Morning Report

09.03.2012

High Participation in Greek PSI-deal

NOK & 3m NIBOR 7.80 7.60 7.40
3m ra.

2.90 2.60 2.30

EURNOK

ECBs liquidity measures have helped to prevent "bank runs" in Europe. With the restructuring of the Greek debt in place, the risk of an uncontrolled bankruptcy in Greece is markedly reduced. What remains is the agreement of the Fiscal Compact in the EU and the recapitalization of banks. Both are work in progress. This morning the message came from Greece that private investors owing 152 billion of Greek debt subject to Greek law, equivalent to 85.8 per cent, voluntarily participate in the scheme of debt reduction and swap. In addition, owners of 20 billion not under Greek law participated in the agreement. If Greece chooses to adopt so-called "Collective Action Clauses" (CAC), the 95.7 per cent of 206 billion private debt will be covered by the restructuring, and the goal of a debt reduction of 100 billion will be met. The question of whether the CAC to be used shall be decided later today and it is stated that a decision on this will be published at 13 GMT today. Yesterday, European stock markets rose sharply. The German DAX index rose by 2.4 per cent and the broader Eurostoxx50 rose 2.2 per cent. Oslo Stock Exchange rose 1.2 per cent, while the UK's FTSE 100 rose just 0.4 percent. In the S&P500 rose by 1 per cent. An important factor was the prospect that participation in the Greek restructuring package would be sufficiently high. In currency markets the euro has appreciated by 0.5 per cent against the Dollar since yesterday morning and the dollar has strengthened against the Japanese Yen. Norwegian kroner is roughly unchanged from yesterday morning, but has weakened slightly against the Swedish krona. The Bank of England decided to keep interest rates unchanged and to continue purchases of government securities in accordance with previously approved plans. It was not submitted information beyond this. The European Central Bank (ECB) also held interest rates steady. The ECB noted that there are signs of stabilization in the economy and expects a gradual improvement. There is still downside risk to the economic outlook. ECB now believes inflation will remain above 2 per cent in 2012 and that there are risks to the upside. The ECB also pointed out that the state of the financial markets are significantly improved compared to last autumn, and attributes this not only LTROs, but also budget cuts, reforms and the Fiscal compact reform. ECB stressed that all non-standard measures are temporary, and that all measures required to address the possible upside risks to price stability over the medium term is fully accessible. Greek government bonds is again permitted used as collateral for liquidity from the ECB. In the U.S., the number of initial claims increased slightly the last week. The average for the last four weeks, however, was not changed. In Germany the production of goods rose in January - more than expected and the decline in December was slightly less than previously reported. Production was thus in clear contrast to the weak order numbers submitted the day before. The increase in production in January reduces the chance that Germany is experiencing a decline in GDP in the first quarter. On the other hand, the trend for both orders and production clearly heads downward and the January figures were unable to reverse the decline in December. Also, the PMI figures indicate stagnation in production. Today U.S. February payroll and unemployment will be released. In January, non-farm payrolls rose by 243' from the previous month. It was clearly more than expected. The unemployment rate fell to 8.3 per cent. Now it is expected an increase of 210' in non-farm payrolls and stable unemployment. We expect an increase of 220'. In Norway, Statistics Norway will release February inflation figures. Inflation pulled up slightly last month but has since October been a bit lower than Norges Bank's forecast in its latest MPR. If inflation were to be clearly higher than the estimated the risk of interest rate hike will increase and may support a stronger NOK. On the other hand, lower inflation than expected may affect the NOK the opposite way. We expect core inflation to 1.3 per cent, the same as the consensus estimate, according to Reuters. kyrre.aamdal@dnb.no Yesterday's key economic events (GMT) 11:00 Germany Goods production, prelim. 12:00 UK BoE meeting: Base rate 12:45 EMU ECB meeting 13:30 US Initial claims Todays key economic events (GMT) 01:30 China CPI 09:00 Norway CPI ATE 13:30 US Employment 13:30 US Unemployment As of Jan Mar Week 9 As of Feb Feb Feb Feb Unit m/m % % % 1000 Unit y/y% y/y % m/m k % Prior -2.9 0.5 1.00 354r Prior 4.5 1.3 243 8.3 Poll 1.0 0.5 1.00 351 Poll 3.5 1.3 210 8.3 Actual 1.6 0.5 1.00 362 DNB 3.2 1.3 220 8.2

27-Jan 16-Feb 7-Mar

SEK & 3m STIBOR 9.0 8.9 8.8 8.7 27-Jan 16-Feb

3m ra.

