New Global Note structure for international bearer debt securities issued through the ICSDs 1 June 2006

The international debt market New Global Note Legal framework Market impacts Additional information

International debt market Key features The international debt market features instruments that are initially issued (and subsequently traded) across borders and has the following features: Wide range of issuers Different jurisdictions Deposited with ICSDs Multi-currency Multi-product Can be offered simultaneously to investors in a number of countries Often stock exchange listed (although the bulk of trading is over-the-counter)

Data source: www.bis.org International debt market Attractiveness of international debt securities Key features: Accessibility Price Liquidity The attractiveness of international debt securities owes something to the flexibility and economics of the current common depository structure. Key features Market accessible by issuers irrespective of jurisdiction and domicile Market priced attractively for issuers Issuers gain access to a broad market through access to both ICSDs Multi-product and multi-currency. The new but important consideration issuers will face is whether or not to structure the security to satisfy the Eurosystem requirements for securities to be recognised as eligible collateral for intra-day credit and monetary operations. Data source: www.bis.org

International debt market Eurosystem collateral eligibility Eurosystem: the ECB and the National Central Banks of member states which have adopted the single currency Principal objectives of the Eurosystem are price stability and support of the general economic policies of the European Community Eurosystem uses monetary policy instruments to help steer interest rates and manage liquidity Liquidity provided to the market via monetary policy instruments usually requires the placement of “eligible collateral” More information on www.ecb.int

International debt market Eurosystem collateral eligibility Eurosystem collateral eligibility criteria (amongst other requirements): euro-denominated debt issued by an EEA , G10 or supranational issuer meets high credit standards is listed or quoted on a regulated market or an approved non regulated market is settled in the Eurozone is held with a Securities Settlement System (SSS) complying with further Eurosystem criteria More information on http://www.ecb.int/pub/pdf/other/gendoc2005en.pdf

The International debt market New Global Note Legal framework Market impacts Additional information

New Global Note Classical Global note (CGN) Structure International securities issued in CGN form I C S D l i e n t s I s u e r Euroclear Common Depositary Agreement Issuing & Paying Agency Agreement Terms & Conditions / Operating Procedures / Customer Handbook Common Depositary Issuer Agent Main features of the current structure: One Global Note deposited with a Common Depositary for the account of EB and CBL No direct relationship between the issuer and the ICSDs Asset servicing and safekeeping performed by one entity (the Common Depositary) under one single contract (Depositary Agreement) For bearer debt securities, the Issued Outstanding Amount is the one indicated on the face of the note Clearing and settlement is only through and between the ICSDs The Common Depositary will be selected in priority among the issuer agents network. Clearstream

New Global Note Trigger of the new structure Request from Eurosystem leads to the proposal of a new structure for securities to be recognised as eligible collateral The new structure will be mandatory for Eurosystem collateral eligible securities as of 1 January 2007 The NGN structure can also be used at issuer’s choice for other bearer debt securities Following a recommendation by the Eurosystem concerning the custody structure of international debt securities, the ICSDs have worked with market participants to create a new structure for the issuance, processing and safekeeping of international bearer debt securities issued using a New Global Note (NGN) form. This new structure will be mandatory for Eurosystem collateral eligible securities. The NGN structure can also be used at issuer’s choice for other bearer debt securities (e.g. multi currency issuer).

New Global Note New structure International securities issued in NGN form Issuer - ICSD Agreement Euroclear Euroclear CSK CSK Issuing & Paying Issuing & Paying I I Agreement Agreement Agency Agency C C Agreement Agreement S S I I Terms & Conditions / Terms & Conditions / D D CSK CSK s s Operating Operating s s procedures / procedures / Issuer Issuer C C u u Customer handbook Customer handbook Agent Agent l l e e i i r r CSP CSP e e See next slides key features. n n t t CSP CSP s s Agreement Agreement Clearstream Clearstream Issuer Issuer - - ICSD Agreement ICSD Agreement

New Global Note Key features Bearer form securities New type of global certificate: New Global Note (NGN) Issue Outstanding Amount (IOA) = ICSDs’ records No need for physical annotation of the Global Note Issuer-ICSD agreement Two new types of agents: Common Safekeeper (CSK): commercial banks or ICSDs Common Service Provider (CSP): commercial banks New issuances of international debt securities in global bearer form to use a new form of global certificate, known as the New Global Note (NGN). Under the terms of the NGN, the Issue Outstanding Amount (IOA) is determined primarily based on the ICSDs’ records avoiding the need for physical annotation of the bearer form global note. Issuers provide a signed Issuer-ICSD agreement requesting acceptance of the securities with the ICSDs. A direct relationship exists between the ICSDs and the issuer via the Issuer-ICSD agreement. The securities will be serviced by two new types of agents, the Common Safekeeper (CSK) and the Common Service Provider (CSP) appointed by the ICSDs. The commercial banks will provide the function of CSP. For the CSK, it will be: Clearstream Banking Luxembourg or Euroclear Bank for securities that issuers wish to make potentially eligible as collateral for Eurosystem monetary policy or intra-day credit operations, or the same entity as the CSP for all other securities issued in NGN form.

