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Corps > Technology > Flashcards

Technology Flashcards

1
Q

ADOBE INC (ADBE)

A

Leading software company known for its creative and digital marketing solutions, including Photoshop and Adobe Experience Cloud. It has a strong market position due to its subscription-based model and continuous innovation. Strengths: High recurring revenue and strong cash flow generation. Weaknesses: Dependence on subscription renewals and exposure to competitive pressures in the software industry.

A1/A+
Technology - Americas
$4.15bn in index across 5 issues

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2
Q

ADVANCED MICRO DEVICES INC (AMD)

A

Semiconductor company specializing in high-performance computing, graphics, and visualization technologies. Reverse-engineered Intel’s products to develop x86 chips. Spun off GlobalFoundries. Second in CPU (Intel) and GPU market (NVDA) and one of two makers of GPUs for data centers (recently launched). Broader offering than NVDA, designing both CPUs and GPUs for data centers, clients (PCs), gaming, and embedded (eg autos, medical deviced). Strengths: Strong growth potential and market share gains. Weaknesses: High competition from larger rivals like Intel and NVIDIA, and cyclical nature of the semiconductor industry.

A2/A-
Technology - Americas
$1.75bn in index across 3 issues

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3
Q

ALPHABET INC (GOOGL)

A

Provides a wide range of internet-related services and products, including search, advertising, and cloud computing. It is a dominant player in the digital advertising market. Strengths: Strong financial position and diversified revenue streams. Weaknesses: Regulatory scrutiny and dependence on advertising revenue.

Aa2/AA+
Technology - Americas
$12.00bn in index across 7 issues

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4
Q

ANALOG DEVICES INC (ADI)

A

Global leader in the design and manufacturing of analog, mixed-signal, and digital signal processing integrated circuits. Second largest analog chip provider in the world (TI). It serves various industries including automotive, industrial, and communications. Strengths: Strong market position and robust cash flow generation. Weaknesses: High capital expenditure requirements and exposure to cyclical demand in the semiconductor industry.

A2/A-(Pos)/A
Technology - Americas
$6.56bn in index across 10 issues

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5
Q

APPLE INC (AAPL)

A

Leading technology company known for its innovative consumer electronics, software, and services. It has a strong brand and loyal customer base, positioning it as a market leader in multiple segments, including smartphones, tablets, and wearables. Strengths: Robust cash flow and a strong balance sheet enhance creditworthiness. Weaknesses: High reliance on iPhone sales and exposure to global supply chain disruptions.

AAPL is exposed to certain challenges. a) Slow migration to higher margin services business (about 1.6-2x hardware margins), 22% of revenues ’23 vs 20% in ’20. b) Device revenue stable but challenged for growth - Vision Pro Headset at a price point of $3,500 could be an impediment to mass adoption. c) Supply chain risks associated with China (~18% of supply). d) Commitment to be cash neutral, which implies continued debt issuance/ or large cash distribution. AAPL will likely be a frequent issuer with $10B+ in maturities each year for the next four years. Recommend an underweight of the name driven by very tight spreads, which are 40-50bps inside the index providing limited upside

Aaa/AA+
Technology - Americas
$79.00bn in index across 45 issues

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6
Q

APPLIED MATERIALS INC (AMAT)

A

Semiconductor Capital Equipment (Semicap) company, known for leadership pos. in deposition, also leads in CMP, Ion Implant, and advanced packaging equipment. Benefits from strong demand in the semiconductor industry. Strengths: Strong market position and consistent cash flow generation. Weaknesses: Exposure to cyclical demand in the semiconductor industry and high capital investment needs.

A2/A
Technology - Americas
$6.20bn in index across 8 issues

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7
Q

ARROW ELECTRONICS INC (ARW)

A

Global provider of products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions. It differentiates itself through its extensive distribution network and value-added services. Strengths: Diversified revenue streams and strong market position. Weaknesses: Exposure to cyclical demand in the electronics industry and inventory management challenges.

