Global Credit Crisis: What, How, Why and When

Global Credit Crisis: What, How, Why and When

Howard HillerFixed Income Capital Markets

October 10, 2008

Credit Crisis: Dramatis Personae

“If banks feel they must keep on dancing while the music is playing and that at the end of the party the central bank will make sure everyone gets home safely, then over time the parties will become wilder and wilder.”

“That might not matter were the consequences limited to the party-goers. But they are not. When the party ends, some innocent bystanders may lose their homes altogether.”

Mervyn King, Governor of the Bank of England British Bankers Association, LondonJune 10, 2008

"You're right, we did it. We're very sorry. But thanks to you, we won't do it again.”

Ben Bernanke’s quip to Milton Friedman referring to the Fed’s responsibility for the Great Depression

Ben Bernanke, Chairman of the Federal ReserveConference to Honor Milton FriedmanUniversity of Chicago, Chicago, IllinoisNovember 8, 2002

“If you have a bazooka in your pocket and people know it, you probably won't have to use it.”

Henry Paulson, Treasury SecretaryTestimony at the Senate Banking Committee on legislation to support Fannie Mae and Freddie Mac July 15, 2008

1

Source: New Yorker, Oct. 6, 2008.2

Credit Crisis Update

Credit Crisis Update: Endgame? End of Beginning?Milestones and Financial Triage

Breaking Points … The Treasury / Fed ResponseBear Stearns

Sale to JPMorgan @ $10$29bn loan from Fed

Fannie Mae / Freddie Mac$200bn commitment in exchange for

preferred w/ warrants

Common and preferred diluted

Lehman Brothers HoldingsFiles for bankruptcy

U.S. operations sold to Barclays ($1.75bn); European and Asian assets

sold to Nomura

Merrill Lynch & Co.Sold to Bank of America

for total deal value of $50bn

AIGTreasury provides $85bn credit line in

exchange for a 79.9% stake

Northern RockNationalized

HBOSSold to Lloyds TSB ($22bn)

3/16/08

9/7/08

9/15/08

9/16/08

9/17/08

9/14/07

9/16/08

Statement on $700-Billion Troubled Asset Relief Program (TARP)

“… fundamentally and comprehensively address the root cause of our financial system’s stresses by removing distressed assets from the financial system.”

“... residential and commercial mortgage-related assets”…”and other assets”

“The purchase prices will be determined by “market mechanisms where possible, such as reverse auctions.”

“Participating financial institutions must have significant operations in the U.S.”

“Borrowing in support of this program will be subject to the debt limit, which will be increased by $700 billion accordingly.”

Treasury will direct “private asset managers” to manage the assets to “meet program objectives”

Money Market Funds ($3.4tn)“Break the buck” at Reserve Primary Fund;$197bn redemptions during week of 9/15

Commercial Paper

Tier 2 market comes under pressure with borrowing limited to overnight maturities at higher rates; 3-mo. T-bill yields touch 0.02%

Bank Drawdowns

General Motors draws the remaining $3.5bn balance from its $4.5bn credit line

Bear Raids on Financial Firms

Short sellers took advantage of less liquid CDS market to attack company’s apparent

viability in credit markets

Guaranty Fund and ABCP MMF LFMade $50bn available to guarantee money

market funds and provided liquidity for ABCP

Prohibit Short SellingShort selling of 799 financial stocks (+30 other stocks) is prohibited through Oct. 2; a ban on

“naked” short selling was also reinstituted

Sept. 23-24: Secretary Paulson and Chairman Bernanke testified before the Senate and House committees on the $700-billion TARP

Un

ited

Kin

gd

om

Washington MutualFDIC seizes failed WaMu and sells

branch system to JPMorgan for $1.9bn9/25/08

IndyMac BancorpOTS closes IndyMac and transfer

operations to FDIC at cost of $4-$8bn7/11/08

Bradford & BingleyNationalized9/28/08

3 Credit Crisis Update

Value Destruction, Capital Raising and a Changing Landscape

Fiscal YE2006 ($bn) Share Price

No. Shares Outstanding

Bear Stearns $17.9 = 152.48 x 117.31

Fannie Mae 57.9 = 59.39 x 975.05

Freddie Mac 47.0 = 67.90 x 692.72

Lehman Brothers Holdings 39.0 = 73.67 x 530.06

American International Group 186.3 = 71.66 x 2,599.72

Washington Mutual 43.0 = 45.49 x 945.22

IndyMac Bancorp 3.2 = 45.16 x 70.87

Total $394.3 bn

Unprecedented Value Destruction

And the Banking Landscape Continues to Evolve …

Excludes Lehman debt and preferred of $140bn; GSE preferred of $36bn and WaMu debt of $26bn.

