSSIBLE PAYOUTS AT MATURITY:

If none of the underlying assets close below 60% at maturity,


you will receive 100% of the invested capital in cash plus 200%
participation in the upside of the underlying basket.

If one of the underlying assets closes below 60% at maturity, you


will receive the final level of the worst-performing underlying
asset in cash.

GUARANTEE
Capital is at risk if one of the underlyings loses more than 60% at maturity.

GENERAL BENEFITS & GENERAL RISKS


General benefits:
If all the underlying assets are above the barrier level at maturity
date, the investor will participate in the positive performance of
the underlying basket at 200%. In this case the final redemption
amount is at least equal to 100%.

One of the underlying asset needs to fall by 40% or more from its
reference price at maturity date before your invested capital may
be subject to a loss.

This investment outperforms a direct investment in the underlying


basket if it trades flat to slightly negative over the term of the
product.

KEY CHARACTERISTICS
SVSP/EUSIPA
Category
Issuer
G2 (Lombard Odier
internal name)
ISIN
Valoren
Asset Class
Currency
FX Hedge
Initial Price

Outperformance Bonus Certificates (1330)


Participation
External, in Lombard Odiers approved issuers
NA

Trading
Strike
Upside Participation
Barrier Level

Units
NA
200%
60% at maturity

NA
NA
Equity
USD
NA
1000

Issue Date
Payment Date
Maturity Date
Redemption Date
Delivery
Liquidity

13 October 2015
27 October 2015
15 October 2018
29 October 2018
Cash
Daily

(not issued): All terms and conditions mentioned here are set out for illustrative purposes only and will be confirmed or adjusted, if the Product is issued, in the final documentation of the Product prepared
by the Issuer and setting forth the complete and legally binding terms and conditions of the Product (including the simplified prospectus according to Swiss law) (the Original Documentation). There is no
assurance that the Product will be issued on the basis of the above indicative terms and no specific issuer shall be obliged to issue any security or instrument on such indicative terms. A copy of the Original
Documentation and any other documentation on the Product may be obtained free of charge from your Relationship Manager.
2
(issued): For further information on the Product, please refer to the final terms of the Product and any other documentation of the Issuer setting forth the complete and legally binding terms and
conditions of the Product (the Original Documentation). These documents are available free of charge from Bank Lombard Odier & Co Ltd.
Past performance is not a reliable indicator of future performance.
1

Page 12/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

HEDGE FUNDS
QUARTERLY REVIEW
INVESTMENT HIGHLIGHT
Performance of main HFRI indices

HEDGE FUNDS DECLINE OVER THE QUARTER BUT


OUTPERFORM GLOBAL EQUITIES
The combination of Chinese growth fears and the uncertainty about
the FED lift-off that ultimately did not happen created a very volatile
environment. Biotech stocks in the US were particularly hard hit.
As a result, Q3 2015 proved to be the weakest quarter for risk assets
since Q3 2011. Volatility spiked to the highest levels since September
2011. Hedge funds were not spared from this market volatility, but
generally lost much less than global equity indices.
The HFRI Fund Weighted Index was down -3.77% vs. -8.45%
for MSCI World. Equity market-neutral and macro strategies
(especially CTAs) managed to post positive returns.

2%
0%
-2%
-4%
-6%
-8%
MTD
-10%

HFRI
HFRI
HFRI
Relative
Fund
Event
Value Weighted Driven
Composite

HFRI
Equity
Hedge

MSCI
World
ND$

Biotech stocks sold off at the end of Q3


110
105
100
95
90
85

Nasdaq Biotech Index

80

S&P500 ND

9/29/2015

9/22/2015

9/8/2015

9/15/2015

9/1/2015

8/25/2015

8/18/2015

8/4/2015

8/11/2015

7/28/2015

7/21/2015

Liquidity risk Event-driven managers incurred losses as the market


generally sold off and credit spreads widened. Merger spreads
also widened, resulting in portfolio losses. However, managers
do not believe there are significant fundamental risks to the
global economy and remain convinced of the attractiveness of
many deals.

7/7/2015

75

7/14/2015

Market risk Equity long/short managers were generally down


on the quarter, with managers with the largest net exposures
experiencing the most significant drawdowns. While it does not
explain the whole story, exposure to healthcare was a major detractor
over Q3. The sell-off in biotech stocks hurt many of their long
positions as the market began to sell indiscriminately in the sector.
This was due to a tweet from Hillary Clinton on potential drug
price controls.