ARW is a well-managed business (behind leader CDW), commitment to IG (low BBB) and ability to manage FCF in downcycles. ARW benefits from good relationship with suppliers and the ability to reschedule/defer/cancel orders when needed. On the flip side, the margins are razor thin (target 5.5-6%), the bond tranches are small ($500mm or less) and only has $2.5B outstanding limiting liquidity. On a RelVal basis, the spreads are inside the 8-9yrs BBB- index (~20bps) and trade on top of higher quality comps FLEX and JBL. See limited upside in spread from current levels; timing for cycle to turn is unclear

Baa3/BBB-/BBB-
Technology - Americas
$1.50bn in index across 3 issues

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8
Q

AUTODESK INC (ADSK)

A

Software company specializing in 3D design, engineering, and entertainment software. It is known for its AutoCAD and Revit products. Strengths: High recurring revenue from subscription-based model and strong market position. Weaknesses: Dependence on subscription renewals and exposure to economic cycles affecting construction and manufacturing industries.

A3/BBB+
Technology - Americas
$2.00bn in index across 3 issues

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9
Q

AVNET INC (AVT)

A

Global distributor of electronic components and embedded solutions. It differentiates itself through its extensive distribution network and value-added services. Strengths: Diversified revenue streams and strong market position. Weaknesses: Exposure to cyclical demand in the electronics industry and inventory management challenges.

Baa3/BBB-/BBB-
Technology - Americas
$1.65bn in index across 4 issues

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10
Q

BROADCOM CORPORATION (AVGO)

A

Global technology leader in semiconductor and infrastructure software solutions. Provides logic chips in 5 markets (broadband, networking, wireless, storage, industrial) enabling “boring” tech areas (PC HDs, bluetooth, GPS, Wi-Fi, Ethernet). It is well-positioned in the market due to its broad product portfolio and strategic acquisitions. Strengths: Strong cash flow generation and diversified product offerings. Weaknesses: High leverage and integration risks from frequent acquisitions.

Positive outlook for AVGO driven by: a) diversified/balanced revenue stream, b) custom ASIC growth, c) strong and improving FCF/leverage, c) synergy upside potential and d) ratings upgrade potential. AVGO expects AI revs to >$11B or 35+% of semiconductor revs. Expect spreads to compress after the company issues new bonds (and more so if it does not). AVGO expects to maintain $2B qtrly debt payments through ‘24. In addition, think there could be additional upside if the company reaffirms its commitment to 2.5x gross leverage target and is upgraded to mid-BBB by the agencies. Leverage is currently 2.6x FY24E

Baa3(Pos)/BBB/BBB
Technology - Americas
$43.53bn in index across 24 issues

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11
Q

CISCO SYSTEMS INC (CSCO)

A

Multinational technology conglomerate that designs, manufactures, and sells networking hardware, software, and telecommunications equipment. It is a leader in networking and cybersecurity solutions. Strengths: Strong cash flow generation and diversified product portfolio. Weaknesses: Exposure to competitive pressures and reliance on hardware sales.

A1/AA-
Technology - Americas
$19.75bn in index across 11 issues

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12
Q

COMMSCOPE TECHNOLOGIES LLC (COMM)

A

Provides infrastructure solutions for communications networks, including broadband, enterprise, and wireless networks. Their business model focuses on delivering innovative solutions to support the growing demand for connectivity. Financially, CommScope benefits from strong market demand and strategic investments in technology.

Caa2(Neg)/CCC(Neg)
Technology - Americas
$5.14bn in index across 5 issues

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13
Q

CORNING INC (GLW)

A

Technology company specializing in specialty glass, ceramics, and related materials. It serves various industries, including telecommunications, consumer electronics, and life sciences. Strengths: Strong market position and diversified product offerings. Weaknesses: Exposure to cyclical demand in key markets and high capital expenditure requirements.

