South Carolina Government Finance Officers

1. Presentation to South Carolina Government Finance Officers 2010 Fall Conference October 18, 2010 CONFIDENTIAL DRAFT

2. Program Summary, Proposed Legislation and Outlook BABs & RZEDBs Market Dynamics and Trends Program Update • Offer municipal issuers access to taxable buyer base and reduced costs, particularly at long maturities • Over $129bn issued to date, comprising about 27% of total municipal issuance during the same period • The current legislation expires at the end of 2010 • The extension of the programs is still unclear • In June, Congress failed to pass a Jobs Bill which would have extended the BAB programs through December 31, 2012 at reduced subsidy of 32% and 30% in 2011 and 2012, respectively • The prospects of the ARRA programs are currently unclear • Issuers have to decide to issue BABs and RZEDBs before the expiration and grapple with unknowns including a likely lower rebate level if an extension does pass • 2010 issuance is expected to remain strong around $100 billion, with likely surge of volume near the year end when the current legislation expires • Steady monthly volume • Increased knowledge and acceptance of municipal credits by traditional taxable investors • Continued demand for long duration BABs & RZEDBs from pensions and insurance firms to offset liabilities

3. Call Features – 30% with Par Calls Size – Majority under $250 Million Volume – Over $129Bn Since Inception Maturities – 63% over 22 Years BABs & RZEDBs Market Dynamics and Trends Overview of BABs Issuance to Date (1) Billions Number of Deals ____________________ (1) Source: Bloomberg and Thomson Reuters. Data as of 9/13/2010.

4. Typical Investor Distribution (2) Ratings – 68% with AA or Higher Sectors – Broadly Diversified BABs & RZEDBs Market Dynamics and Trends Overview of Issuance to Date (1) • ~ 50% Are Traditional Municipal Bond Buyers: • Mutual Fund (i.e. Bond Fund) • Investment Advisory (with tax-exempt market research capacity) • Property Casualty Insurance Company • Retail • ~ 50% Are Non-Traditional Municipal Bond Buyers • Life Insurance Company • Investment Advisory • Foreign Banks • Pensions • Hedge Funds • Corporation * - Hedge Funds, Governmental, Pensions • ____________________ • Source: Thomson Reuters. Data as of 8/6/2010. • Based on a large, highly rated, GO BAB issue.

5. BABs Market Dynamics and Trends Top BABs Holders (1) ____________________ (1) Source: eMAXX as of 6/30/10

6. BABs & RZEDBs Market Dynamics and Trends Muni-Style 10-Year Par Call vs. Corporate Style Make-Whole Call

7. BAB Spreads Are Grinding Tighter in the Past Weeks (1) Muni Credit Spreads to AAA (1) Ratios Are Above Averages Market Update Municipal Spreads and Ratios ____________________ (1) Source: Bank of America Merrill Lynch.

8. Tax-Exempt vs. Taxable Syndicate Syndicate Dynamics – Typical Timeline and Process Addressing Dual Marketing Plans Tax-Exempt Syndicate • Investor Presentations Posted • Preliminary & Final Pricing • Mailing of POS • Rating Reports • Formal Award • Retail Order Period -1 to 2 Days - 1 Week -2 to 3 Days -1 Day 0 +1 Day • Formal Guidance • Launch Pricing • Set Coupons/Formal Award • Mailing of POS • Rating Reports • Investor Conference Call (If Needed) • Whisper Talk • Preliminary Guidance Taxable Syndicate (including BABs & RZEDBs) • Investor Presentations Posted