HFRI
Macro

YTD

Source: Bloomberg, as of 07 October 2015

6/30/2015

Alpha risk managers such as those for macro and equity marketneutral strategies were on average the better performers. Macro
managers reduced risk aggressively entering August and some
even managed to turn their books quickly to short the Chinese
equity market. Getting long volatility through call options on the
VIX or straddles on the CNH are telling examples of how they
generated profits. The USD bias is now mainly expressed against
EM currencies, whereas in the first half of the year it was mainly
against the EUR and JPY. Long exposures to European and
Japanese equities were cut completely. CTAs generally made money
on short crude oil and long bonds positions.

BarCap
Global
Agg. Hdg
$

QTD

Source: Bloomberg, as of 30 September 2015

Traders have reduced bets against the EUR and JPY


0
-50,000

-150,000
-200,000

Sep-15

Sep-15

Aug-15

Jul-15

May-15

Apr-15

May-15

Mar-15

Mar-15

Jan-15

Feb-15

Dec-14

-250,000

Jul-15

Bearish bets on Euro


Bearish bets on JPY
Jun-15

Contracts

-100,000

Source: CFTC, Bloomberg, as of 07 October 2015

Past performance is not a reliable indicator of future performance.

Page 13/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

CURRENCIES
OUTLOOK

PORTFOLIO CONSIDERATIONS
EURUSD: A more neutral bias ahead
Near-term risk for the pair relies more on the FOMC outlook than
on the ECB. Our Investment Committee decided to reduce foreign
currency hedges in USD profiles, as it has downgraded its view
on USD to Neutral. Indeed, the dovish stance adopted by the Fed,
combined with healthier trade balances and economic conditions
in other developed markets, is likely to limit the upside for the
months to come.

potential for further depreciation against the uuro appears limited,


notably with the SNB short position.
Accordingly, the Committee has decided to reduce the hedges
in USD profiles by half, from 50% to 25%, while keeping the
current positioning in CHF portfolios (hedge half of EUR and GBP
exposures) unchanged.

The EURUSD should thus evolve in the 1.101.15 range, while


USDJPY will stabilise around 120. When it comes to the Swiss
Franc, interest rate differentials, diverging economic dynamics
and valuations make current hedges less consistent. However, the

Currency preferences

Overweight

Neutral

Underweight

USD

EUR

CHF

JPY

GBP

Source: Lombard Odier Investment Strategy, as of 08 October 2015

FX performance and target


Price

EURUSD
1.1289
EURCHF
1.0932
EURJPY
135.2900
EURGBP
0.7364
GBPUSD
1.5329
USDJPY
119.8500
AUDUSD
0.7185
USDCHF
0.9684
GBPCHF
1.4845
* targets are indicative and from our FX trading team.

5 days

YTD

3m target*

6m target*

0.8%
0.1%
-0.8%
0.5%
1.3%
0.1%
2.2%
0.9%
-0.4%

-6.7%
10.0%
7.1%
5.4%
-1.6%
-0.1%
-12.1%
2.7%
4.3%

1.1000
1.0200
134.0000
0.7400
1.4900
122.0000
0.7100
0.9300
1.3857

1.1500
1.0100
138.0000
0.7500
1.5300
120.0000
0.6900
0.8800
1.3464

Source: Bloomberg, as of 08 October 2015

Past performance is not a reliable indicator of future performance.

Page 14/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

CURRENCIES
INVESTMENT HIGHLIGHT
EURUSD: EXPECT A 1.10-1.15 TRADING RANGE.

EURUSD spread of 2Y Swap rates in bps

From a portfolio management perspective, and as we enter the


last quarter of the year, we cannot afford to take the risk of further
weakness on the greenback, which, after this difficult Q3 for risky
assets, remains one of the last positive contributors in terms of
YTD performance.
The risk of experiencing another wave of volatility should the Fed
tightening cycle become more blurry is real, and we therefore keep
our tactical recommendations to buy USD put options to hedge
over-exposure to the USD (FX volatility remains attractive, with 3
months EURUSD implied volatility at 10%).
A long-call option EURUSD strike 1.15 expiry in three months
(where October and December FOMC meetings will be covered for
any surprises) indicatively costs 1% (ref. spot at 1.1300). Based on
our grid allocation, EUR balanced investors willing to hedge (for
example) their entire USD exposure (or 13.1%) would have to spend
only 0.15% of their YTD performance to be hedged from 1.15 until
31 December.

