ACTSR

Association of Corporate Treasurers in Switzerland

Mauricette Salque, S.V.PDaniele Rossi, A.V.P.

Business DevelopmentMoody’s

24th of June, 2010

2

Agenda

1. Moody’s introduction

2. Corporate ratings: an introduction

3. Moody’s rating process

4. From Sovereign to Corporates

5. Switzerland: some analytical considerations

6. Appendices

Moody’s Introduction1

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Who we are

Moody's is an essential component of the global capital markets, providing credit ratings, research, tools and analysis that contribute to transparent and integrated financial markets. Moody's Corporation (NYSE: MCO) is the parent company of Moody's Investors Service, which provides credit ratings and research covering debt instruments and securities, and Moody's Analytics, which encompasses the growing array of Moody's non-ratings businesses including risk management software for financial institutions, quantitative credit analysis tools, economic research and data services, data and analytical tools for the structured finance market, and training and other professional services. The Corporation, reported revenue of $1.8 billion in 2009

Moody’s Investor Service

» Providing credit ratings and analysis on $30 trillion of debt

» 150.000 corporate and government securities and structured products

» 75.000 public finance obligations

» 10.000 corporate and financial institution relationships

» 100 sovereign nations

Leading global rating agency

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Offices and staffing distribution

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Moody’s strong presence in expanding markets

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A short overview of Moody’s services: a tool to communicate to investors

» Over 3,000 institutional investor clients, managing an estimated 85% of global fixed income capital.

» More than 1,000 institutional research clients in Europe alone

» More than 16,500 investors or analysts connected to www.moodys.com

» More than 50 relationship professionals located around the world to provide service and consultative access to Moody’s analytical resources

Corporates ratings: an introduction 2

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» Credit ratings are opinions, derived through fundamental analysis, of relative credit quality expressed though a rating symbol system.

» Credit quality is the ability and willingness of an issuer to make timely payments on a debt instrument, such as a bond, over the life of the instrument.

» Fundamental analysis refers to financial statement, management, industry, analysis, etc. placing little to no weight on transient changes in market prices.

Moody’s definition and rating scale

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European Corporate Ratings Products

» Debt Ratings (Short and / or Long Term)

– A rating assigned to a public or private issue of debt and monitored throughout the debt’s life

» Indicative Ratings

– A confidential, informal rating, at a single point in time, assigned to an issuer contemplating a debt issue and consequently not monitored

» Issuer Ratings

– A public rating assigned at the senior unsecured level albeit that there may be no debt outstanding at the level

» Syndicated Loan Ratings

– A rating assigned to a syndicated bank loan and monitored throughout the life of the loan (may also be private and not monitored)

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Corporates Ratings-Stable demand

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Corporates Ratings-increasing importance among other credit categories

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Corporates Ratings-composition

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Corporates Ratings: growing refinancing need

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Corporates Ratings: why Moody´s

A Moody’s rating helps to optimise funding

» Wider access to the global capital market

» Diversification of investor base

» Means of communicating creditworthiness to key counterparts

» Internal management tools:– to assist financial and strategic planning

– independent benchmarking

– to help determine balance considerations of bondholders and shareholders

Moody’s rating process3

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Sign & return to Moody’s a Rating Application Form

Initial discussion with Moody’s

Schedule date for RatingMeeting

Submission of background information

Moody’s forwards Agenda for Rating Meeting

Rating Meeting

Subsequent analysis and questions

Rating Committee & assignment of Rating

Weeks

M T W T F S S1

2 3 4 5 6 7 89 10 11 12 13 14 15

16 17 18 19 20 21 2223 24 25 26 27 28 2930

Month 1

M T W T F S S1 2 3 4 5 6

7 8 9 10 11 12 1314 15 16 17 18 19 2021 22 23 24 25 26 2728 29 30 31

Month 2

M T W T F S S1 2 3

4 5 6 7 8 9 1011 12 13 14 15 16 1718 19 20 21 22 23 2425 26 27 28 29 30

Month 3

210th

13rd

317th

424th

51st

68th

715th

822nd

929th

105thDate

We work to your timetable

Moody´s rating process: timetable

Industry

Strategy

Operations

Competitive environment Outlook for industry consolidation Key industry growth and success factors; key risks Barriers to entry Sensitivity to economic cycles Regulatory issues