Capital Share Price

No. Shares

%Mkt Cap

JPMorgan Chase $11.50 40.50 283.95 7.7%

Goldman Sachs 5.75 123.00 46.75 10.7%

Goldman Sachs (a) 5.00 10% Preferred with Warrant at $115

Morgan Stanley (b) 9.00 Equity stake of 21%

Citigroup 10.00 Expected

Bank of America 10.01 22.00 455.00 10.0%

Total $51.26 bn

Capital Raised Post Sept. 22

(a) GS preferred and warrants placed with Berkshire Hathaway.(b) Equity investment from Mitsubishi UFJ.

+ ++

+New bank holding companies (9/22)


http://www.bearstearns.com/index.htm

Sept. 26-Oct 8: Credit Crisis Makes Landfall in Europe

Glitnir Bank – Glitnir Bank, the 104-year-old Icelandic bank, will be nationalized. Iceland's government will pay €600mm ($859mm) in return for a 75% stake. Additional banks may also be at risk.

Bradford & Bingley – The UK government announced it will take control of mortgage lender Bradford & Bingley Plc.

UK – The UK government unveils capital plan for banks (up to £50bn); enhanced liquidity scheme (£200bn); and guarantee up to £250bn of short-term bank debt with maturities up to 36 months.

Fortis – Fortis, the largest Belgian financial-services firm, received an €11.2bn ($16.3bn) rescue from Belgium, the Netherlands and Luxembourg on Sept. 28. But BNP Paribas agreed to buy Fortis's units in Belgium and Luxembourg for €14.5bn ($19.8bn) on Oct. 5 after the government rescue plan failed.

Hypo Real Estate AG – The German government and a group of private banks will provide a €50bn ($68bn) guarantee for Hypo Real Estate Holding AG -- Germany's second-largest real-estate lender.

The Irish government announced it will guarantee all deposits, senior debt, covered bonds and dated subordinated debt of four banks and two savings banks for 2 years.

Spain – Considering a TARP-like plan funded with €50bn ($68bn)

Dexia SA – Belgium and France will rescue Dexia SA with an infusion of €6.4bn ($9.2bn). (Dexia has been supporting bond insurer Financial Security Assurance through $500mm equity in Feb., a $5bn credit line in Jun. and an additional equity pledge of $300mm in Aug.)

Greece, Denmark and Germany

have decided to guarantee all their

countries' bank deposits.

Global Rate Cut


$245

$340

$175

$227 $23

$25

$150

$0

$250

$500

$750

$1,000

$1,250

$1,500

Writedowns Capital Infusion

Bil

lio

ns

($)

Asia

Americas

EuropeAsia

Europe

EquityLoss

$588

$439

Americas

$1,405

Assessing the Progress of the Credit Crisis

Which “Inning” Are We In Now … After More Than One Year into the Current Credit Crisis?

Source: Bloomberg LP (as of 10/2/08); Containing Systemic Risks and Restoring Financial Soundness, Global Financial Stability Report, International Monetary Fund, April 8, 2008.

Total: $1,405 BillionIMF Estimate, Oct 2008

(Revised Up From Apr 2008 Est. of $945 Billion)

?Corporate Loans

& Securities $360bn (26%)

Consumer Loans$45bn (3%)

Residential Mortgages

& Securities$750bn (53%)

Commercial Mortgages & Securities

$250bn (18%)


How Bad Is It?

The Economic Cost of a Financial Crisis Can Be Measured as a % of Gross Domestic Product

Source: Global Financial Stability Report: Financial Stress and Deleveraging -- Macro-Financial Implications and Policy, International Monetary Fund, October 7, 2008.

2 Years 10 Years 10 Years ? Years 2 Years 10 Years 10 Years ? Years

35%

15%

3%5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Asia(1998-1999)

Japan(1990-1999)

S&L(1986-1995)

Global CreditCrisis

(2007-)

Eco

no

mic

Co

st a

s a

% o

f G

DP

$400

$770

$280

$1,405

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

Asia(1998-1999)

Japan(1990-1999)

S&L(1986-1995)

Global CreditCrisis

(2007-)

Eco

no

mic

Co

st (

$ b

illio

ns)

The current global credit crisis is the largest in expected dollar terms – the current IMF estimate is $1.4 trillion

As a percentage of Developed World GDP (~$30 trillion), the magnitude appears more benign at under 5%


Federal Reserve Responses: Liquidity Solutions

Dec. 12, 2007: Term Auction Facility (TAF)

Mar. 11, 2008: Term Securities Lending Facility (TSLF)– Sept. 14, 2008: The collateral for the TSLF has been expanded to include all investment-grade debt securities.