Source: Lombard Odier, as of 08 October 2015

Investor positioning

Source: Lombard Odier, as of 08 October 2015

Past performance is not a reliable indicator of future performance.

Page 15/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

GLOSSARY
Amount
Amount of a bond issue, expressed in
millions of units of the currency.
Amt
Amount issued, expressed in millions
of currency.
Barbell
A barbell bond investment strategy
allocates the entire portfolio to short-term
and long-term bonds in order to reduce
the portfolios sensitivity to an increase
in interest rates. The investor therefore
benefits from higher income from longterm bonds, while their exposure to shortterm instruments provides security and
flexibility.

ECB
European Central Bank.
EM
Emerging Markets.
EMBI
Emerging Market Bond Index, as defined
by JP Morgan.
EPS
Earnings Per Share
Expected outperformance
The security is expected to do better
than its peers in terms of total return in a
12-month time horizon.

BOE
Bank of England

Expected underperformance
The security is expected to do worse
than its peers in terms of total return in a
12-month time horizon.

BoJ
Bank of Japan

FCF
Free cash flow

Balance of trade
Difference between the value of exports
and imports of goods and services of a
country.

Federal Reserve
US central bank, commonly known as the
Fed.

Ccy
Currency.

FINMA
Swiss Financial Market Supervisory
Authority.

Coupon (Cpn)
Paid interest in percent. The letter s
indicates it is paid semi-annually.

FOMC
Federal Open Market Committee

Cumulative days
Number of cumulative days carrying an
accrued coupon.
Current account balance
(or current account)
Net balance of a countrys trade with third
countries, integrating the value of exports
of goods and services less that of imports
and the balance of capital transfers.
D
Minimum piece or increment (in
thousands).
Days
Number of accrued days.
Deflation
Environment in which consumer prices
generally fall. The opposite situation
(inflation) is far more common.

Page 16/20

FRN
Floating-rate note.
GDP
Abbreviation of Gross Domestic Product
(total wealth produced by a country).
Govt spread
Yield spread versus government bonds.
High yield
bond rated below investment grade. These
bonds have a higher risk of default or other
adverse credit events, but typically pay
higher yields than better quality bonds in
order to make them attractive to investors.
Issuer
Entity that placed the relevant bond on the
market.

Inflation linked bonds (ILBs)


Primarily issued by sovereign
governments, such as the U.S. and the
U.K., ILBs are indexed to inflation so that
the principal and interest payments rise and
fall with the rate of inflation. Inflation can
significantly erode investors purchasing
power, and ILBs can potentially provide
protection from inflations effects. ILBs
may also offer additional benefits in a
broader portfolio context.
IP
Industrial Production
Iss
Issuance year, use day and month of
maturity date to find the issue date.
Key rate
Overnight rate of interest, set by the central
bank.
Libor
Series of money market reference rates
for different currencies produced by the
British Bankers Association, reflecting
the average rate at which a sample of large
banks based in London lend to other large
banks without the loan being guaranteed
by securities.
Lower Tier 2 included
A debt that is subordinated to senior debt
buts ranks ahead of Upper Tier 2 and
Tier 1 capital.
Maturity
Redemption date of the issue.
MoM
Month on Month
M. Dur
Modified duration, gives the weighted
average term to maturity of the future
cash flows, sensibility to interest rates
movements.
Name
Name of issuer.
NAV
Abbreviation of Net Asset Value, or book
value

Issue year
Combined with the day and month of the
maturity date, gives the issue date of a
bond.