Management's approach to growth: external vs. organic. Acquisition parameters

Product / geographic business portfolio? Optimal financial structure. Financial parameters. Share buybacks? Areas of growth? New product development, technological risks, product obsolescence

Competitive position / Market shares. Strengths and weakness Manufacturing operations. Export vs. local production vs. delocalisation Distribution channels and marketing strategy Cost structure: raw materials, wages, sales and administrative expenses Potential for productivity gains Profitability measures, including vs. major competitors

The rating meeting: typical agenda -1

The rating meeting: typical agenda -2

Financial

Corporate Organisation

Financial planning process Medium-term financial/funding plans Financial projections: income and cash-flow statements, balance-sheet… Financial strategy, use of target ratios Seasonality of operations. Working capital management Capital expenditure program Liquidity management Dividend policy Off balance-sheet commitments Rental expense on operating leases

Ownership structure and strategic implications Minority interests and equity investments. Relationship with affiliates, medium term view, circulation of cash-flows

within the group Debt at operating companies vs. debt at holding company

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Corporate rating factors

Global / Domestic

QUALITATIVEANALYSIS

ManagementStrategic DirectionFinancial Flexibility

QUANTITATIVE ANALYSISFinancial Statements

Past PerformanceFuture Projections

MARKET POSITION

COMPETITIVE TRENDS IN SECTOR

Global / Domestic

REGULATORY ENVIRONMENT

SECTORAL (INDUSTRY) ANALYSIS

SOVEREIGN MACRO-ECONOMIC ANALYSIS

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Lower business risk activities (more predictable, stable cash flows) can better support weaker debt protection ratios than higher risk activities for the same rating category.

Rating Sector Methodology Structure

BUSINESS RISKLow Medium High

FINANCIAL RISK

Financial parameters mapped to rating levels based on company-specific business risk.

Ratings are forward looking and take into account current and future business and financial risk often driven by management strategy.

RATINGS

Core credit protection ratios, on typically a 3-5 year horizon with stress testing.

Adjustments for accounting and debt-like obligations.

Aaa Aa A Baa Ba B Caa

Debt / EBITDA <1.25x 1.25-2.25x 2.25-3x 3-4x 4-5x 5-6.5x >6.5x

RCF / Net Debt >36% 30-36% 22-30% 14-22% 12-14% 8-12% <8%

EBITA / Interest >10x 7-10x 5-7x 2.5-5x 1.5-2.5x 1-1.5x <1x

FCF / Net Debt >25% 18-25% 14-18% 12-14% 9-12% 0-9% Negative

CFO / Debt >35% 25-35% 20-25% 13-20% 9-13% 6-9% <6%

All ratios are adjusted as per Moody’s approach to Global Standard Adjustments

Moody’s Corporate ratings: where in the scale

Rating Factors

Retail Industry Aaa Aa A Baa Ba B CaaFactor 1: Business and Cash Flow Volatility (13.0% )

a) Product Volatility x

b) Geographic Diversification x c) Seasonality of Cash Flow from Operations x

Factor 2: Market Positioning of Retailer (26.5%) a) Scale (Revenues, USD) $122bn

b) Segmental Market Share and Competitive Position x

c) Cost Efficiency and Profitability x

Factor 3: Execution Ability (12.0%) a) Quality of Merchandising x b) Supply Chain x

Factor 4: Real Estate Assets Positioning (7.5%) a) Investments in Store Quality x

b) Barriers to Entry High Factor 5: Financial Policies / Liquidity (8.0%)

a) Financial Policies / Liquidity x Factor 6: Key Indicator Ratios (33.0%)

a) Debt / EBITDA 3.6x b) RCF / Net Debt 22.1% c) EBITA / Interest 4.2x d) FCF / Net Debt 0.1% e) CFO / Debt 21.5%Rating: a) Indicated Rating from Methodology A3 b) Actual Rating Assigned A2