Previously, only Treasury securities, agency securities, and AAA-rated mortgage-backed and asset-backed securities could be pledged.

Mar. 16, 2008: Primary Dealer Credit Facility (PDCF)– Sept. 14, 2008: The collateral eligible PDCF has been broadened to closely match the types of collateral that can be

pledged in the tri-party repo systems of the two major clearing banks. Previously, PDCF collateral had been limited to investment-grade debt securities.

Sept. 19, 2008: ABCP MMF Liquidity Facility (AMLF)– Eligible borrowers may borrow funds from the AMLF (ABCP MMF Liquidity Facility) in order to fund the purchase of

eligible ABCP from a money market mutual fund (MMMF) under certain conditions.

Sept. 22, 2008: New Bank Holding Companies– The Federal Reserve Board announced that the applications of Goldman Sachs and Morgan Stanley to become bank

holding companies may be consummated immediately without the application of the five-day antitrust waiting period.

Oct. 7, 2008: Commercial Paper Funding Facility (CPFF)– The SPV will purchase directly from eligible issuers 3-month U.S. dollar-denominated commercial paper at a spread

over the 3-month overnight index swap (OIS) rate.


But Liquidity Challenges Remain Unprecedented


Credit Crisis: What, How, Why and When

Credit Crisis: What, How, Why and When

Four Key Questions on the Credit Crisis

What Causes Financial Crises?

How Did the Current Credit Crisis Develop?

Why Did the Current Credit Crisis Spread?

When Will it End?

10Credit Crisis: What, How, Why and When

What Causes Financial Crises? (A. Puncturing Asset Bubbles)

Cheap Money + Leverage

Financial Innovation

Asset Bubble

Inte

rest

Ra

te (

%)

+


+0

+50

+100

+150

+200

+250

+300

+350

+400

+450

+500

Spr

ead

(bp)

Housing Bubble EndsSubprime and CDOs Leveraged Finance

ECB and Fed inject liquidity8/10/07

Financial Crises (of Lesser Magnitude) Are Not Uncommon

Metallgesellschaft AG $1.5bn oil trading losses

12/93

Collapse of the CMO market -- higher ratesApr. 1994

Orange County bankruptcy filing due to structured note investments12/6/94

Mexico currency devaluation12/20/94

Barings collapsed after Nick Leeson trading losses of £830mm2/ 26/95

Thai currency

devaluation7/2/97

Russia currency

devaluation and default

8/17/98

LTCM bailout9/23/98

Brazil devaluation1/15/99

Y2K12/31/99

Dot-com bubble burst8/1/00

PG&E bankruptcy filing ($29.8bn in assets)/ CA energy crisis4/6/01

WTC terrorist

attack9/11/01

Enron bankruptcy filing ($63.4bn in assets)12/2/01

Argentina currency devaluation1/ 6/02

WorldCom bankruptcy filing ($103.9bn in assets)7/21/02

Mirant bankruptcy filing ($19.4bn in assets)7/14/03

GM reports $1.1bn Q1

loss and withdraws

earnings guidance

for year4/19/05

Calpine bankruptcy filing ($27bn in assets)12/11/05

Bear Stearns to bail out funds

6/23/07

IMF says credit crisis losses could reach $945bn

4/8/08

Junk bond market closed (UAL LBO 1989)

Drexel Burnham bankruptcy filing2/13/90

Recession Recession

Asian Currency/Debt CrisisRussian DefaultLTCM Bailout

Corporate GovernanceSept. 11, 2001

Dot-Com Bubble Ends

Credit Rallies as Recession Ends

Ease

Tighten

Ease

Tighten

8.25% 3.00% 3.00% 6.00% 5.25% 4.75% 6.50% 1.00% 5.25% 2.00%

Tighten

Ease

Ease

Fed arranges sale of Bear Stearns to JPM

3/17/08

Mexican Currency/Debt CrisisOrange County Bankruptcy

Mortgage Market

S&P 500 Price Performance, Quarter-on-Quarter.