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

GLOSSARY
ND/Ebitda
Net Debt To EBITDA Ratio.
A measurement of leverage, calculated
as a companys interest-bearing liabilities
minus cash or cash equivalents, divided by
its EBITDA. The net debt to EBITDA ratio
is a debt ratio that shows how many years
it would take for a company to pay back
its debt if net debt and EBITDA are held
constant. If a company has more cash than
debt, the ratio can be negative.
NFPs
Non Farm Payrolls
Non-IG
Non investment grade issuers which
therefore have a rating of BB+ or below.
ParCurve
Bench-mark yield curve.
PBOC
Public Bank of China
PMI
Purchasers Managing Index
PPE
Abbreviation of Proprit Par Etages
(condominium ownership).
Price
Indicative closing price.
Price Target
A projected price level as stated by an
investment analyst or advisor.
A price that, if achieved, would result
in a trader recognizing the best possible
outcome for his or her investment. This is
the price at which the trader would like to
exit his or her existing position so that he
or she price target.

Quantitative Easing (QE)


An unconventional monetary policy in
which a central bank purchases government
securities or other securities from the
market in order to lower interest rates and
increase the money supply. Quantitative
easing increases the money supply by
flooding financial institutions with capital
in an effort to promote increased lending
and liquidity. Quantitative easing is
considered when short-term interest rates
are at or approaching zero, and does not
involve the printing of new banknotes
R
Recommended positioning or issuer.
Rating
Composite rating (Fitch, Moodys
and Standard & Poors).

Tapering
Gradual reduction of the Feds asset
purchase programme.
WTI
West Texas Intermediate.
Yield (YTM)
Yield to maturity, recognize time value
of money.
Yield curve
Graphical representation of the reference
interest rates for each maturity. The
difference between the yields on longand short-term maturities indicates the
steepness of the curve.
YoY
Year on Year

ROE
Return on Equity
Sec. N
Isin identification number.
Front, short, intermediary, long,
very long segments
1-3 years, 3-5 years, 5-7 years, 7-10 years,
10+ years maturities.
Settl
Settlement date at subscription.
SNB
Abbreviation of Swiss National Bank.
Soft comm.
Soft commodities
SPI
Swiss Performance Index.
Swap
Spread between the yield of the bond and
the yield from the appropriate swap curve.
Underlined/Red: Avoid
A security which has a significant
probability of default in a 12 months time
horizon.

Page 17/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

WEEKLY INVESTMENT NOTES

CONTRIBUTORS
Bader Alidra
b.alidra@lombardodier.com

Nicolas Dondolini, CFA


n.dondolini@lombardodier.com

Elton Mendes De Brito


e.mendesdebrito@lombardodier.com

Rolf Baertschi
r.baertschi@lombardodier.com

Christophe Gautier
ch.gautier@lombardodier.com

Aurlien Michaud
a.michaud@lombardodier.com

David Balmon, CFA


d.balmon@lombardodier.com

Dominique Goy, CFA


d.goy@lombardodier.com

Nordin Semlal, CFPI


n.semlal@lombardodier.com

Delphine Barbaud, CFA


d.barbaud@lombardodier.com

Filip Van Hoomissen


f.vanhoomissen@lombardodier.com

Daniel Spichiger
d.spichiger@lombardodier.com

Fares Benouari, CFA


f.benouari@lombardodier.com

Adrien Ludmann
a.ludmann@lombardodier.com

Jrome Strecker
j.strecker@lombardodier.com

Gaelle Boucher
g.boucher@lombardodier.com

Yvan Mencattini, CFPI


y.mencattini@lombardodier.com

David Vacherand-Denand
d.vacherand-denand@lombardodier.com

Page 18/20

IMPORTANT INFORMATION - MATERIAL WITH NON PERSONALISED RECOMMENDATION


Please see important information at the end of this documentAuthorised for distribution in Switzerland only