New Global Note Overview of the dual structure CGN NGN Type of security International securities International debt securities Legal form of security Global Bearer or Registered Global Bearer Asset servicing CD CSP Safekeeping CSK (Bank or ICSD) Legal record keeper ICSDs Date of existence Since 1986 As from 30 June 2006 Eligibility for Eurosystem monetary policy and credit operations Yes, for securities issued before 1 January 2007 Yes, if deposited with ICSD CSK

New Global Note Collateral eligibility As from 1 January 2007 collateral eligible international debt securities in bearer form will have to comply with: The current collateral eligibility criteria, AND New criteria: NGN form Kept in safe custody with an ICSD CSK Grandfathering will apply for securities issued before 1 January 2007 Securities eligible as collateral for Eurosystem operations Based on information provided by the ECB, the Eurosystem collateral-eligibility criteria currently require that, among other things, a security: is euro-denominated debt issued by an EEA, G10 or supranational issuer, meets high credit standards, is listed or quoted on a regulated market or an approved non regulated market, is settled in the Eurozone, and is held with a Securities Settlement System (SSS) complying with further Eurosystem criteria AND the international bearer debt security will have to be issued under the NGN form; and the NGN will have to be kept in safe custody with one of the ICSDs acting as CSK. Securities issued in CGN form before 1 January 2007 continue to be eligible (grandfathering)

New Global Note Collateral eligibility for securities issued through the ICSDs 30 Jun 1 Jan CGN NGN + ICSD CSK NGN + Commercial bank CSK Potentially eligible Not potentially eligible As from 1 January 2007, Eurosystem collateral eligibility = current Eurosystem criteria + NGN form + ICSD CSK

The International debt market New Global Note Legal framework Market impacts Additional information

Legal framework Principles New or updated legal documents: New Global Note (NGN) Effectuation authorisation Issuer-ICSD Agreement Legal Opinions for four jurisdictions: England, Germany, Netherlands, New York Model provisions for offering documentation Standard clauses for Trust Deeds / Issuing and Paying Agent Agreements The NGN structure relies on a series of new or updated legal documents, including: NGN template: issuers should use a new model form of global note. Compared to the CGN, the main difference is that the nominal amount of the issuer’s debt is no longer recorded on the face of the note or on the attached schedule(s), but is determined by the records of the ICSDs. Effectuation: the Lead Manager or issuer agent can deliver the NGN electronically to the CSK; in such a case, the issuer should authorise the CSK to effectuate the NGN to make it validly issued. Issuer – ICSD agreement: issuers will be requested to provide a signed Issuer-ICSD agreement requesting acceptance of their securities with the ICSDs Documentation: issuers will need to update their programme or offering documentation, trust deeds or indentures to account for this new form of note, and modify their term sheets, pricing supplements and offering documentation accordingly. Legal opinion: the WG has obtained a legal opinion on the validity and enforceability of the NGN for four of the main jurisdictions used to issue international debt securities: the law of England, Germany, The Netherlands and New York. For other jurisdictions, issuers will be asked to provide a copy of the validity and enforceability opinion prior to acceptance. Agency agreements: agency agreements will be updated to reflect the new structure to be serviced by the issuer’s agent.

The International debt market New Global Note Legal framework Market impacts Additional information

Market Impacts Generic New operational flows had to be designed for the NGN structure when necessary Changes led to optimisation of the operational flows Harmonisation of the current and new flows Standard Market Protocol to promote the changes to the market New operational flows had to be designed for the NGN structure when necessary, e.g. issuance process (see next slide) IOA reconciliation, … Changes led to optimisation of the operational flows: the aim of the new operational flows is not only to adapt them to the new structure but also to make them more efficient Harmonisation of the current and new flows: whenever possible, current operational flows (CGN structure) will be harmonised to the new structure The Standard Market Protocol will record the changes to the operational flows and will be available to all market participants. It will establish best market practices for the issuance and asset servicing of international debt securities issued in CGN and NGN form.