BBB Corporate Spreads

Credit Rallies as Recession Ends

The Last Twenty Years

Savings & LoansCrisis / BailoutMid-1980s

Fed Policy:

Senate passes Housing Bill with unlimited credit line for

Fannie Mae and Freddie Mac7/26/08

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

03/90 03/91 03/92 03/93 03/94 03/95 03/96 03/97 03/98 03/99 03/00 03/01 03/02 03/03 03/04 03/05 03/06 03/07 03/08


What Caused the Current Credit Crisis?

Cheap Money

Financial Innovation

Asset Bubble

Attractive mortgagefinancing

No-doc/low-doc“Piggyback” seconds

Option ARMsHousing

Fed funds ≤ 3% (9/01-6/05)

Collateralized Debt Obligations (CDOs):Structuring/Valuation

Housing

High-yield ratesbelow 8%

Collateralized Loan Obligations (CLOs):Structuring/Valuation

Corporations?

The Conditions for the Current Credit Crisis Emerged in a Number of Ways in 2005–2006:

CurrentCreditCrisis


How Did The Current Credit Crisis Start?

SubprimeBorrower

Mortgage Brokers

CDOManager

Housing Mortgages RMBS CDO

EquityNot Rated

MezzanineAA-BB

SeniorAAA

Banks

RMBS: Residential Mortgage-Backed Securities CDO: Collateralized Debt Obligations

A bubble in housing prices …

… enabled by a loosening of lending standards …

… fed mortgages into complex structured transactions, with high-grade ratings …

… led to a “perfect storm” of troubled mortgages, RMBS and CDOs

When the Music Stopped, Banks & Brokers Retained Hundred of Billions of Senior CDO Tranches and “Warehoused” Subprime Loans … Leading to Major Writedowns …


http://www.fitchratings.com/corporate/index.cfm

http://www2.standardandpoors.com/portal/site/sp/en/us/page.siteselection/home.jsp

CDO Example: From Triple-A to Single-B in Eight Months

Source: The Wall Street Journal, December 27, 2007, “Wall Street Wizardry Amplified Credit Crisis.”


0

50

100

150

200

250

300

350

400

450

500

550

600

01/01/07 03/12/07 05/21/07 07/31/07 10/09/07 12/19/07 02/27/08 05/08/08 07/17/08 09/26/08

Off

er-S

ide

5-Y

ear

CD

S S

pre

ad (

bp

)

Average Broker Credit Default Swap Sreads

Average Bank Credit Default Swap Spreads

Why Has The Current Credit Crisis Spread?The Multiplier Effect Has Shrunk Credit Availability Throughout the Banking System …

Monday, Mar. 17: Announced sale of

Bear Stearnsto JP Morgan Chase with

$29-billion Fed loan

Traditional Revolving Credit Facility Cost

$1.5 Trillion = 10 x times $150 Billion

U.S. Bank Losses Net of Capital Infusions

($bn)

U.S. Bank Leverage

(x)

Credit Erosion

($tn)

… Compounded by Higher Bank/Broker Funding Costs

Bank Leverage Targets Could be

Reduced

Monday, Sept. 15: Lehman Brothers Holdings files for

bankruptcy protection

+255 bp(9/30)

+


Why Has The Current Credit Crisis Spread? (continued)

B A N K S & B R O K E R S

Merchant Energy

Mortgage Cos.

Credit Availability

Consumer Securitization

Leveraged Finance

Other Credit Intensive Industries

GM Ford

Chrysler

Auto Loans

Credit Cards

Student Loans

High-Yield Bonds

High-Grade Finance

Short-term Debt

Refinancing

Loan Commitments

ABCP (FAS 140)

Municipal Bond MarketAuction Rate

Securities (ARS)

Structured Investment

Vehicles (SIV)

U.S. Treasury

GSE Rescue (9/7)

CDOs

Commercial Real Estate

Subprime andAlt-A

Housing Bubble

Homebuilders Construction Cos.

S&Ls FDIC

Monoline Insurers

$330bn

$275bn

$2.7tn

$1.6tn Senior Debt

$5tn mortgages(almost 50% of total

U.S. outstanding)

$700bn

$5tn

$800bn(9/1/08–12/31/09)

$5.9tn

$2.5tn

The FDIC Deposit Insurance Fund totals $53 bn and the

closure of IndyMac Bancorp is estimated to cost $4-$8bn.

$1.0tn

Credit DefaultSwaps

$62tn

Bear StearnsSells (3/16)

CLOs

Dampening Global Economic Growth and Equity Market Upside

The monoline insurers (Ambac, MBIA) expanded their business from municipalities to CDOs –

guaranteeing about $45bn of these securities.