lombard odier weekly investment notes switzerland 09 october 2015

STRUCTURE PRODUCTS SPECIFIC DISCLAIMER


General Risks
Market Risk: During its lifetime, the performance of the Product depends on the general global economic situation along with the political and economic factors in the specific countries. In
particular, any changes in market prices (e.g., interest rates, stock prices, foreign exchange rates or commodity prices) can have a negative effect on the valuation of the Product. Investing in this
Product represents a potential loss similar to a direct investment in the Underlying Assets and could thus result in a total loss of the invested capital. If the Underlying Assets performance on
Maturity Date is higher than 100% plus the Coupon, the investor will suffer from an opportunity loss (direct investment in the Underlying Assets).
Credit Risk: This product is a type of debt instrument, which is a loan to the Issuer. It bears the risk of default of the Issuer and, if any, of the Guarantor. The credit risk of the Issuer and, if any,
of the Guarantor may change during the term of the product. The Issuer and, if any, the Guarantor are rated either by Moodys, Standard&Poors and/or Fitch. Please refer to the rating of these
agencies to assess the credit risk of the Issuer and, if any, of the Guarantor. This product represents direct unsecured and unsubordinated obligations of the Issuer.
Currency Risk: If an investment is denominated in a currency other than the investors base currency, changes in the rate of exchange may have an adverse effect on value, price or income.
Fees
The Issuer may pay a fee up to 2% of the Issue Price (the Structuring Fee), a portion of which may be allocated to distributors as Placement Fee. Further details in this respect is provided in the
Original Documentation. The investor acknowledges and agrees that such Fees are retained by their recipient and will not be passed on to the investor.
THE LOMBARD ODIER EQUITY RESEARCH RATING SYSTEM
Financial Rating
The financial rating aims to indicate the expected performance of a security over 12-18 months relative to its sector universe benchmark. It is the final step of an analytical process based first on
company fundamentals, then on valuation and momentum indicators. It is expressed as follows:
Research List (R): we expect the stock to post a 12-18 month performance above that of its sector universe benchmark.
Research List Focus (RF): designates the analysts best pick within his or her universe, again with a 12-18 month view.
Not Rated (NR): the stock does not figure among our favorites within its sector universe.
In parallel, for each stock rated R or RF, we issue a 12-month price target.
Extra-financial Rating
Since 1998, Lombard Odier has also produced extra-financial ratings for companies within a socially responsible investment framework. These ratings are based on a three-pillar approach:
Environmental: group-wide policy, international certifications, product innovation.
Social: service quality, health & safety, training, ethics, community involvement.
Governance: structure, independence, voting rights, compensation, controversy management.
Each pillar is given a score (A: best D: worst) following a proprietary methodology last updated in 2012. These ratings are partly based on our main information provider, Sustainalytics.
BOND RATING SYSTEM (SOURCE BLOOMBERG COMPOSITE)
AAA: A bond rated AAA has the highest rating assigned by Bloomberg Composite. The issuers capacity to meet its financial commitment on the bond is EXTREMELY STRONG / AA:
A bond rated AA differs from the highest rated bonds only in small degree. The issuers capacity to meet its financial commitment on the bond is VERY STRONG./ A: A bond rated A is
somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than bonds in higher rated categories. However, the issuers capacity to meet its financial
commitment on the bond is still STRONG. / BBB: A bond rated BBB exhibits ADEQUATE protection parameters. However, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the issuer to meet its financial commitment on the bond. / BB+ to CCC: From and including BB+ to CCC, the bond is vulnerable to nonpayment. In the
event of adverse business, financial, or economic conditions, the issuer is not likely to have the capacity to meet its financial commitment on the bond. / Plus (+) or minus (-): The ratings from
AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
IMPORTANT INFORMATION MATERIAL WITH NON PERSONALISED RECOMMENDATIONS
This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter Lombard Odier). It is not intended for distribution, publication, or use in any jurisdiction where
such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document.
This document is provided for information purposes only. It does not constitute an offer or a recommendation to subscribe to, purchase, sell or hold any security or financial instrument. It contains
the opinions of Lombard Odier, as at the date of issue. These opinions and the information herein contained do not take into account an individuals specific circumstances, objectives, or needs.
No representation is made that any investment or strategy is suitable or appropriate to individual circumstances or that any investment or strategy constitutes a personal recommendation to any
investor. Each investor must make his/her own independent decisions regarding any securities or financial instruments mentioned herein. Tax treatment depends on the individual circumstances
of each client and may be subject to change in the future. Lombard Odier does not provide tax advice. Therefore you must verify the above and all other information provided in the document
or otherwise review it with your external tax advisors.
Investment are subject to a variety of risks. Before entering into any transaction, an investor should consult his/her investment advisor and, where necessary, obtain independent professional
advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. The information and analysis contained herein are based on sources considered to be reliable.
However, Lombard Odier does not guarantee the timeliness, accuracy, or completeness of the information contained in this document, nor does it accept any liability for any loss or damage
resulting from its use. All information and opinions as well as the prices, market valuations and calculations indicated herein may change without notice.
Past performance is no guarantee of current or future returns, and the investor may receive back less than he invested. The investments mentioned in this document may carry risks that are
difficult to quantify and integrate into an investment assessment. In general, products such as equities, bonds, securities lending, forex, or money market instruments bear risks, which are higher
in the case of derivative, structured, and private equity products; these are aimed solely at investors who are able to understand their nature and characteristics and to and bear their associated
risks. On request, Lombard Odier will be pleased to provide investors with more detailed information concerning risks associated with given instruments.
The value of any investment in a currency other than the base currency of a portfolio is subject to the foreign exchange rates. These rates may fluctuate and adversely affect the value of the
investment when it is realized and converted back into the investors base currency. The liquidity of an investment is subject to supply and demand. Some products may not have a well-established
secondary market or in extreme market conditions may be difficult to value, resulting in price volatility and making it difficult to obtain a price to dispose of the asset.
If opinions from financial analysts are contained herein, such analysts attest that all of the opinions expressed accurately reflect their personal views about any given instruments. In order to
ensure their independence, financial analysts are expressly prohibited from owning any securities that belong to the research universe they cover. Lombard Odier may hold positions in securities
as referred to in this document for and on behalf of its clients and/or such securities may be included in the portfolios of investment funds as managed by Lombard Odier or affiliated Group
companies.
Switzerland: This document has been issued approved for issue in Switzerland by Bank Lombard Odier & Co Ltd Geneva, a bank and securities dealer authorized and regulated by the Swiss
Financial Market Supervisory Authority (FINMA).
United States: Neither this document nor any copy thereof may be sent, taken into, or distributed in the United States or given to any US person.
This document may not be reproduced (in whole or in part), transmitted, modified, or used for any public or commercial purpose without the prior written permission of Lombard Odier.
2015 Bank Lombard Odier & Co Ltd all rights reserved