Baa1(Neg)/BBB+(Neg)
Technology - Americas
$4.30bn in index across 8 issues

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14
Q

CROWDSTRIKE HOLDINGS INC (CRWD)

A

Global cybersecurity company specializing in cloud-delivered protection of endpoints, cloud workloads, identity, and data. Renowned for its Falcon platform, which integrates advanced threat intelligence and AI-powered threat detection to prevent breaches. Innovative approach to cybersecurity, focusing on real-time protection and comprehensive threat management. CrowdStrike’s cutting-edge technology and strong market position; Intense competition and the need for continuous innovation can strain resources and impact financial stability.

Upgrade candidate: performance has been very strong growing at double-digits and growing product portfolio; due to recent software update issue more likely 18-24 months out

Baa3/BB
Technology - Americas
$0.75bn in index across 1 issues

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15
Q

DELL INTERNATIONAL LLC (DELL)

A

Leading provider of IT infrastructure, including servers, storage, and networking products. It benefits from a strong brand and a comprehensive product portfolio. Strengths: Strong market position and consistent cash flow generation. Weaknesses: High debt levels and exposure to fluctuations in enterprise IT spending.

DELL should benefit from continued server demand which should be followed storage demand (2-3 quarter lag). Demand in the PC markets looks to be a 2HCY24 event driven by: a) Windows refresh, b) laptop/PC refresh cycle in FY25 (CY24/CY25) (300mm PCs turn 4 years old) and c) AI workloads can’t be supported on existing PCs. Enterprise refresh is likely to lead the way which would benefit Dell given 80% of its PC business is driven by the enterprise market. DELL should trade modestly back of AVGO. Would be a buyer on spread widening

BBB/BBB
Technology - Americas
$14.23bn in index across 14 issues

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16
Q

DXC TECHNOLOGY CO (DXC)

A

IT services company that helps global enterprises manage their IT infrastructure and operations. It focuses on digital transformation and modernization services. Strengths: Strong client relationships and diversified service offerings. Weaknesses: Declining revenue in legacy business segments and high competition in the IT services industry.

Baa2(Neg)/BBB-/BBB
Technology - Americas
$1.35bn in index across 2 issues

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17
Q

FOUNDRY JV HOLDCO LLC (FABSJV)

A

Special purpose entity formed to issue debt securities for refinancing and acquisition purposes. It is indirectly owned by Brookfield Infrastructure Partners and Intel Corporation, focusing on Intel’s manufacturing expansion. Strengths: Backed by strong institutional partners, providing financial stability. Weaknesses: High leverage and construction risks associated with new projects.

Baa2(Neg)/BBB
Technology - Americas
$4.95bn in index across 5 issues ($4.95bn 144a)

18
Q

HEWLETT PACKARD ENTERPRISE CO (HPE)

A

Spun off from HP Inc. in 2015. Global technology company providing solutions in AI, networking, and hybrid cloud. It differentiates itself through its focus on edge-to-cloud strategy and customer-centric innovation. Strengths: Strong recurring revenue and profitability. Weaknesses: Exposure to market headwinds and high competition in the tech sector.

Baa2/BBB(Neg)/BBB+
Technology - Americas
$6.43bn in index across 6 issues

19
Q

HP INC (HPQ)

A

Leading provider of personal computing and printing solutions; retained old HP’s personal computer and printing business after it was spun off from HP. It benefits from a strong brand and extensive product portfolio. Strengths: Strong cash flow and attractive valuation levels. Weaknesses: Low revenue growth prospects and reliance on the cyclical PC market.

Baa2/BBB/BBB+
Technology - Americas
$7.89bn in index across 9 issues

20
Q

INTEL CORPORATION (INTC)

A

Major player in the semiconductor industry, known for its microprocessors and related technologies. IDM mired in a sales slump, hemorrhaging cash, considering drastic actions including spinning off its foundry division. Set to receive $8.5bn in grants and $11bn in loans from CHIPS. It has a significant market share and a strong R&D focus. Strengths: Strong market position and substantial R&D investments. Weaknesses: Competitive pressures and challenges in transitioning to new manufacturing processes.

