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Capital Markets 101 Dr. Judson Russell, CFA

Capital Markets 101 Dr. Judson Russell, CFA. What is Capital Markets?. Helping Companies Finance their Strategic Plans. Noah Holdings Ltd. US$5,732,444,283 Capital Increase Joint Bookrunner & Global Coorindator Apr 2010 Germany. US$13,961,810,315 Rights Issue Joint Bookrunner

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Capital Markets 101 Dr. Judson Russell, CFA

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  1. Capital Markets 101Dr. Judson Russell, CFA

  2. What is Capital Markets?

  3. Helping Companies Finance their Strategic Plans Noah Holdings Ltd US$5,732,444,283Capital Increase Joint Bookrunner & Global Coorindator Apr 2010 Germany US$13,961,810,315 Rights Issue Joint Bookrunner Oct 2010 Germany US$2,239,469,809IPO Joint Bookrunner Jan 2010 Russia US$500mm Reg SSubordinated LT2 Notes Joint Bookrunner US$116 mm September 2010 US$70.0 billion Follow-on Global Coordinator IPO Joint Bookrunner Joint Lead Manager November 2010 Nov 19, 2010 US$5,000,000,000Multi-Tranche Fixed OfferingJoint Bookrunner October 2010 US$4,500,000,000Multi-Tranche Fixed Offering Joint Bookrunner November 2010 US$2,000,000,0005yr & 10yr Fixed Offering Joint Bookrunner November 2010 £5,000,000,00030yr Fixed Offering (Tap) Joint Bookrunner October 2010 June 2010 US$5.4 billion Follow-on Global Coordinator May 2010 US$3.0 billion Follow-on (PP) Global Coordinator Republic of Peru C$500,000,000Fixed OfferingJoint BookrunnerSeptember 2010 US$2,000,000,0005yr Fixed Offering Joint Bookrunner November 2010 US$1,000,000,00040yr Global Notes Joint Bookrunner November 2010 US$2,500,000,000 Senior Unsecured Notes Joint Lead Manager & Bookrunner November 2010 $2,000,000,0005yr Covered Bond Fixed OfferingJoint Bookrunner October 2010 March 2010 US$715 million Convertible Joint Bookrunner

  4. Issuers Equity Capital Markets Information Wall Corporate & Investment Banking Coverage Equity Research Debt Capital Markets Syndicate Sales and Trading Fixed Income Research The Big Picture Investors

  5. Issuers Equity Capital Markets Information Wall Corporate & Investment Banking Coverage Equity Research Debt Capital Markets Syndicate Sales and Trading Fixed Income Research The Big Picture Investors

  6. The Big Picture Issuers Equity Capital Markets Information Wall Corporate & Investment Banking Coverage Equity Research Debt Capital Markets Syndicate Sales and Trading Fixed Income Research Investors

  7. The Big Picture Issuers Equity Capital Markets Information Wall Corporate & Investment Banking Coverage Equity Research Debt Capital Markets Syndicate Sales and Trading Fixed Income Research Investors

  8. The Big Picture Issuers Equity Capital Markets Information Wall Corporate & Investment Banking Coverage Equity Research Debt Capital Markets Syndicate Sales and Trading Fixed Income Research Investors

  9. The Big Picture Issuers Equity Capital Markets Information Wall Corporate & Investment Banking Coverage Equity Research Debt Capital Markets Syndicate Sales and Trading Fixed Income Research Investors

  10. The Big Picture Issuers Equity Capital Markets Information Wall Corporate & Investment Banking Coverage Equity Research Debt Capital Markets Syndicate Sales and Trading Fixed Income Research Investors

  11. How are Capital Markets Organized? Equity Capital Markets Debt Capital Markets • IPO • Follow-On • Equity-Linked • Investment Grade Bond • High Yield Bond • Senior Bank Debt • Leveraged Finance

  12. What Does Equity Capital Markets Do? Client (Equity Issuer) Equity Research Investment Banking Sales Equity Capital Markets Trading Institutional Investors

  13. What Does Equity Capital Markets Do? Client (Equity Issuer) Equity Research Investment Banking Sales Equity Capital Markets Institutional Investors Trading

  14. What Does Equity Capital Markets Do? Client (Equity Issuer) Equity Research Investment Banking • The client’s main relationship • Advises client on business strategies and alternatives • Introduces client with product groups as appropriate • Role in an Equity Offering • Completes due diligence • Assists in document drafting • Drives internal discussions on valuation and timing Sales Equity Capital Markets Institutional Investors Trading