Common Service Provider Market impacts Issuance process € Issuer Common Safekeeper Positioning Confirm receipt and validity of the NGN € € € NGN deposit: the NGN certificate must be deposited with and confirmed by the CSK Effectuation authorisation if electronic delivery IOA mark-up: the issuer agent must confirm the initial amount to be credited to the ICSDs (via the CSP). Euroclear Mark Up Instruction Lead Manager NI Account Common Service Provider Syndicate/ Allottees Clearstream Confirm Mark Up + Instruction to credit LM account CS358F CS358F

Market Impacts Impact for issuers Specific form of security (NGN) deposited with a CSK Updated offering documentation Issuer-ICSD Agreement Legal opinion on validity and enforceability of NGN (except in four markets covered by WG opinions) Effectuation authorisation The NGN structure will have the following impacts on the issuers: Issuance of a specific form of security (NGN). The NGN certificate must be deposited with and confirmed by the CSK; for securities expected to meet Eurosystem eligibility criteria, the CSK will need to be one of the ICSDs; Updated offering documentation includes prior to June 2006: Prospectus/Offering Circular/Subscription Agreement, Trust Deeds, Fiscal Agency, Issuing & Paying Agency and Paying Agency Agreements, as the case may. The issuer or its agent will be required to specify whether the security is to be issued in NGN or CGN form and whether the security is expected or not to meet Eurosystem eligibility criteria at the time of issuance or in the future. The latter will allow the ICSDs to determine whether the security should be deposited with an ICSD acting as CSK. Issuer-ICSD Agreement: before depositing the security (stand alone security) or the first draw-down (securities under a programme) in NGN form, the issuer or its agent must ensure that the issuer has signed the Issuer-ICSD agreement. Legal opinion on validity and enforceability of NGN (except in four markets covered by WG opinions) Effectuation authorisation: for NGN securities sent electronically to the ICSDs CSK, the issuer or its agent will have to provide the CSK with an authorisation to effectuate the Global Note to make it a valid security.

Market Impacts Impact for issuer agents and lead managers Specific form of security NGN New issue documentation New procedure for New Issue issuance process. For issuer agents only: New procedures/systems for reconciliation Enhanced procedures for Income and Corporate Actions processing New responsibilities created by the Issuer-ICSD Agreement New Issues New form of security: New Global Note Lead Manager / Issuer Agent to ensure Issuer–ICSD Agreement is place as its absence will prevent closing. Update offering documentation Issuer or agent chooses channel of delivery of NGN. New issuance process (see slide 19) Accounting and reconciliation There will be a regular reconciliation (daily for securities for which the IOA has been modified and monthly for all securities) between the Issuer or its agent (via the CSP) and each ICSD of the IOA portion held by each ICSD. Agent - Income Provide proactively to the CSP any income related information as soon as announced to the market, to optimise flow of information between the CSP, the ICSDs and beneficial owner. Pro-active support in particular from Calculation Agent to provide accurate and timely information to the CSP & ICSDs. Agent - Corporate Action Provide MU/MD confirmation to the CSP the same day as the Issuer Agent has booked the movement.

Market Impacts Impact for investors Eurosystem-eligibility maintained Communication of new criteria Improved asset servicing Eurosystem-eligibility maintained: the new NGN structure will allow maintenance of the collateral eligibility for international bearer debt securities in global note form issued after June 2006. Communication of new criteria: new eligibility criteria (NGN form and ICSDs CSK) will be available from ICSDs’ website. Improved asset servicing through the new operational flows (improved operational flows will apply to NGN and CGN).

The International debt market New Global Note Legal framework Market impacts Additional information

Additional information Project organisation Working Group Market Advisory Group The NGN structure is a market initiative undertaken by leading entities active on the international debt market. Market Advisory Group Role: providing strategic guidance to the Working Group on market feedback and how to communicate the proposed changes to the market and ensuring high level monitoring of the project. Membership: Issuers, ICSDs, ICMA (Lead Managers), leading IPAs, EIB, ECB, BNB, BCL (last four as observers). Chairman is George Faux from Citigroup. Working Group Role: supervising the effective implementation of the ECB Standard 3 project and overseeing the project deliverables Membership: ICSDs, ICMA, leading IPAs.

Additional information Documents covering the NGN structure NGN brochure FAQ Legal pack including: NGN templates standard provisions for agency agreements standard provisions for offering documentation Issuer-ICSD agreement Effectuation authorisation Operating & Administrative Procedures Memorandum NGN New Issues Procedures NGN brochure: New Global Note structure for international debt securities issued through the ICSDs – General information. New Global Note templates: Form of the global note to be issued for securities under programme and stand-alone securities. Legal pack: this legal pack will include: - NGN templates- standard provisions for agency agreements- standard provisions for offering documentation- Issuer-ICSD agreement- Effectuation and disposal authorisation.

Additional information Where to obtain additional information www.icma-group.org NGN@icma-group.org www.euroclear.com NGN@euroclear.com + 32 2 224 4527 www.clearstream.com NGN@clearstream.com + 352 243 32119 www.capmktserv.com NGN@capmktserv.com