INTC is in the process of trying to achieve five nodes in four years by 2025 and building its own foundry business. The company has elevated capex requirements to achieve its plans that will likely pressure FCF (negative in ’23 and ’24 and likley negative in ‘25 as well). Remain cautious on the risk of continued issuance to fund its plans, its aggressive five node in four-year plan and competitive pressures as we do not expect other semi players to stand still. Should trade ~20bps back of IBM

Baa1(Neg)/BBB+(Neg)/BBB+
Technology - Americas
$45.14bn in index across 37 issues

21
Q

INTERNATIONAL BUSINESS MACHINES CORP (IBM)

A

Multinational technology and consulting company, focusing on hybrid cloud and AI solutions. It differentiates itself through its extensive patent portfolio and long-standing client relationships. Strengths: Strong cash flow and a diversified business model. Weaknesses: Declining legacy business segments and high debt levels.

IBM posted mixed 1Q results (miss on top line and better EPS). Liquidity is strong with cash of $19bn+, maturities in ‘24/’25 of ~$0.8bn/$4.8bn and ~$8bn for M&A (year-end). Calculated leverage is 4.0x (excluding unfunded pensions). Our caution on the name is driven by M&A risk which could result in a downgrade (S&P the more likely agency). IBM will continue to be acquisitive for bolt-on M&A (base case), but the risk of larger M&A and a potential willingness to take a downgrade to high BBB over time as M&A is now an integral part of the strategy. Spreads should be inside INTC and back of META (+65bps)

A3(Neg)/A-/A-
Technology - Americas
$34.70bn in index across 35 issues

22
Q

IRON MOUNTAIN INFORMATION MANAGEMENT SERVICES INC (IRM)

A

Offers information management services, including records storage, data management, and secure shredding. Their business model focuses on providing comprehensive solutions to manage and protect information. Financially, Iron Mountain benefits from a strong market position and consistent revenue from recurring services.

Ba3/BB-
Technology - Americas
$8.08bn in index across 9 issues

23
Q

KEYSIGHT TECHNOLOGIES INC (KEYS)

A

Leading technology company providing electronic design and test solutions. It serves various industries, including communications, aerospace, and defense. Strengths: Strong market position and consistent financial performance. Weaknesses: Exposure to cyclical demand in the electronics industry and reliance on a few key markets.

Poor management team: have outstanding hybrids w/ libor language that they refused to amend, that would have resulted in coupons locking in for life. They wouldn’t even engage bondholders to talk about it. Then they tried to come to market and couldn’t get the deal done. So they finally amended the language

Baa2(Pos)/BBB/BBB+
Technology - Americas
$1.20bn in index across 2 issues

24
Q

KLA CORP (KLAC)

A

Develops advanced process control and process-enabling solutions for the semiconductor industry with over 50% share in metrology and inspection, analyzing wafers for defects at each stage of mfg process. It collaborates with leading technology companies to drive innovation. Strengths: Strong market position and robust financial performance. Weaknesses: High capital expenditure requirements and exposure to cyclical demand in the semiconductor industry.

A2/A-/A
Technology - Americas
$5.70bn in index across 7 issues

25
Q

LAM RESEARCH CORPORATION (LRCX)

A

Global supplier of wafer fabrication equipment and services to the semiconductor industry. It is known for its innovative solutions that enable advanced chip manufacturing. Best known as the etch provider and a key enabler of the verticalization of memory chips, but also a beneficiary of the verticalization of logic chips. Strengths: Strong market position and consistent cash flow generation. Weaknesses: High capital investment needs and exposure to cyclical demand in the semiconductor industry.

A2/A-
Technology - Americas
$4.50bn in index across 6 issues

26
Q

LEIDOS INC (LDOS)

A

Leading provider of technology and engineering services, focusing on defense, aviation, information technology, and biomedical research. Strengths: Strong growth potential and diversified revenue streams. Weaknesses: High competition in the government contracting space and reliance on federal budgets.