In April 2008, S&P commented that GSEs “pose large contingent fiscal risk” and “if these risks were to translate into increased government debt, they could even hurt the U.S.'s credit standing.”

Banks commit to buy back$40bn from retail holders.

Brought onbalance sheet.

Concern about counterparty

exposures.

AAA rated asset-backed securities are now trading at spreads near +300 bp.

Insurance Cos. (e.g. AIG)

CMBS

AAA

AAA

AAA

AAA

LEH Files (9/15)

MER Sells to BOA (9/15)

AIG - Fed Loan (9/16)

WaMuFails (9/25)

MS/Mitsubishi

(9/22)

$2.2tn

$0.7tn

The Fed created its ABCP MMF Liquidity Facility to support


-20-15

-10-5

05

1015

20

Jan-05 Aug-05 Mar-06 Oct-06 May-07 Dec-07 Jul-08

Yea

r-on

-Yea

r (%

)

Case-Shiller Composite-20 City

Why Has The Current Credit Crisis Spread? (continued)

Home Prices. Home prices have declined 16% over the last 12 months, reduced cash available from “home equity withdrawals”

Energy Prices. During the 12 months preceding June 2008, crude oil more than doubled to over $140 per barrel, increasing the cost of refined products, particularly gasoline

Credit Availability. The most recent Fed survey of lending officers shows a recession-level decline in loan availability

Equity Markets. The Dow Industrials are in official bear market territory after having declined more then 20% from its Oct. 2007 high

11,000

12,000

13,000

14,000

15,000

Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08

Dow Jones Industrial Average

-20% 11,350(6/30/08)

14,165(10/9/07)

WE

AL

TH

EF

FE

CT

$40

$60

$80

$100

$120

$140

$160

Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08

WTI Crude

+98%

$140.00(6/30/08)

$70.68(6/30/07)

CO

ST

OF

LIV

ING

+11.2%(4/30/06)

-15.9%(6/30/08)

Crisis Has Spread From Wall Street to Main Street … Compounded by Higher Energy Prices


-2.75%

-2.25%

-1.75%

-1.25%

-0.75%

-0.25%

0.25%

0.75%

1.25%

1.75%

2.25%

2.75%

Feb-00

May-00

Aug-00

Nov-00

Feb-01

May-01

Aug-01

Nov-01

Feb-02

May-02

Aug-02

Nov-02

Feb-03

May-03

Aug-03

Nov-03

Feb-04

May-04

Aug-04

Nov-04

Feb-05

May-05

Aug-05

Nov-05

Feb-06

May-06

Aug-06

Nov-06

Feb-07

May-07

Aug-07

Nov-07

Feb-08

May-08

When Will It End?

A recent BIS analysis suggested that writedowns determined by the ABX index may be overstated

Unlike Japan in the 1990s (the so-called “lost decade”), banks have pro-actively addressed balance sheet needs, raising over $350 billion in capital

Despite recent gridlock, the US Treasury, Fed, FDIC and legislators understand the depth of the crisis

The unwinding of the commodity boom may provide relief for consumers and energy-intensive businesses

Businesses are adapting to the constrained credit environment

Financial institutions and the New York Fed are working on a Clearing Corp. for credit default swaps

There Is Some Good News ….Jul-08

Month-to-Month Change in the S&P Case-Shiller Composite Index

There are some signs that the pace of housing price declines is slowing:


0.000

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Deb

t (T

rilli

on

s o

f D

olla

rs)

Gross Federal DebtPublicly-Held

After the Storm …What are the longer-term implications of the Treasury/Fed resolution of the credit crisis?

20.0

40.0

60.0

80.0

100.0

120.0

1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Deb

t (P

erce

nta

ge

of

GD

P)

Gross Federal Debt

Publicly-Held

US and Global Economic Growth - Slower

Higher unemployment and lower credit availability will slow US consumer spending

Reduced US demand creates a headwind for developed/emerging economies

The Federal Deficit

Likely growing both on an absolute and relative (to GDP) basis

US Interest Rates and the US Dollar

Competition between reduced growth (lower rates) and larger deficits (higher rates)

Likely higher taxes under any new administration

Deflation will likely be a bigger worry than inflation

Regulation of Financial Services

Non-traditional mortgage lending

Bank balance sheets

Securitization and rating agencies

Publicly-held US Treasury debt was $5.0tn at the end of 2007.

Other debt increased the total US debt to $9.0tn.

