| TD SECURITIES' CAPABILITIES |
TD Securities offers creativity, insight, depth of professional experience, and the strength of capital in meeting the financing needs of our clients. Whether conducting a large and complex transaction or facilitating daily trading and investment, TD Securities' teams deliver the product or service required.
| INVESTMENT BANKING |
With over 200 professionals, TD Securities' Investment Banking group delivers ideas, advice, financing services, and products and capital to corporate clients in Canada, the US, Europe, Asia and Australia.
PRODUCTS, PLUS STRATEGIC ADVICE
Investment Banking is responsible for TD Securities' relationships with its senior corporate clients. Working with product specialists, Investment Banking provides advice on debt and equity underwritings, derivatives, corporate credit and mergers and acquisitions.
ORGANIZED FOR RESULTS
The Investment Banking Group is organized by industry specialization: Media and Telecommunications, Technology, Energy (Utilities & Power and Oil & Gas), Real Estate, Financial Institutions, Government Infrastructure, Diversified Industries, Mining and Forest Products.
In 1999, TD Securities merged the Corporate and Investment Banking groups in order to provide fully integrated financing advice and execution. We strengthened our industry focus by adding corporate credit specialists to each industry team. The result is comprehensive sector coverage that brings all our key resources to bear on finding optimum financing solutions for our clients.
In 1999, TD Securities participated in 103 equity issues, 20 preferred share issues and 117 debt issues totaling close to $27 billion. In its annual underwriting rankings, published in January 2000, The Financial Post ranked TD Securities #4 overall in new issue activity.
1999 INVESTMENT HIGHLIGHTS
TD Securities was a central player in TD Bank's purchase of CT Financial Services Inc., including acting as lead underwriter for TD Bank's $700 million common equity issue and $410 million preferred share issue. TD Securities also acted as acquisition advisor to the Bank.
| TD SECURITIES EQUITY RESEARCH |
| "History has shown that major discontinuities in economic advances are catalyzed by drastic reductions in the price of a key factor of production. Much as the Industrial Revolution was defined by plunging energy prices, the Internet Era is being defined by the plummeting price of bandwidth. There is no end to human creativity to develop uses for abundant bandwidth. Optical networks, telecom equipment, eBusiness and the vast array of software that enables the applications to exploit this abundance will prove to be the major investment themes of this new era." - Mark Lucey, Technology Analyst |
| LOAN SYNDICATIONS |
In 1999, TD Securities' Global Loan Syndications team acted as agent or lead arranger for over US$64.8 billion in transactions - more than any other Canadian firm.
In its annual Gold Sheet rankings, Securities Data Co. rated TD Securities #1 in 1999 for number of leveraged Media and Telecommunications deals. These transactions exceeded US$21 billion. Securities Data consistently ranks TD Securities among the top five leveraged syndication houses in North America.
TD Securities led several high profile and complex deals over the past year, including:
| MERCHANT BANKING |
INVESTMENT PARTNER OF CHOICE
TD Capital's experienced and expert team members have backgrounds in principal investing, investment banking, mergers and acquisitions, operations, law and engineering. This multidisciplinary group works closely with our Investment Banking team to deliver a value-added investment approach that has made TD Capital the partner of choice for many leading companies.
By leveraging TD's extensive relationships, industry expertise and corporate resources, TD Capital is able to provide the best opportunities for its portfolio companies to build shareholder value. One of the most powerful examples of such a success was TD Capital's and TD Securities' early and lead role in financing GlobeNet Communications Group Limited.
Recent developments at TD Capital include the launch of TD iCapital, a venture capital fund focused on identifying, nurturing and building on-line financial services businesses, in conjunction with TD Waterhouse. In addition, TD Capital has set up a $300 million Mezzanine Fund to increase the level of mezzanine financing available to clients to help finance organic growth, acquisitions or buyouts.
| EQUITIES |
TD Securities has one of Canada's top-rated Equities groups, offering research advice, trading and execution to institutional accounts in Canada and the US from our offices in Toronto, Montreal, New York and London.
FULL RESEARCH COVERAGE
Our Equities group provides comprehensive and insightful research coverage of Media and Telecommunications, Financial Services, Oil & Gas, Mining and Metals, Industrial Products, Forest Products, Technology, Utilities and Pipelines and Real Estate, along with Quantitative and Technical Analysis. This platform of research with an investment strategy overlay is the basis for our advice to issuers on the timing, size and structure of their new and secondary equity issues. Quality research has also enabled our top-rated sales and trading professionals to deal aggressively and strategically on behalf of our institutional investing clients.