  15. What Does Equity Capital Markets Do? Client (Equity Issuer) Equity Research Investment Banking • The client’s main relationship within BofAML • Advises client on business strategies and alternatives • Introduces client with product groups as appropriate • Role in an Equity Offering • Completes due diligence • Assists in document drafting • Drives internal discussions on valuation and timing Sales Equity Capital Markets • Works with industry bankers to advise clients on raising equity capital • Monitor the equity markets • Role in an Equity Offering • Coordinates all internal efforts between banking, sales and research (when permitted) • Roadshow scheduling and logistics • Maintains order book and compiles investor feedback • Recommends offer price to client; allocates shares to investors Institutional Investors Trading

  16. What Does Equity Capital Markets Do? • Role in an Equity Offering • Analysts educate the sales force and investors on the key points of the transaction (business, valuation, growth drivers, positives, risks, etc.) • Receives and makes outgoing calls regarding the transaction Client (Equity Issuer) Equity Research Investment Banking • The client’s main relationship within BofAML • Advises client on business strategies and alternatives • Introduces client with product groups as appropriate • Role in an Equity Offering • Completes due diligence • Assists in document drafting • Drives internal discussions on valuation and timing Sales • Has relationships with the buy-side • Continually relays research analyst recommendations and viewpoints to institutional investors • Role in an Equity Offering • Attends “teach-ins” from the research analyst and the client on the company’s story • Educates the buy-side on the merits of the transactions • Relays to ECM buy-side interest in one-on-one and small-group meetings • Relays orders to ECM and confirms deal allocations with investors Equity Capital Markets • Works with industry bankers to advise clients on raising equity capital • Monitor the equity markets • Role in an Equity Offering • Coordinates all internal efforts between banking, sales and research (when permitted) • Roadshow scheduling and logistics • Maintains order book and compiles investor feedback • Recommends offer price to client; allocates shares to investors Institutional Investors Trading • Market maker in the client’s stock (if public) • Role in an Equity Offering • Provides liquidity to investors post-offering • Stabilizes stock if it comes under pressure after an offering

  17. What Does Equity Capital Markets Do? • Role in an Equity Offering • Analysts educate the sales force and investors on the key points of the transaction (business, valuation, growth drivers, positives, risks, etc.) • Receives and makes outgoing calls regarding the transaction Client (Equity Issuer) Equity Research Investment Banking • The client’s main relationship within BofAML • Advises client on business strategies and alternatives • Introduces client with product groups as appropriate • Role in an Equity Offering • Completes due diligence • Assists in document drafting • Drives internal discussions on valuation and timing Sales • Has relationships with the buy-side • Continually relays research analyst recommendations and viewpoints to institutional investors • Role in an Equity Offering • Attends “teach-ins” from the research analyst and the client on the company’s story • Educates the buy-side on the merits of the transactions • Relays to ECM buy-side interest in one-on-one and small-group meetings • Relays orders to ECM and confirms deal allocations with investors Equity Capital Markets • Works with industry bankers to advise clients on raising equity capital • Monitor the equity markets • Role in an Equity Offering • Coordinates all internal efforts between banking, sales and research (when permitted) • Roadshow scheduling and logistics • Maintains order book and compiles investor feedback • Recommends offer price to client; allocates shares to investors Institutional Investors Trading • Market maker in the client’s stock (if public) • Role in an Equity Offering • Provides liquidity to investors post-offering • Stabilizes stock if it comes under pressure after an offering

  18. What Does Debt Capital Markets Do? Government Trading Capital Markets Desk Issuers Liability Management Corporate Trading Fixed- Income Sales Force Sector Research and Economists Risk Solutions Syndicate

  19. What Does Debt Capital Markets Do? Government Trading Capital Markets Desk Issuers Debt Origination - Market Information - Financing Ideas - Opportunities Liability Management Corporate Trading Fixed- Income Sales Force Sector Research and Economists Risk Solutions Syndicate

  20. What Does Debt Capital Markets Do? Government Trading Capital Markets Desk Issuers Debt Origination - Market Information - Financing Ideas - Opportunities Liability Management Corporate Trading Fixed- Income Sales Force Sector Research and Economists Risk Solutions Syndicate • Swap and Derivative Pricing • Trading Axes • Swap-Driven Financing Opportunities

