Key Highlights (all deals) * **Credit Metrics - Some Softening on the Headline**: * Moody's WARF deteriorated slightly month-over-month by 2 points to 2971 vs. 2969 a month ago. This is consistent with the year-to-date trend, which has seen WARF tick higher by 6 points each month on average. Compared to this time last year, the average WARF across portfolios is roughly 50 points higher. * However, when only looking at deals still within their reinvestment period, the YoY difference is a more pronounced +23 points. This implies that a disproportionate amount of credit softening is occurring in deals outside of their reinvestment period. * Part of what may be driving the headline WARF number is the acceleration of paydowns in 2024. As AAAs pay off at a quicker rate, the overall credit ratings for those deals will decline materially. * Moody's Caa buckets held steady and remain at 4.7%. The differential between deals inside their reinvestment period (4.2%) and deals outside of their reinvestment period (5.8%) is quite high here as well. * S&P CCC's still remain considerably lower across all deals, 3.3%. Although this marks a m-o-m rise of 0.2%, the current level is on par with the October 2023 figure, signaling relative consistency. * 32 platforms – or roughly 48% - currently have an S&P or Moody's triple-C bucket of at least 5% compared to 36 for the same period a month ago, marking an improvement. However, dispersion continues in the tails, with the lowest three platforms now ranging between 9.1% and 9.7%, compared to a slightly more modest range of 8.6% - 9.1% last month. Moreover we expect some deterioration to occur by next month owing to Cerba and Lipton CCC downgrades – see our comment (here). * **Market Value Metrics - Range Bound**: * Market Value metrics were broadly flat on the month – BB MVOC and WAPP were unchanged and reside at 109% / 97%, respectively. NAV decreased marginally by 1% and now resides at 52%. NAV has remained flat since July, consistent with the Morningstar European Leveraged Loan Index (ELLI) which continues to remain range bound between 97.5 and 98 for nearly four months. * Sub-90-point loans, increased by 0.4% over the month to reside at 6.9%. Although an increase, the current level is still well below the 8.5% / 7.7% in June and July. Similarly, the percentage of sub-80 point loans also marginally ticked upward and is now at 3.4% compared to 3.3% the month prior. * **Structural and Other Credit - Steady**: * The average BB OC ratio and BB OC cushions decreased by 0.1% each to reach 111% / 4.7%, respectively. This is a reversal of last month's 1 bps increase. * A total of 7 deals (3 Barings, 2 Bain and 1 each from Accunia, ManGLG) are currently breaching single-B OC tests, at par with last month. Only one deal, from ICG, is currently breaching its double BB OC test. * Portfolio WAS (4%), WARR (44%), and Diversity Score (55) all remained pegged to current levels. Summary Metrics * **All Deals in and out of RP**: * WARF: 2971 * Caa1 %: 4.7% * CCC %: 3.3% * Default stock %: 0.53% * WAS: 4.0% * D S: 55 * WARR: 44 * 2nd Lien %: 1.5% * BB MV OC: 109% * Equity NAV: 52% * WAPP: 97% * % assets priced < 85: 4.0% * % assets priced < 90: 6.9% * Bid depth: 7 * BB OC Ratio: 111% * BB OC Cushion: 4.7% * Leverage: 9 * OC Test Fail: 1.3% * IDT test Fail: 0.0% * Fixed Rate Assets: 7.3% * HYB: 13.1% * of unique obligors: 681 * of unique facilities: 1147 * **Deals inside RP**: * WARF: 2933 * Caa1 %: 4.2% * CCC %: 3.0% * Default stock %: 0% * WAS: 4.0% * D S: 58 * WARR: 44 * 2nd Lien %: 1.5% * BB MV OC: 109% * Equity NAV: 55% * WAPP: 97% * % assets priced < 85: 3.7% * % assets priced < 90: 6.4% * Bid depth: 7 * BB OC Ratio: 111% * BB OC Cushion: 4.7% * Leverage: 10 * OC Test Fail: 0.0% * IDT test Fail: 0.0% * Fixed Rate Assets: 7.2% * HYB: 13.2% * of unique obligors: 681 * of unique facilities: 1147 * **Deals outside RP**: * WARF: 3041 * Caa1 %: 5.8% * CCC %: 4.0% * Default stock %: 1% * WAS: 3.8% * D S: 50 * WARR: 44 * 2nd Lien %: 2.0% * BB MV OC: 108% * Equity NAV: 41% * WAPP: 96% * % assets priced < 85: 4.8% * % assets priced < 90: 8.2% * Bid depth: 7 * BB OC Ratio: 111% * BB OC Cushion: 4.7% * Leverage: 9 * OC Test Fail: 3.5% * IDT test Fail: 0.0% * Fixed Rate Assets: 8.1% * HYB: 13.5% * of unique obligors: 681 * of unique facilities: 1147

Global Commodities Research 04 October 2024 J P M O R G A N European Natural Gas Rising geopolitical risk grabs the spotlight in a market with little spare capacity | --- | --- | --- | |-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------- ...