SWITZERLAND

MADRID
Lombard Odier (Europe) S.A. Sucursal en Espaa
Paseo de la Castellana 66 28046 Madrid Espaa
Credit institution regulated by the Commission de Surveillance du Secteur Financier
(CSSF), Banco de Espaa and the Comisin Nacional del Mercado de Valores
(CNMV).
E-mail: madrid@lombardodier.com
Lombard Odier Gestin (Espaa) S.G.I.I.C., S.A.U.
Paseo de la Castellana 66 28046 Madrid Espaa
Management Company supervised by the Comisin Nacional del Mercado de Valores
(CNMV).
E-mail: madrid@lombardodier.com

GENEVA
Bank Lombard Odier & Co Ltd
Rue de la Corraterie 11 1204 Genve Suisse
Private Bank regulated by the FINMA.
E-mail: geneva@lombardodier.com
Lombard Odier Asset Management (Switzerland) SA
Avenue des Morgines 6 1213 Petit-Lancy Suisse
Management Company regulated by the FINMA.
E-mail: geneva@lombardodier.com

FRIBOURG
Banque Lombard Odier & Cie SA Bureau de Fribourg
Rue de la Banque 3 1700 Fribourg Suisse
E-mail: fribourg@lombardodier.com

MOSCOW
Bank Lombard Odier & Co Representative Office Moscow
82 Sadovnicheskaya Street 115 035 Moscow Russian Federation
E-mail: moscow@lombardodier.com

LAUSANNE
Bank Lombard Odier & Co Ltd
Place St-Franois 11 1003 Lausanne Suisse
E-mail: lausanne@lombardodier.com

PARIS
Lombard Odier (Europe) S.A. Succursale en France
8, rue Royale 75008 Paris France
RCS PARIS B 803 905 157. Credit institution under Luxembourg law regulated by
the Commission de Surveillance du Secteur Financier (CSSF) - Business permit No.
3/12.
Registered in Luxembourg No. B169 907.
Insurance company authorised by the Commissariat aux assurances (CAA) No.
2014 CM002. The registration with the Commissariat aux assurances can be
verified at www.orias.fr.
E-mail: paris@lombardodier.com
Lombard Odier Gestion (France)
8, rue Royale 75008 Paris France
RCS PARIS B 434.256.392. Limited company with an Executive Board and
Supervisory Board and capital of 4,250,000 euros.
Portfolio management company approved by the Autorit des Marchs Financiers
(no. GP O1-011).
E-mail: paris@lombardodier.com