LEADING IN NEW ISSUES
In 1999, despite a 29.7% increase in the TSE 300, equity new issuance decreased on a dollar basis by 7.65%. Despite this lower activity, TD Securities increased its level of business, more than doubling market share and leading 18 deals valued at over $2.9 billion.
Among these deals were the TD Bank's common equity issue of $700 million to support its acquisition of Canada Trust and the $1.5 billion TD Waterhouse IPO. Overall we participated in 85 additional deals worth over $11 billion.
DOMINATING IN PREFERRED SHARES
TD Securities dominated the increasingly active preferred market in 1999, leading six deals amounting to over 32% of the new offerings in Canada.
TD Securities' leadership role in the preferred share market during the year was acknowledged by Brendan Wood International which cited TD Securities as having the best research on preferred shares and ranking among the top dealers for overall preferred share coverage.
AWARD-WINNING PERFORMANCE
Clients consistently rank our Institutional Equities sales, trading and research as one of the leaders in the Canadian marketplace.
In 1999, Brendan Wood International ranked TD Securities #1 in Overall Reputational Franchise, #1 for Quality of Research Service, #1 for Overall Quality of Trader Service, and #1 for the Professional Integrity of our Sales Team.
The 1999 Reuters Survey on Sales, Trading and Investment Banking ranked TD Securities second for its quality, pricing and after-market support in the Canadian new issue market.
| TD SECURITIES EQUITY RESEARCH |
| "The past year was marked by two big trends: the dramatic shift away from the "old economy" stocks to the "new economy" stocks - technology, media, communications and biotech - and equity valuations being set by the retail investor.
For the balance of 2000 we expect volatility to continue to be the key market feature. Equity pricing will be driven by large retail participation. A change to this trend would come only because of US restrictions on margin and monetary liquidity. In a US election year, this is an unlikely event." |
| DEBT CAPITAL MARKETS |
TD Securities' Debt Capital Markets team is responsible for trading, sales and origination of Derivatives, Fixed Income and Money Market products. Effective integration is the key to TD Securities' leadership.
FIXED INCOME
While credit markets remained strong throughout 1999 during a stable economic environment, government borrowings continued to decrease. The Canadian debt market was characterized by a significant number of new entrants as well as traditional borrowers.
In 1999, TD Securities was the underwriter for an impressive list of senior issuers, including CTV Inc., Renaissance Energy Ltd., Alberta Energy Company Ltd. and Associates Capital Corporation of Canada.
RESPONSIVE AND INNOVATIVE
TD Securities identifies and responds to opportunities in the markets with global execution and innovative deal structuring. As an example, recognizing the international markets' increased interest in Australian dollars, TD Securities applied its knowledge of global credit trading and distribution to the rapidly developing Australian "Kangaroo" bond market and led an AUD$300 million joint-lead issue for GE Capital Australia. TD Securities also participated in syndicated transactions for borrowers such as World Bank, DSL Bank and National Australia Bank.
Canadian dollar global bonds returned to favour among international investors taking advantage of strengthening currency and higher yields. TD Securities led the EuroCanadian market with 23 issues totaling C$3.2 billion for issuers such as Farm Credit Canada, Ford Credit Canada, GE Capital Funding Canada, GMAC Canada, Toyota Credit Canada and other clients.
TOP-RANKED IN CANADA AND THE WORLD
TD Securities' success has been demonstrated in new issue activity and independent rankings in Canada and internationally. The Financial Post 1999 Underwriting Tables ranked TD Securities third in all corporate debt underwriting in Canada during the year. We led 32 corporate debt issues and participated in another 99 deals worth over $5.4 billion in total.
International Financing Review's 1999 League Table Standings ranked TD Securities as the #1 underwriter in Europe for Canadian and New Zealand dollar debt and Polish Zloty debt, and second in Australian dollars, Czech Koruna, Greek Drachma and South African Rand debt. In the 1999 Euroweek Financing Awards, industry peers recognized TD Securities' strength, citing market-leading structures for the Best Greek Drachma issue (60 billion for World Bank), and the Best Canadian Dollar issue (C$750 million for the Province of British Columbia). We received further recognition in the 1999 Euromoney Bond Trading Survey, which ranked us #1 globally for trading in Canadian, Australian and New Zealand dollar bonds, as well as #2 for trading in Greek Drachma and South African Rand debt.