2.70 2.60 2.50 2.40 2.30 7-Mar

EURSEK

Headquarters 0021 Oslo Stranden 21

+47 03000

Offices Abroad New York London Shanghai Singapore Stockholm

+1 212 681 3800 +44 207 6211111 +86 21 6132 2888 +65 6220 6144 +46 8 4734850

Sales Oslo (+47) Equity Fixed Income FX/IR

22 94 89 40 22 01 78 20 22 01 76 50

Regional sales (+47) Bergen Bod Fredrikstad Hamar Haugesund Lillehammer Kristiansand Oslo Stavanger Troms Trondheim Tnsberg lesund

55 21 95 80 75 52 9910 69 39 41 50 62 54 14 82 52 72 09 06 61 24 79 56 38 07 28 62 22 01 76 50 51 84 04 30 77 62 96 80 73 58 74 89 33 01 73 80 70 11 69 85

Research Regional Sales (+47) Eirik Larsen 22 01 76 55

Research FX/IR (+47) ystein Drum Kjersti Haugland Ole Andr Kjennerud Knut A. Magnussen Camilla Viland Kyrre Aamdal

22 01 76 56 22 01 78 03 22 01 78 24 22 01 76 63 22 01 77 41 22 01 76 67

Credit Research (+47) Ole Einar Stokstad Mikael L. Gjerding se Haagensen Rolv Kristian Heitmann Thomas Larsen Knut Olav Rnningen

22 01 78 37 22 01 77 62 22 01 76 93 22 01 76 77 22 01 77 36 22 01 78 15

Morning Report
09.03.2012

SPOT RATES AND FORECASTS

Oil spot & NOK TWI 130 120 110 100 27-Jan 16-Feb
NOK TWI ra.

102 100 98 96 94 92 7-Mar

$/b

1.25 1.20 1.15

EUR vs GBP & CHF 0.87 0.85 0.83

1.10 0.81 27-Jan 16-Feb 7-Mar

GBP r.a CHF

FX USDJPY EURUSD EURGBP EURCHF EURNOK EURSEK EURDKK USDNOK JPYNOK SEKNOK GBPNOK USDSEK JPYSEK NOKSEK GBPSEK

Prior 81.17 1.315 0.835 1.205 7.435 8.919 7.435 5.654 6.968 0.834 8.899 6.783 8.362 1.200 10.678

Last 81.64 1.322 0.837 1.206 7.423 8.901 7.435 5.617 6.884 0.835 8.875 6.736 8.266 1.200 10.643

% 0.6% 0.5% 0.2% 0.0% -0.2% -0.2% 0.0% -0.6% -1.2% 0.1% -0.3% -0.7% -1.2% 0.0% -0.3%

In 1 m ...3 m 77 77 1.30 1.30 0.83 0.83 1.23 1.23 7.60 7.75 8.90 9.20 7.45 7.45 5.85 5.96 7.59 7.74 0.85 0.84 9.2 9.3 6.85 7.08 5.27 5.45 1.17 1.19 10.72 11.08

...6 m ...12 m 80 85 1.35 1.40 0.85 0.87 1.23 1.30 7.65 7.65 9.00 9.00 7.45 7.45 5.67 5.46 7.08 6.43 0.85 0.85 9.0 8.8 6.67 6.43 5.33 5.46 1.18 1.18 10.59 10.34