Industry and Company Overview * **Industry**: Liquid cooling in the data center market, specifically focusing on direct-to-chip (DTC) and immersion cooling technologies. * **Market Size**: Estimated to grow at a 38% CAGR from $1.6bn in 2024 to $5.5bn in 2028. * **Key Players**: Vertiv, Schneider Electric, Legrand, Delta Electronics, nVent, AVC, Auras, and CoolIT. Key Takeaways **Market Growth and Trends**: * **Market Growth**: Liquid cooling is expected to grow significantly due to increasing data center rack densities and the need for more efficient cooling solutions. * **TAM**: The total addressable market (TAM) for liquid cooling is projected to reach $5.5bn by 2028. * **CAGR**: The Compound Annual Growth Rate (CAGR) for the liquid cooling market is expected to be 38% from 2023 to 2028. * **Rack Density**: As rack densities increase beyond 30kW/rack, liquid cooling becomes a necessity for efficient cooling. * **PUE**: Liquid cooling can improve data center Power Usage Effectiveness (PUE), contributing to better energy efficiency. **Competitive Landscape**: * **Vertiv**: A leading player in liquid cooling, with a strong offering and a significant presence in the market. * **Schneider Electric**: Focuses on traditional air cooling but has partnerships and pass-through products in the liquid cooling space. * **Legrand**: Strong position in rear-door cooling (RDHx) with the acquisition of Usystem. * **Delta Electronics**: Strong position in liquid cooling components, particularly CDUs and manifolds. * **nVent**: A large player in the liquid cooling market, particularly in Europe. * **AVC, Auras, and CoolIT**: Major global suppliers of cold plate modules for DTC liquid cooling. **Technology and Solutions**: * **Direct-to-Chip (DTC)**: A more advanced and efficient cooling technology compared to immersion cooling. * **Immersion Cooling**: Involves submerging the entire server or specific components in a dielectric coolant. * **Rear Door Heat Exchanger (RDHx)**: An air-to-liquid cooling solution that improves cooling efficiency compared to traditional air cooling. * **CDU and Manifold**: Key components of DTC liquid cooling systems, responsible for distributing coolant and managing heat exchange. **Investment Opportunities**: * **Legrand**: Well-positioned to benefit from the growth in rear-door cooling and data center sales. * **Schneider Electric**: Has a strong position in data center power equipment and could potentially expand its liquid cooling offerings. * **Vertiv**: A leading player in the liquid cooling market with a strong product portfolio and growth potential. Additional Important Points * **Regulatory Drivers**: Increasing regulations on data center PUE are driving the adoption of more efficient cooling solutions like liquid cooling. * **Cost Savings**: Liquid cooling can lower both CapEx and OpEx for data centers, particularly at high rack densities. * **Asia Market**: Asia is expected to be a leading market for cooling solutions, driven by expertise in metal processing and heat flow management.