| TD SECURITIES FIXED INCOME RESEARCH |
| "Plans for central European countries to join the European Union are creating exciting opportunities. As these countries adopt economic policies in line with the EU, their interest rates fall toward EU levels, triggering gains for bondholders. This "convergence" process is well-advanced in Poland, Hungary and the Czech Republic; this year countries such as Slovakia and the Baltic Republics will attract increased attention." - Jim Webber, Chief Strategist, UK and Europe |
| GOVERNMENT FINANCE |
INTEGRATED SOLUTIONS
TD Securities has emerged as a leader in the integrated delivery of debt origination and derivative trading. Some marquee examples of TD Securities-led debt issues include:
In addition, TD Securities has been at the forefront of government infrastructure financings. In 1999, TD Securities led and co-led two trusts to fund construction of new schools in the province of Nova Scotia: the $110 million Scotia School Bonds and the $160 million Borealis Infrastructure Bonds. TD Securities was also the lead manager for the $160 million Durham District School Board issue, the largest Ontario school board financing in 1999.
| HIGH YIELD |
TD Securities made some dramatic gains in the high yield market in 1999, despite an approximate 30% decrease in total market issuance. TD Securities has long been recognized as having one of Wall Street's top High Yield research, sales and trading teams in the Media and Telecommunications sector - the largest segment of new issuance in the High Yield market. In this industry alone, TD Securities participated in 40 issues in 1999, raising more than US$12.6 billion. TD Securities also participated in eight High Yield issues for clients in other industry sectors, such as Power and Energy, raising an additional US$3.13 billion.
Our High Yield team also took a leadership role in a growing number of transactions. As recognized by Investment Dealers Digest, TD Securities underwrote US$911.4 million in lead-managed issues in 1999 - up from US$475 million in 1998. This increase in lead-managed underwriting activity moved TD Securities up substantially in the overall rankings to 15th, up from 25th the prior year.
The year's major deals include issues totaling US$589 million for Clearnet Communications, US$275 for Cablevision S.A. and US$300 million for GlobeNet Communications. We acted as lead dealer-manager for tender offers for Benedek Communications and InterMedia Capital Partners IV for issues totaling US$340 million, and as lead consent manager for Consumers Packaging and Hollinger International Publishing on issues totaling nearly US$1 billion.
Another one of TD Securities' recognized strengths is our ability to commit capital. In 1999, almost US$1 billion was provided in bridge loans prior to the High Yield issues being sold.
| TD SECURITIES HIGH YIELD RESEARCH |
| "Regulatory liberalization, technological innovation, and the Internet are sparking revolutionary changes in the structure of the global economy. The High Yield market is playing an important role in financing change, and has become a significant and invaluable source of permanent investment capital for emerging growth companies worldwide, particularly in the Media and Telecommunications industries. Going forward, we expect the European High Yield market will experience phenomenal growth over the next few years." - John Chester, Managing Director, High Yield Research |
| DERIVATIVE PRODUCTS GROUP |
Derivatives are becoming an increasingly important and effective tool in managing financial risk. Derivatives such as interest rate swaps, currency swaps or credit derivative trades were an essential part of close to 80% of all the debt financings TD Securities underwrote in 1999.
INTEREST RATE DERIVATIVES
Interest rate derivatives are central to TD Securities' fixed income, underwriting, trading and lending businesses. As one of the first Canadian organizations to enter the interest rate derivative market in 1985, TD Securities has the most established and experienced team of professionals in the business. TD Securities manages portfolios in 11 currencies, providing interest rate risk management products for some of the most sophisticated clients in the world.
CREDIT DERIVATIVES
Banks, institutional investors, government agencies, corporate and insurance companies seek dealers with the best analytical understanding of risk. Increasingly, clients turn to TD Securities as the authority on credit derivative products to make financing more efficient by lowering issuing or borrowing costs.
EQUITY DERIVATIVES
TD Securities has been one of the first to design securities to minimize equity risk exposure in various industry sectors. For example, the TD Bank Diversified Internet Equity-Linked Notes enabled retail investors to participate in the potential growth of Internet and technology stocks without exposure to capital risk. Investors were able to buy Notes where performance was related to a basket of 12 Internet and technology stocks comprising: Amazon.com, America Online, Cisco Systems, eBay, E*Trade Group, Intel, Lucent Technologies, MCI Worldcom, Microsoft, Charles Schwab, Sun Microsystems and Yahoo. In addition to being RRSP eligible, investors' principal was guaranteed by TD Bank. This oversubscribed Note was designed for the retail market and distributed through TD Evergreen, TD Waterhouse and other brokers throughout Canada.
| MONEY MARKET |
TD Securities is the leading Money Market dealer in Canada. We utilize an integrated cross-product approach for our issuing and investing clients. Products include: Treasury Bills, Provincial Notes, Bankers Acceptances, Commercial Paper, Asset Securitization, Repurchase Agreement Bonds, Eurobonds, and Interest Rate and Credit Derivatives.
TD Securities represents 85% of all commercial paper issuers. We offer issuers the largest and most diverse distribution network, placing on average over 25% of all money market securities outstanding. TD Securities provides unsurpassed market access and liquidity through our well-developed institutional, corporate, commercial and retail channels. Our retail channels include the TD branch network, TD Evergreen and TD Waterhouse.