Baa2/BBB-
Technology - Americas
$2.50bn in index across 3 issues

27
Q

MICROCHIP TECHNOLOGY INCORPORATED (MCHP)

A

Semiconductor company specializing in microcontroller, mixed-signal, analog, and Flash-IP solutions. It serves various industries, including automotive and industrial. Strengths: Strong financial performance and robust product portfolio. Weaknesses: High competition in the semiconductor industry and exposure to cyclical demand.

Baa1/BBB
Technology - Americas
$2.20bn in index across 2 issues

28
Q

MICRON TECHNOLOGY INC (MU)

A

Leading provider of memory and storage solutions, US largest memory chip manufacturer. It is well-positioned in the market with its advanced DRAM and NAND technologies. Strengths: Strong market position and significant R&D investments. Weaknesses: Exposure to cyclical demand in the memory market and high capital expenditure requirements.

The combination of memory pricing improving and excess inventories in the channel being worked down will drive strong revenue growth, EBITDA and FCF. Demand for HBM (high bandwidth memory) driven by AI should further enhance the MU story. The name should be a derivative paly on AI growth and expect spreads to grind tighter based on performance.

Baa3/BBB-/BBB
Technology - Americas
$9.45bn in index across 12 issues

29
Q

MICROSOFT CORPORATION (MSFT)

A

Global leader in software, services, devices, and solutions. It is well-positioned in the market with its cloud computing platform, Azure, and a strong portfolio of software products. Strengths: Strong financial performance and diversified revenue streams. Weaknesses: Regulatory scrutiny and competition in the cloud computing space.

MSFT is a high-quality software provider with strong growth drivers in gaming (on the back of the Activision acquisition last year), cloud services and generative AI demand (through Azure solutions). Recommend an underweight of the name driven by very tight spreads, which are 40-50bps inside the index providing limited upside.

Aaa/AAA
Technology - Americas
$45.59bn in index across 27 issues

30
Q

NCR CORPORATION (NCR)

A

Provides technology solutions for the retail, financial, and hospitality industries, including point-of-sale systems, ATMs, and self-service kiosks. Their business model focuses on delivering innovative solutions to enhance customer experiences. Financially, NCR benefits from strong market demand and strategic investments in technology.

B1/B+/BB+
Technology - Americas
No USD Bonds Outstanding

31
Q

NVIDIA CORPORATION (NVDA)

A

Leading technology company specializing in graphics processing units (GPUs) and artificial intelligence (AI) solutions. It is well-positioned in the market due to its dominance in the gaming and data center sectors. Strengths: Strong financial performance and significant growth potential in AI and data centers. Weaknesses: High valuation and exposure to cyclical demand in the semiconductor industry.

Aa3(Pos)/AA-
Technology - Americas
$8.50bn in index across 7 issues

32
Q

NXP BV (NXPI)

A

Designs semiconductors and software for businesses, specializing in secure connectivity solutions for embedded applications. Based in NL. It is well-positioned in the automotive and industrial markets. Strengths: Strong market position and robust cash flow generation. Weaknesses: High capital expenditure requirements and exposure to cyclical demand in the semiconductor industry.

BBB+/BBB+
Technology - Americas
$17.98bn in index across 23 issues

33
Q

ORACLE CORPORATION (ORCL)

A

Global provider of enterprise software and cloud computing solutions. It differentiates itself through its comprehensive suite of cloud applications and database technologies. Strengths: Strong cash flow and a broad product portfolio. Weaknesses: High competition in the cloud computing market and challenges in transitioning from legacy systems.

ORCL is poised to benefit from the continued demand for cloud infrastructure as well as growing demand for generative AI services. Expect solid topline and bottom-line growth along with strong FCF generation. We see limited deleveraging from current levels (ORCL is around its leverage target- gross 3.5x) and ORCL historically has been much more focused on shareholder friendly activities. ORCL has been historically acquisitive and we would not be surprised to see M&A activity in the near to midterm.

Baa2/BBB/BBB
Technology - Americas
$70.24bn in index across 34 issues

34
Q

QUALCOMM INCORPORATED (QCOM)

A

Leading semiconductor company specializing in wireless technology and mobile communications. It is well-positioned in the 5G market with its advanced chipsets and licensing business. Strengths: Strong market position and significant patent portfolio. Weaknesses: Dependence on a few major customers and exposure to regulatory challenges.