As a percent of US GDP ($13.7tn), total debt was 66% and publicly-held was 37%.

US Debt: 1940-2007


0

50

100

150

200

250

300

350

10/88 12/90 03/93 05/95 08/97 11/99 01/02 04/04 06/06 09/08

A I

nd

ust

rial

Sp

read

(b

asis

po

ints

)

3

4

5

6

7

8

9

10

11

10/88 12/90 03/93 05/95 08/97 11/99 01/02 04/04 06/06 09/08

Tre

asu

ry a

nd

A Y

ield

(%

)Raising Capital in an Uncertain World

Investment-Grade (A-Rated) Spreads Are At Historically Wide Levels

But Investment-Grade (A-Rated) Yields Are Near Median

+340 bp

7.05%

High-Yield Bond Market

High-Yield Loan Market

Preferred Stock Market

Convertible Market

Bank Loan Market

A Industrial Yield

Treasury Yield

3.65%

+80 bp

6.58%


Electric Utility Debt Financing in Sep.-Oct. 2008

Ratings legend: N: Review for downgrade; P: Review for upgrade; n: negative outlook; p: positive outlook.

OfferDate Company Issue Structure

Amt($MM) Type

Moody/S&PRatings

Yield(%)

ReofferSpread

(bp)

10/07 Southern California Edison Co. 5.750% due 03/15/2014 5.5 NC/L $500 Secured A2/A 5.862% +340

10/07 Detroit Edison 6.400% due 10/01/2013 5 NC/L $250 Secured A3/A- 6.462% +400

10/01 Interstate Power & Light 7.250% due 10/01/2018 10 NC/L $250 Unsecured A3/BBB+ 7.375% +358.2

10/01 Wisconsin Power & Light 7.600% due 10/01/2038 30 NC/L $250 Unsecured A2/A- 7.75% +349.9

09/25 PECO Energy Company 5.600% due 10/15/2013 5 NC/L $300 Secured A2/A 5.664% +262.5

09/25 South Carolina Electric & Gas 6.500% due 11/01/2018 10 NC./L $300 Secured A2/A-(n) 6.500% +265

09/25 Wisconsin Electric Power Co. 6.000% due 04/01/2014 5.5 NC/L $300 Unsecured A1/A-(p) 6.042% +300

09/08 Consumers Energy Company 6.125% due 03/15/2019 10.5 NC/L $350 Secured Baa1/BBB 6.134% +245

09/04 Ohio Power Company 5.750% due 09/01/2013 5 NC/L $250 Unsecured A3(n)/BBB 5.769% +290

09/04 Oklahoma Gas and Electric Co. 6.350% due 09/01/2018 10 NC/L $250 Unsecured A2/BBB+ 6.399% +275

09/03 Oncor Electric Delivery Co. 5.950% due 09/01/2013 5 NC/L $650 Secured Baa3/BBB+ 5.982% +305

09/03 Oncor Electric Delivery Co. 6.800% due 09/01/2018 10 NC/L $550 Secured Baa3/BBB+ 6.815% +312.5

09/03 Oncor Electric Delivery Co. 7.500% due 09/01/2038 30 NC/L $300 Secured Baa3/BBB+ 7.526% +320

09/03 Northern States Power-Wisconsin 6.375% due 09/01/2038 30 NC/L $200 Secured A2/A 6.433% +210


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In January 2007, Citi released a Climate Change Position Statement, the first US financial institution to do so. As a sustainability leader in the financial sector, Citi has taken concrete steps to address this important issue of climate change by: (a) targeting $50 billion over 10 years to address global climate change: includes significant increases in investment and financing of alternative energy, clean technology, and other carbon-emission reduction activities; (b) committing to reduce GHG emissions of all Citi owned and leased properties around the world by 10% by 2011; (c) purchasing more than 52,000 MWh of green (carbon neutral) power for our operations in 2006; (d) creating Sustainable Development Investments (SDI) that makes private equity investments in renewable energy and clean technologies; (e) providing lending and investing services to clients for renewable energy development and projects; (f) producing equity research related to climate issues that helps to inform investors on risks and opportunities associated with the issue; and (g) engaging with a broad range of stakeholders on the issue of climate change to help advance understanding and solutions.

Citi works with its clients in greenhouse gas intensive industries to evaluate emerging risks from climate change and, where appropriate, to mitigate those risks.

Global Credit Crisis: What, How, Why and When

Business

Transcript of Global Credit Crisis: What, How, Why and When