  21. What Does Debt Capital Markets Do? Government Trading Capital Markets Desk Issuers Debt Origination - Market Information - Financing Ideas - Opportunities Liability Management Corporate Trading Fixed- Income Sales Force Sector Research and Economists Risk Solutions Syndicate • Swap and Derivative Pricing • Trading Axes • Swap-Driven Financing Opportunities • Market Forecasts/ Outlooks • Interest Rate Outlook • Credit Fundamentals • Investor Perceptions

  22. What Does Debt Capital Markets Do? • Traders, Exchangers and Consents • Capital and Liability Structure Government Trading Capital Markets Desk Issuers Debt Origination - Market Information - Financing Ideas - Opportunities Liability Management Corporate Trading Fixed- Income Sales Force Sector Research and Economists Risk Solutions Syndicate • Swap and Derivative Pricing • Trading Axes • Swap-Driven Financing Opportunities • Market Forecasts/ Outlooks • Interest Rate Outlook • Credit Fundamentals • Investor Perceptions

  23. What Does Debt Capital Markets Do? • Traders, Exchangers and Consents • Capital and Liability Structure Government Trading Capital Markets Desk Issuers Debt Origination - Market Information - Financing Ideas - Opportunities Generate Market Information Liability Management Corporate Trading Fixed- Income Sales Force Sector Research and Economists Risk Solutions Syndicate • Swap and Derivative Pricing • Trading Axes • Swap-Driven Financing Opportunities • Market Forecasts/ Outlooks • Interest Rate Outlook • Credit Fundamentals • Investor Perceptions

  24. What Does Debt Capital Markets Do? • Traders, Exchangers and Consents • Capital and Liability Structure Government Trading Capital Markets Desk Issuers Debt Origination - Market Information - Financing Ideas - Opportunities Generate Market Information Liability Management Corporate Trading Fixed- Income Sales Force Sector Research and Economists Risk Solutions Syndicate New Issue Feedback • Swap and Derivative Pricing • Trading Axes • Swap-Driven Financing Opportunities • Market Forecasts/ Outlooks • Interest Rate Outlook • Credit Fundamentals • Investor Perceptions • New Issue Pricing • Transaction Feedback • General Market Information

  25. What Does Debt Capital Markets Do? • Traders, Exchangers and Consents • Capital and Liability Structure Government Trading Capital Markets Desk Issuers Debt Origination - Market Information - Financing Ideas - Opportunities Generate Market Information Liability Management Fixed- Income Sales Force Corporate Trading Sector Research and Economists Risk Solutions Syndicate • Secondary Trading Levels • General information New Issue Feedback • Swap and Derivative Pricing • Trading Axes • Swap-Driven Financing Opportunities • Secondary Trading Levels • General Market Information Secondary Trading Bids/ Offers • Market Forecasts/ Outlooks • Interest Rate Outlook • Credit Fundamentals • Investor Perceptions • New Issue Pricing • Transaction Feedback • General Market Information

  26. What Does Debt Capital Markets Do? • Traders, Exchangers and Consents • Capital and Liability Structure Government Trading Capital Markets Desk Issuers Debt Origination - Market Information - Financing Ideas - Opportunities Generate Market Information Liability Management Corporate Trading Fixed- Income Sales Force Sector Research and Economists Risk Solutions Syndicate • Secondary Trading Levels • General information New Issue Feedback Investor Feedback • Swap and Derivative Pricing • Trading Axes • Swap-Driven Financing Opportunities • Secondary Trading Levels • General Market Information Secondary Trading Bids/ Offers • Market Forecasts/ Outlooks • Interest Rate Outlook • Credit Fundamentals • Investor Perceptions Investor Feedback • New Issue Pricing • Transaction Feedback • General Market Information

  27. Roles and Responsibilities

  28. Roles and Responsibilities

  29. Roles and Responsibilities The information in this prospectus supplement and the accompanying prospectus is not complete and may be changed. This prospectus supplement and accompanying prospectus are not an offer to sell these securities and are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

  30. Roles and Responsibilities Joint Book runner Lead Left Book runner Sole Book runner Sole Arranger

  31. Conclusion Capital Markets links issuing clients with investor clients Equity Capital Markets & Debt Capital Markets Various roles of Capital Markets How an Investment Bank gets paid

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