Moody’s Corporate ratings: an example

The role of rating committee

Rating Committee sets the pulse of the rating

» Lead analyst or else ask for RC

» RC will conclude on Rating Action

» One member/ one vote

» Ideally consensus, but not always

» Protects against potential conflicts of interest or individual bias influencing rating decision

» Brings diversity of experience, multiple disciplines to bear in sorting out complex issues

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Composition of a Rating Committee

From Sovereign to Corporates4

» The collapse of interest rates and fiscal stimulus have prevented complete economic and financial meltdown in the downturn

» The 2010 sovereign crisis is of unprecedented nature, has accelerated the “exit from fiscal stimulus “ into the expected painful process of stabilising debt ratios in Europe...

» ...But potential further effect on the growth prospects for European economies?

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A sluggish recovery continues to be the most likely global macro-economic scenario

2011as per 05/09 as per 09/09 as per 01/10 as per 01/10

France 0.0 / 1.0 0.5 / 1.5 1.0 / 2.0 1.5 / 2.5Germany -0.5 / 0.5 0.5 / 1.5 1.2 / 2.2 1.5 / 2.5Italy -0.5 / 0.5 0.0 / 1.0 0.5 / 1.5 1.0 / 2.0UK -0.5 / 0.5 0.5 / 1.0 1.0 / 2.0 2.0 / 3.0USA 1.0 / 2.0 1.5 / 2.5 2.0 / 3.0 2.5 / 3.5Russia 1.5 / 2.5 1.5 / 2.5 2.0 / 3.0 4.0 / 5.0China 7.5 / 8.5 8.0 / 9.0 8.5 / 9.5 8.5 / 9.5Japan 0.0 / 1.0 0.0 / 1.0 1.0 / 2.0 1.0 / 2.0

= upward revision from previous forecast

2010

Source: Moody‘s Investors Service

Challenges-Weak European Recovery

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Macroeconomic view: still “in the hook”

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Facing a difficult situation

The current (Greek) crisis has challenged (though not invalidated so far) assumptions long held by the market:

» Rich governments cannot default;

» Rich governments are price-constrained, not liquidity-constrained;

» Governments with long-term solvency problems have time to address those problems.

Rise in public debt is not unprecedented, but…

» No support to be expected from a fall in interest rates;

» Fiscal crisis is global;

» Additional challenges are looming (ageing, climate change)

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Corporates affected by Sovereign weakness

» GRI first ?– Government Related Issuers

» Issuer with full or partial (national or local) government ownership or with a charter from a national or local government

– 147 in EMEA, 27 affected with Sovereign rating downgrades between November 2009 and February 2010» 6 in EMEA outside ME (Reykjavik Energy,

Iceland, Ba1)

» 21 in ME

» From Sovereign weakness to Corporate weakness

– Impact of macro-scenario in corporate ratings

– Short to Long term effect

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Challenges – Impact of Sovereign Weakness

While market access has improved significantly, sovereign weakness could spill-over to corporates, restrict access to funding

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Trend on Bonds Issuances

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Near-Term Challenges: Significant Refunding Needs

European corporate funding needs coincide with a substantial increase in debt issuance by European sovereigns and banks

» Increasing competition for credit and higher volatility in funding costs

» Sovereign advantage to gradually return for nearly all countries, supported by an eventual recovery

Source: Moody's Investors Service, data for Eurozone and UK, USD billion

2010 European Corporate Funding Needs (USD, billion)

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Western European Bond Issuance

» Issuance increasingly driven by high-yield market, with new issuers in all geographies and in various Ba and B rating categories

» Investors looking for diversification, yield, consistent and resilient corporate business model, alternative to challenged sovereign risks

» Mid size issuers looking for funding diversification (reducing reliance on bank debt)

Issuance Volumes in Western European Bond Market

Investment Grade in USD bn

Issuance Volumes in Western European Bond Market

Speculative Grade in USD bn

Source: Moody‘s Economy.com

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2000

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ay-1

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Quarterly Breakdown

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Quarterly Breakdown

Switzerland: some analytical considerations5

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Switzerland debt trajectories 2007-2013