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Solar Energy in China - **Date**: September 23, 2024 Core Insights 1. **Module Export Trends**: - In August 2024, module export volume increased by 35% year-over-year (YoY), while export value decreased by 27% YoY [1] - The export value to Asia fell by 17% YoY, but to Africa, it rose by 6% YoY in the first eight months of 2024 [1] - Cumulative module and cell export value for January-August 2024 was Rmb161.2 billion, down 29% YoY, attributed to price declines of 46% for modules and 63% for cells [1][2] 2. **Regional Performance**: - Module export value to Europe declined by 44% YoY in 8M24, with significant drops in the Netherlands, Spain, Germany, Poland, and Italy [2] - Notable increases in module export value to India (up 112% YoY), Saudi Arabia (up 68% YoY), and Pakistan (up 81% YoY) [2] 3. **Cell Export Dynamics**: - Cell export volume rose by 68% YoY in 8M24, but the export value fell by 35% YoY due to a 63% YoY price drop [3] - Export value to India increased by 24% YoY, while significant declines were observed in Turkey, Germany, Thailand, and Vietnam [3] 4. **Inverter Export Performance**: - Inverter export value decreased by 24% YoY in 8M24 but increased by 24% YoY in August [3] - Exports to Asia and South America saw increases of 41% and 32% YoY, respectively, in 8M24 [3] 5. **Installation Capacity Growth**: - China added 140 GW of solar power generation capacity in 8M24, a 24% increase YoY compared to 113 GW in 8M23 [5] Additional Important Insights - **Price Trends**: - The decline in module prices (182mm PERC) was noted at 46% YoY, impacting the overall export value [2] - In the EU, module prices fell by 42% YoY and 7% MoM in August [2] - **Export Value by Destination**: - The cumulative module export value showed a consistent decline across various countries, with significant drops in Brazil and Chile (down 30% and 61% YoY, respectively) [2][12] - **Market Outlook**: - The overall sentiment in the solar industry remains attractive, despite the challenges posed by declining prices and export values [4] This summary encapsulates the key points discussed in the conference call, highlighting the current state and trends within the solar energy sector in China.

Investment Rating - The report indicates a positive momentum for the European tourism industry, suggesting a favorable investment outlook as international travel has recovered beyond pre-pandemic levels [10][19]. Core Insights - The European tourism industry is experiencing strong demand, with international tourist arrivals up 12% year-to-date compared to last year and 6% compared to 2019, indicating a robust recovery [6][10]. - Southern European destinations are leading the growth, driven by favorable climatic conditions and value-for-money offerings [10][19]. - The report highlights a shift towards off-the-beaten-track destinations and increased interest in international rail travel, which are expected to shape the future of European tourism [6][13]. Summary by Sections 1. Tourism Performance Summary 2024 - International travel has recovered, with arrivals up 6.3% and nights up 7.0% compared to 2019 levels, reflecting year-on-year improvements of 11.8% and 9.9% respectively [19]. - Southern Europe continues to report the strongest growth, with notable increases in arrivals from countries like Serbia (+40%) and Malta (+37%) [11][19]. - The accommodation sector has seen occupancy rates increase by 1.8% and Revenue Per Available Room (RevPAR) up by 5.4% for January to May 2024 [16][39]. 2. Global Tourism Forecast Summary - The global travel forecast indicates a 16.1% increase in inbound tourism for 2024, with Europe expected to see a 10.2% growth [29]. - The report anticipates that the return of travelers from the Asia-Pacific region will significantly contribute to European tourism growth [14][29]. 3. Recent Industry Performance - Air transport in Europe has largely recovered to pre-pandemic levels, with Revenue Passenger Kilometres (RPKs) slightly above 2019 levels [31][33]. - The accommodation sector is performing well, with RevPAR growth of 5.4% in Europe, driven by increased room rates and occupancy [39][41]. - Short-term rental markets are expanding, particularly in France, which has seen a 108% year-on-year growth in supply due to the upcoming Summer Olympic Games [42][43].