QCOM is a leader in the smartphone semi segment and expect growth driven by on-device AI edge computing which could drive a faster upgrade cycle. Additional market opportunities include automotive segment and Arm-based PCs. Risks include: Apple remains largest customer (~22% - contract until ‘26) and China exposure (63% of revenues). Strong credit but believe spreads broadly reflect the strong performance and are fairly priced. Dollar adjusted, QCOM is on top of NVDA with a one notch rating differential.

A2/A
Technology - Americas
$13.59bn in index across 12 issues

35
Q

SALESFORCE INC (CRM)

A

Global leader in customer relationship management (CRM) software, offering a comprehensive suite of cloud-based applications for sales, service, marketing, and more. It differentiates itself through continuous innovation and strategic acquisitions. Strengths: Strong recurring revenue and robust market position. Weaknesses: High competition in the cloud software market and integration challenges from acquisitions.

A1/A+
Technology - Americas
$8.50bn in index across 6 issues

36
Q

SENSATA TECHNOLOGIES BV (ST)

A

Designs and manufactures sensors and controls for various industries, including automotive, industrial, and aerospace. Their business model focuses on providing high-quality, reliable products to meet customer needs. Financially, Sensata benefits from strong market demand and a diversified product portfolio.

Ba2(Pos)/BB+
Technology - Americas
$3.20bn in index across 5 issues

37
Q

SKYWORKS SOLUTIONS INC. (SWKS)

A

Designs and manufactures semiconductor products for wireless communications. It serves various markets, including mobile, automotive, and IoT. Strengths: Strong market position and diversified product portfolio. Weaknesses: Exposure to cyclical demand in the semiconductor industry and reliance on a few key customers.

Ba1(Pos)/BBB-/BBB+
Technology - Americas
$1.00bn in index across 2 issues

38
Q

TEXAS INSTRUMENTS INC (TXN)

A

Major player in the semiconductor industry, largest analog chip provider in the world. It benefits from a broad product portfolio and strong customer relationships. Strengths: Consistent cash flow generation and strong market position. Weaknesses: Exposure to cyclical demand in the semiconductor industry and high competition.

Aa3/A+
Technology - Americas
$12.95bn in index across 18 issues

39
Q

TRIMBLE INC (TRMB)

A

Technology company providing solutions for positioning, modeling, connectivity, and data analytics. It serves various industries, including construction, agriculture, and transportation. Strengths: Strong market position and diversified revenue streams. Weaknesses: Exposure to economic cycles affecting key markets and high capital expenditure requirements.

Baa3/BBB-
Technology - Americas
$1.40bn in index across 2 issues

40
Q

VMWARE INC (VMW)

A

Acquired by Broadcom in Nov 2023. Leading provider of cloud computing and virtualization software and services. It differentiates itself through its comprehensive suite of cloud solutions and strong customer base. Strengths: Strong recurring revenue and robust market position. Weaknesses: High competition in the cloud computing market and challenges in transitioning from legacy systems.

Acquired
Technology - Americas
$6.25bn in index across 6 issues

41
Q

WESTERN DIGITAL CORPORATION (WDC)

A

Leading provider of data storage solutions, including hard drives and solid-state drives. Provides NAND (non-volatile) memory chips. It benefits from strong demand in the data storage market. Strengths: Strong market position and diversified product offerings. Weaknesses: Exposure to cyclical demand in the data storage industry and high capital expenditure requirements.

Ba1-/BBB--/BBB-*-
Technology - Americas
$3.30bn in index across 3 issues

42
Q

WORKDAY INC (WDAY)

A

Provider of enterprise cloud applications for finance and human resources. It is well-positioned in the market with its innovative solutions and strong customer base. Strengths: Strong recurring revenue and robust market position. Weaknesses: High competition in the enterprise software market and significant investment needs for growth.

Baa2/BBB
Technology - Americas
$3.00bn in index across 3 issues

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