DB HY Energy E&P Index, and maintain this recommendation. Last year, the DB HY Energy E&P Index was the worst performing sub-sector in high yield. HY Energy was down -6% for the year, which compares to overall HY being up -3.5%. In particular, we see little room for E&P subsector outperformance as these

ry 2018 Andrew Casella Research Analyst iddrs Highsmith Research Analyst • Building Products Hollando. CFA Research Analyst • Chemicals • HY Energy • Gaming and Lodging KIJr4nin II • Healthcare Research Analyst • Media / Business Services Retail, Consumer and Food r...enflrev IvIr.kinne

-213 bps) already rade inside the broader-BB index and it is therefore difficult to see much further upside. I Figure 5: Historical spread levels: HY Energy, 66 Energy, 8 Energy and CCC Energy vs VVT1 price movements 6000 $70 s000 seo 4600 $50 BB 6660/ —HY 66671 —B &SD Sans DanowSitat Bernivg Anne

ge scale overhaul of the asset portfolio (mainly a shift to Permian). By early 2017, the revamped corporate strategies were largely in place. The HY Energy index is currently trading only modestly wide of the broader HY index (50 bps wider), a far cry from the >1,000 bps gap in early 2016. Meanwhile,

January 2018 HY Corporate Credit HY Multi Sector.Media. Cable & Satellite HY Energy debt market activity in FY 17 The HY Energy bond issuance market activity gained back momentum this year after a semi-hiatus over the last two year

vestitures). By early 2017. broad financial and portfolio strategies for most companies were largely in place. Post-OPEC deal in November 2016, the HY Energy sector was trading only 25 bps wide of the broader HY index, reminiscent of spreads seen during 1H 14, and a far cry from the >1,000 bps gap in ear