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Switzerland, our issuer ratings-1 Issuer LT Rating LT Rating Desc Outlook Specific IndustryABB Asea Brown Boveri Ltd. A3 LT Issuer Rating STA ELECTRICAL EQUIPMENTABB Ltd. A3 LT Issuer Rating STA ELECTRICAL EQUIPMENTAdecco S.A. Baa3 LT Issuer Rating - Fgn Curr STA MANAGEMENT SERVICESAXA Versicherungen AG Aa3 Insurance Financial Strength STA INSURANCE: PROPERTY & CASUALTYBank Julius Baer & Co. AG Aa3 LT Bank Deposits - Dom Curr NEG NON-U.S. BANKBank Morgan Stanley AG A2 LT Bank Deposits - Fgn Curr STA NON-U.S. BANKBank Vontobel AG A1 LT Bank Deposits - Fgn Curr STA NON-U.S. BANKBanque Cantonale Vaudoise A1 LT Bank Deposits - Fgn Curr STA NON-U.S. BANKBanque SYZ & Co. S.A. A3 LT Bank Deposits - Fgn Curr STA NON-U.S. BANKBarry Callebaut AG Ba1 LT Corporate Family Ratings - Fgn Curr STA CONSUMER PRODUCTSBerne, City of Aa2 LT Issuer Rating - Fgn Curr STA REGIONAL AND LOCAL GOVERNMENTBSI AG A1 LT Bank Deposits - Fgn Curr STA NON-U.S. BANKClariant AG Ba1 LT Corporate Family Ratings - Fgn Curr STA CHEMICALSClariden Leu AG Aa2 LT Bank Deposits - Fgn Curr NEG NON-U.S. BANKClientis AG A3 LT Bank Deposits - Fgn Curr STA NON-U.S. BANKCompagnie Financiere Michelin Baa2 LT Issuer Rating STA TIRES/RUBBER GOODSCredit Suisse AG Aa1 LT Bank Deposits - Fgn Curr NEG NON-U.S. BANKCredit Suisse Group AG (P)Aa2 Senior Unsec. Shelf - Fgn Curr NEG NON-U.S. BANK HOLDING CO.EFG Bank A2 LT Bank Deposits - Fgn Curr STA NON-U.S. BANKEFG International A2 LT Issuer Rating - Fgn Curr STA NON-U.S. BANKElsevier Finance S.A. Baa1 BACKED Senior Unsecured - Fgn Curr NEG PRINTING/PUBLISHINGEmissionszentrale Der Schweizer GemeindenAaa Senior Unsecured - Dom Curr STA SOVEREIGN RELATED INDUSTRIAL CO.European Reinsurance Company of ZurichA1 Insurance Financial Strength STA REINSURANCEFinanciere SYZ & Co. S.A. A3 LT Issuer Rating - Fgn Curr STA NON-U.S. BANK HOLDING CO.Flagstone Reassurance Suisse SA A3 Insurance Financial Strength - Fgn Curr NEG REINSURANCEGate Gourmet Borrower LLC B2 LT Corporate Family Ratings STA FOOD DISTRIBUTORGlencore Funding, LLC Baa2 BACKED Senior Unsecured - Fgn Curr NEG COMMODITY MERCHANDISEGlencore International AG Baa2 LT Issuer Rating NEG COMMODITY MERCHANDISEHolcim Capital Corporation Baa2 BACKED Senior Unsecured - Fgn Curr STA BUILDING MATERIALS

