Presentation to the JSLA Don Pollard, Chairman of the LSTA NOVEMBER 2004 THESE MATERIALS MAY NOT BE USED OR RELIED UPON FOR ANY PURPOSE OTHER THAN AS SPECIFICALLY CONTEMPLATED BY A WRITTEN AGREEMENT WITH CREDIT SUISSE FIRST BOSTON

1 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /1  Strong risk adjusted returns, low default rates  Explosive Growth of the Asset Class (New Issuance and Secondary Activity)  Growth driven by Institutional Investors  LSTA Leadership has been important to the growth and health of the market  Providing the groundwork for transparency (standard documentation, mark-to- market), liquidity (standard trade terms, tighter settlement standards, reduced assignment fees) and information The Big Picture for Leveraged Loans in the US

2 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /2 The Leveraged Loan Market Has Grown Rapidly Over the Last 3 Years Total Institutional Loan VolumeTotal Number of Leveraged Loan Issuers ($ in billions) Source:Standard & Poor’s LCD.

3 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /3 Secondary Loan Trading Volume H 2004 (single-sided basis) ($ Billions) Source: Loan Pricing Corporation 03 Annualized Par Loan Desk RankingsDistressed Loan Desk Rankings Source: Loan Market Week (Institutional Investor) market survey.

4 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /4 Loan Market Growth is Significantly Outpacing Other Capital Markets Total New Issuance in the Capital Markets ($ in billions) Source:CSFB Leveraged Finance Research.

5 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /5 Par Amount of Outstanding Leveraged Loans Includes all loans including those not included in the LSTA/LPC mark-to-market service Vast majority are institutional tranches ($ in billions) Source:Standard and Poor’s LCD and S&P / LSTA Leveraged Loan Index.

6 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /6 Why Investors Are Increasingly Attracted to the Leveraged Loan Market Strong Returns – Especially When Risk Adjusted 2002 Returns 2003 Returns YTD 2004 Returns 2002 Sharpe Ratios 2003 Sharpe Ratios YTD 2004 Sharpe Ratios Source:CSFB Leveraged Finance Research. For Investors:  Attractive risk adjusted returns  Floating rate  Lower risk

7 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /7 Why Issuers Are Increasingly Attracted to the Leveraged Loan Market Weighted Average Institutional Loan Pricing by Ratings Average Debt Multiples of Highly Leveraged Loans Criteria: Pre-1996: L+250 and higher; 1996 to date: L+225 and higher; Media Loans excluded; There were too few deals in 1991 to form a meaningful sample. Source:Standard & Poor’s LCD. For Issuers:  “Flexible” form of financing  Callable  Able to negotiate/renegotiate with tangible group of investors  Low cost of capital  Increasingly aggressive terms

8 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /8 The Leveraged Loan Market Has Become “Institutional” Excludes hybrids; as well as, all left and right agent commitments (including arranger and administrative, syndication and documentation agent). Non-banks include: institutional investors, insurance companies, finance companies and securities firms Primary Market for Highly Leveraged Loans: Banks vs. Non-Banks Source:Standard & Poor’s LCD.

9 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /9 Primary Market For Leveraged Loans The leveraged loan market has become institutionalized. LTM 9/30/ Source:Standard & Poor’s LCD.

10 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /10 Total Institutional Loan Investor Groups & Portfolios 1993 – LTM 9/30/04 Includes investor groups that either participated in 3 or more loans or made $10MM of commitments Source:Standard & Poor’s LCD.

11 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /11 Most Active Pro Rata Investors Lenders that Made Ten or More Primary Commitments Source:Standard & Poor’s LCD.

12 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /12 As New Investors Enter the Loan Market, They Turn to the LSTA Total LSTA Membership

13 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /13 As New Investors Enter the Loan Market, They Turn to the LSTA  The LSTA and Sell-side Members Provide:  Accurate Marks  Market Research  Forum for Self-Regulation and “Change” Initiatives  Documentation Standardization  Education

14 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /14 What To Expect Going Forward Conditions and Trends  LBO sponsors have raised an estimated $22 billion out of a targeted $38 billion  $9 billion was raised in the third quarter  Bank / Institutional and Hedge Fund $  Credit Cycle - Default Rates at 5 year lows, leverage creeping back to late 90’s levels  Banks Reinvent / Re-emerge  Leveraged Loan Market is “Always Open” for business  More LSTA leadership  Continued pursuit of liquidity  Continued pursuit for education  Continued pursuit for excellence  We created, we own it and we love it

15 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /15 Outlook / Issues for the JSLA  Considerations from Borrowers  Obstacles as the market develops and how market participants overcame them  Resistance from borrowers regarding loan trading in the early stage and how market participants overcame them  Resistance from borrowers or difficulties regarding disclosing secondary loan prices to the public (some loan prices are actually disclosed at the LSTA website)  How loan sellers have disclosed confidential information such as loan conditions or borrowers’ credit information to potential buyers, avoiding conflicts with confidentiality requirement

16 \\SNYC14216\SyndFin\STAFF\Cantwell, Shane\Pollard\LSTA - Don's presentation to the JSLA_2004 v4.ppt - Nov :45 /16 Outlook / Issues for the JSLA  Problems of the Secondary Market  Assignment Fees  Private versus Public Issues - Sharing of primary loan information (spread, covenants, etc.) –Whether or not disclosing primary loan information to third parties (such as LPC) conflicts with confidentiality requirements –Is the practice being done with borrowers’ consent? Or is the information regarded as public information?  Cross Border Trading –Problems for US investors investing in loan in Europe with 2 different standard documents: LSTA & LMA

Presentation to the JSLA Don Pollard, Chairman of the LSTA NOVEMBER 2004 THESE MATERIALS MAY NOT BE USED OR RELIED UPON FOR ANY PURPOSE OTHER THAN AS SPECIFICALLY CONTEMPLATED BY A WRITTEN AGREEMENT WITH CREDIT SUISSE FIRST BOSTON Back to Main Screen