Our leading role in the expanding Canadian commercial paper market was evident throughout this year. In 1999, corporations issued more commercial paper than ever before, increasing outstandings by over $25 billion for a total of $119 billion. The fastest growing sector of the commercial paper market continued to be securitized commercial paper, which grew by over $12 billion and was $53 billion at the end of 1999.
| ASSET SECURITIZATION |
In 1999, TD Securities arranged or underwrote 51 single- and multi-seller transactions and launched a new multi-seller conduit, MERIT Trust. In total, TD Securities accounts for 32% of the total multi- and single-seller transaction market in Canada.
Over the past year, the Canadian asset-backed securities market continued to experience tremendous growth, primarily driven by the securitization of assets such as lines of credit, credit card receivables and mortgages. TD Securities' total market share of the asset-backed securities market rose from 19% in 1998 to over 24% in 1999.
Commercial paper funded transactions continued to fuel the market growth over the past year with outstandings totaling $53 billion in 1999, up $10 billion from the previous year. TD Securities' Securitization team is a recognized leader in this market.
Term asset-backed transactions grew $5 billion to a total of $13 billion outstanding. In April, TD Securities led the securitization of TD Bank's VISA card receivables through the $325 million York Receivables Trust II Credit Card Receivables-Backed Senior and Subordinated Note transaction.
| FOREIGN EXCHANGE |
As one of Canada's top providers of Canadian dollar spot, forward and currency options, TD Securities' Foreign Exchange group has consistently demonstrated strong risk management capabilities on behalf of corporate, institutional and government clients.
To enhance client service, TD Securities' Foreign Exchange group undertook a number of strategic initiatives in 1999. Global businesses were realigned to implement a structure whereby "dollar bloc" (Australian, New Zealand and Canadian) spot and options are now together on two 12-hour "hybrid" desks - one in Toronto and one in Sydney. Interest rate and G7 spot and forwards have also been integrated. The result has been improved transaction communication and smoother order flow for clients.
The Money Market and Funding businesses were also realigned with the Foreign Exchange group, providing a more focused and sophisticated service to TD Securities' clients.
TD Securities' leadership was recognized this past year by Risk Magazine, who ranked TD Securities the #1 Global Provider of Canadian Dollar Repurchase Agreements and the #3 Global Provider of US$/C$ Currency Products.
| TD SECURITIES FIXED INCOME RESEARCH |
| "The real value of equity can be seriously impacted by a company's ability to refinance its balance sheet. The combination of the current interest rate environment, together with ample systemic liquidity, is providing an opportunity to manage a variety of financial risks." - Frank Hracs, Director, Fixed Income Research Strategy and Economics |
| DISTRIBUTION CAPABILITIES |
Our strong distribution network helps TD Securities achieve superior deal execution on behalf of clients. We ensure broad and well-placed distribution through our institutional, commercial and retail channels.
INSTITUTIONAL CHANNELS
Daily contact with a global client network provides our institutional sales teams with the market intelligence needed to place new issues successfully.
COMMERCIAL CHANNELS
TD Securities has distinguished itself by pioneering new ways for commercial clients to access capital markets. TD Securities has developed money market and fixed income products, including structured and securitized products, to help this client base invest at more sophisticated levels and achieve enhanced returns.
RETAIL CHANNELS
Retail branches - With the acquisition of CT Financial Services Inc., TD Securities' clients now have access to the most powerful retail distribution network in Canada - TD Canada Trust. TD Securities now has the opportunity to offer its broad selection of Money Market and Fixed Income products, as well as its full selection of Foreign Exchange services to retail clients in TD Canada Trust's 1,290 branches.
Self service brokerage - TD Waterhouse is the largest discount brokerage in Canada, and the second largest globally providing access to a global client base extending across Canada, the US, Hong Kong, Australia and the UK.
Full service brokerage - TD Evergreen, one of the best full service brokerages in Canada, is consistently a strong performer in new issue underwriting syndicates, typically outperforming its major competitors in distribution relative to underwriting liability.
| NEW ELECTRONIC CHANNELS |
TD Securities expects to lead the marketplace with technological advancements that will make issuing and investing easier and more efficient. By examining the way we do business and creating innovative solutions, our goal is to exploit the limitless possibilities available to us.
TD Securities recently became the first institution to successfully leverage the Internet to market its US$1.2 billion senior secured credit facilities for Rural Cellular Corporation. Prospective institutional investors were able to view an audio and slide presentation in a secure on-line environment. The result was a financing that was marketed at less cost to the issuer, more convenience to the investor and executed faster overall.