FX AUD CAD CHF CZK DKK GBP HKD ISK KWD LTL LVL NZD PLN SGD RUB

USD 1.0632 0.9908 0.9120 18.76 5.6250 1.5801 7.7573 125.47 0.2784 2.6125 0.5280 0.8242 3.1065 1.2546 29.4062

% 0.45% -0.72% -0.51% -0.73% -0.51% 0.36% -0.09% -0.21% -0.05% -0.54% -0.71% 0.96% -1.72% -0.28% -0.80%

EURSEK & OMXS 9.0 8.9 8.8 8.7 27-Jan 16-Feb 550 500 450 400 350 7-Mar

OMXS ra. EURSEK

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

N IBOR Prior 2.24 2.61 2.96 3.12 2.98 3.24 3.46 3.68

SWAP AN D MON EYM ARKET RATES STIBOR EURIBOR Last Prior Last Prior 2.22 2.03 2.02 0.44 2.58 2.34 2.32 0.84 2.90 2.53 2.51 1.19 3.09 2.64 2.62 1.38 2.98 1.89 1.90 1.16 3.24 2.04 2.06 1.52 3.46 2.25 2.26 1.89 3.67 2.41 2.42 2.25

Last 0.43 0.81 1.17 1.36 1.16 1.53 1.89 2.25

USD LIBOR Prior 0.24 0.47 0.74 0.89 0.69 1.12 1.57 2.05

Last 0.24 0.47 0.74 0.89 0.71 1.15 1.60 2.09

Gov. Bonds, 10y 2.00 1.75 1.50

NOK, ra.

3.00 2.50 2.00 1.50

SEK

10y 10y yield vs bund

N ORWAY Prior Last 114.98 111.15 2.34 0.56 2.38 0.58

GOVERNM ENT BON DS SWEDEN GERMANY Prior Last Prior Last 115.897 115.78 101.95 101.76 1.79 0.01 1.80 -0.01 1.78 1.80

US Prior 100.25 1.97 0.19

Last 99.88 2.02 0.22

27-Jan 16-Feb 7-Mar

JPY and DowJones 14 83 82 13 81 80 79 12 78 77 11 76 75 10 27-Jan 16-Feb 7-Mar

USDJPY ra. DowJones, 1000

In 3m 6m 12m

INTEREST RATE FORECASTS N ORWAY SWEDEN GERMANY 3m nibor 10y swap 3m stibor 10y swap 3m euribor 10y swap 2.65 3.50 2.15 2.25 1.05 2.50 2.55 3.75 2.10 2.50 1.05 2.75 2.60 4.25 2.00 3.00 1.05 3.25

US 3m libor 10y 0.50 0.50 0.50

swap 2.25 2.50 3.00

USD and gold 1900 1800 1700 1600 1500

EURUSD ra.

1.42 1.38 1.34 1.30 1.26

Gold

27-Jan 16-Feb 7-Mar

MISCELLANEOUS FRA NOK 3m Prior chg TWI Today % MAR 2.59 2.62 -0.03 NOK 92.85 - 0.12 JUN 2.50 2.50 0.00 SEK 117.85 - 0.41 SEP 2.48 2.48 0.00 EUR 104.47 0.42 DEC 2.50 2.50 0.00 USD 79.39 - 0.40 FRA SEK 3m Prior chg GBP 81.00 - 0.1 MAR 2.23 2.26 -0.02 Comm. Today Last JUN 1.93 1.93 0.00 Brent spot 129.9 127.3 SEP 1.71 1.71 0.00 Brent 1m 125.2 124.1 DEC 1.66 1.65 0.01 Spot gold 0.0 1677.5 Sources to all tables and graphics: Reuters and DNB Markets

Stock ex. Today Dow Jones 12,837.3 Nasdaq 2,935.7 FTSE100 5,791.4 Eurostoxx50 2,460.8 Dax 6,671.1 Nikkei225 9,929.7 Oslo 415.88 Stockholm 486.88 Copenhagen 577.64

% 0.6% 0.9% 0.4% 0.7% 0.6% 0.0% 1.2% 0.6% 0.7%

Morning Report
09.03.2012
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