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Switzerland, our issuer ratings-2 Issuer LT Rating LT Rating Desc Outlook Specific IndustryHolcim Ltd Baa2 LT Issuer Rating - Dom Curr STA BUILDING MATERIALSHSBC Private Bank (Suisse) SA Aa3 LT Bank Deposits - Fgn Curr STA(m) NON-U.S. BANKHSBC Private Banking Holdings (Suisse) SAA1 LT Issuer Rating STA NON-U.S. BANK HOLDING CO.Julius Baer Group Ltd. A1 LT Issuer Rating - Dom Curr NEG NON-U.S. BANKNestle Holdings, Inc. Aa1 Senior Unsecured - Dom Curr NOO FOOD/SOFT DRINKSNestle S.A. Aa1 LT Issuer Rating NEG FOOD/SOFT DRINKSNLB InterFinanz AG Baa2 LT Issuer Rating - Fgn Curr STA FINANCE-NON CAPTIVENovartis AG Aa2 LT Issuer Rating - Dom Curr NEG PHARMACEUTICALSPetroplus Holdings AG B1 LT Corporate Family Ratings - Fgn Curr NEG OILPictet et Cie Aa3 LT Bank Deposits - Fgn Curr STA NON-U.S. BANKRaiffeisen Schweiz Aa1 LT Bank Deposits - Fgn Curr STA NON-U.S. BANKRoche Holding AG A2 LT Issuer Rating - Fgn Curr STA PHARMACEUTICALSRoche Kapitalmarkt AG A2 BACKED Senior Unsecured - Dom Curr STA PHARMACEUTICALSSCOR Switzerland AG A2 Insurance Financial Strength STA REINSURANCESIX SIS Ltd Aa1 LT Bank Deposits - Fgn Curr STA NON-U.S. BANKSIX x-clear Ltd Aa1 LT Bank Deposits - Fgn Curr STA NON-U.S. BANKSt. Galler Kantonalbank Aa1 LT Bank Deposits - Fgn Curr STA NON-U.S. BANKSTMicroelectronics N.V. Baa1 Senior Unsecured - Fgn Curr NEG SEMICONDUCTORSSwiss Bank Corporation A1 BACKED Subordinate - Fgn Curr NOO NON-U.S. BANKSwiss Reinsurance Company Ltd A1 Insurance Financial Strength STA REINSURANCESwisscom AG A2 LT Issuer Rating - Dom Curr STA TELECOMMUNICATIONSSwitzerland, Government of Aaa LT Issuer Rating STA SOVEREIGNSyngenta AG A2 LT Issuer Rating STA CHEMICALSSyngenta Finance AG A2 BACKED Senior Unsecured - Dom Curr STA FINANCE-CAPTIVEUBS AG Aa3 LT Bank Deposits - Fgn Curr NEG NON-U.S. BANKUnion Bank of Switzerland A1 BACKED Subordinate - Fgn Curr NOO NON-U.S. BANKValiant Bank AG A1 LT Bank Deposits - Fgn Curr STA NON-U.S. BANKVontobel Holding AG A2 LT Issuer Rating - Fgn Curr STA NON-U.S. BANKXL Insurance Switzerland A2 Insurance Financial Strength STA INSURANCE: PROPERTY & CASUALTYZuercher Kantonalbank Aaa LT Bank Deposits - Fgn Curr STA NON-U.S. BANKZurich Insurance Company Ltd A1 Insurance Financial Strength STA INSURANCE: PROPERTY & CASUALTY

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4. Appendices

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Sovereign, 10 years spread

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We are facing fiscal challenges that were only expected to materialise in 15-20 years

Euro area public debt projection under no policy change assumptions

Source: Moody’s, based on Eurostat and European Commission data

2005

2008

2011

2014

2017

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2056

2059

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2006 projections2009 projections

% of GDP

The Long-Term has become much nearer

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Crisis- what’s new ? Regulatory oversight and reputation risk

EU Oversight : 1.Changes in line with existing internal rules2.Changes requiring internal changes : disclosure obligations securities trading policies record retention fee discussions3.Changes still in discussion : registration requirements separate rating scale for SFG analyst rotation

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Selected research

Mauricette Salque-Senior Vice President , Business Development Tel. +33 1 5330 103Mob. +33 6327 54632Email : mauricette.salque@moodys.com

Daniele Rossi - Assistant Vice President, Business DevelopmentTel. +39 02 914 81 137Mob. +39 331 178 3091Email : daniele.rossi@moodys.com

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© 2009 Moody’s Investors Service, Inc. and/or its licensors and affiliates (collectively, “MOODY’S”). All rights reserved. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. Under no circumstances shall MOODY’S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY’S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY’S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or selling.

Moody’s Investors Service, Inc. (“MIS”), a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Shareholder Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”