LUGANO
Banca Lombard Odier & Co SA Agenzia di Lugano
Via Vegezzi 6B 6900 Lugano Svizzera
E-mail: lugano@lombardodier.com

VEVEY
Banque Lombard Odier & Cie SA Agence de Vevey
Rue Jean-Jacques Rousseau 5 1800 Vevey Suisse
E-mail: vevey@lombardodier.com

ZURICH
Bank Lombard Odier & Co Ltd
Utoquai 31 Postfach 1457 8032 Zrich Schweiz
E-mail: zurich@lombardodier.com

EUROPE
AMSTERDAM
Lombard Odier (Europe) S.A. Netherlands branch
Herengracht 466 1017 CA Amsterdam Nederland
Credit institution regulated by the Commission de Surveillance du Secteur
Financier (CSSF) and the Nederlandsche Bank (DNB).
E-mail: amsterdam@lombardodier.com

BRUSSELS
Lombard Odier (Europe) S.A. Luxembourg Belgium branch
Avenue Louise 81 Box 12 1050 Brussels Belgium
Credit institution regulated by the Commission de Surveillance du Secteur
Financier (CSSF), the Banque nationale de Belgique (BNB) and the Financial
Services and Markets Authority (FSMA)
E-mail: brussels@lombardodier.com

GIBRALTAR
Lombard Odier & Cie (Gibraltar) Limited
Suite 921 Europort P.O. Box 407 Gibraltar
Bank supervised by the Gibraltar Financial Services Commission (FSC).
E-mail: gibraltar@lombardodier.com

LONDON
Lombard Odier (Europe) S.A. UK Branch
Queensberry House 3 Old Burlington Street London W1S 3AB United Kingdom
The bank is authorized and regulated by the CSSF in Luxembourg and its branch in
the UK by the Prudential Regulation Authority and the Financial Conduct
Authority. Registered in Luxembourg No. B169 907
E-mail: london@lombardodier.com
Lombard Odier Asset Management (Europe) Limited
Queensberry House 3 Old Burlington Street London W1S 3AB United Kingdom
E-mail: london@lombardodier.com

LUXEMBOURG
Lombard Odier (Europe) S.A.
5, alle Scheffer 2520 Luxembourg Luxembourg
Credit institution regulated by the Commission de Surveillance du Secteur
Financier (CSFF).
E-mail: luxembourg@lombardodier.com

MIDDLE EAST, AMERICAS, ASIA | PACIFIC


BERMUDA
Lombard Odier (Bermuda) Limited
Lombard Odier Trust (Bermuda) Limited
3rd Floor, Victoria Place 31 Victoria Street Hamilton HM 10 Bermuda
E-mail: bermuda@lombardodier.com

DUBAI
Bank Lombard Odier & Co Representative Office Dubai
The Fairmont 25th Floor Sheikh Zayed Road P.O. Box 212240 Dubai UAE
E-mail: dubai@lombardodier.com

HONG KONG
Lombard Odier (Hong Kong) Limited
3901, Two Exchange Square 8 Connaught Place Central Hong Kong
E-mail: hongkong@lombardodier.com

MONTREAL
Lombard Odier & Cie (Canada), Limited Partnership
1000 Sherbrooke Street West Suite 2200 Montreal (Quebec) Canada H3A 3R7
E-mail: montreal@lombardodier.com

NASSAU
Lombard Odier & Cie (Bahamas) Limited
Goodmans Bay Corporate Centre West Bay Street P.O. Box N-4938
Nassau Bahamas
E-mail: nassau@lombardodier.com

PANAMA
Lombard Odier & Cie (Bahamas) Limited Representative Office in Panama
Oceania Business Plaza Tower 2000 unit 38-D Boulevard Pacifica,
Urb. Punta Pacifica Panama

SINGAPORE
Lombard Odier (Singapore) Ltd.
9 Raffles Place Republic Plaza #46-02 Singapore 048619
E-mail: singapore@lombardodier.com

TOKYO
Lombard Odier Trust (Japan) Limited
Izumi Garden Tower 41F 1-6-1 Roppongi, Minato-ku Tokyo 106-6041 Japan
E-mail: tokyo@lombardodier.com

01.2015

WWW.LOMBARDODIER.COM