KIRKLAND & ELLIS LLP Kirkland & Ellis LLP U.S. Capital Markets Comparison Christian O. Nagler July 26, v1

KIRKLAND & ELLIS LLP History of U.S. Markets Bonds  States used bonds to finance the Revolutionary War  First U.S. government issuance was to refund state debts (1790)  Corporate bonds financed much of the industrial boom  WWI Liberty Bonds marketed to individuals Equities  NYSE / 1792  Continent wide economy with low internal trade barriers  2

KIRKLAND & ELLIS LLP Regulation of Securities  Generally, a disclosure regulated regime  Offering document quite well-established  Registered/unregistered securities (equities typically registered)  State regulation dates back to 1911 – “blue sky laws”  Federal regulation dates back to 1933 (Securities Act); 1934 (Exchange Act); 1940 (Trust Indenture Act)  3

KIRKLAND & ELLIS LLP Current Market  154 U.S. IPOs completed in 2010/69 U.S. IPOs completed in 2009*  About $822 billion average daily bond trading volume**  Low interest rates for new issuances (IBM – 5 yr bond – 2.07% YTM)  Almost all bond trading is between broker-dealers on the over-the- counter market  Today’s buyers include: mutual funds; institutional funds; hedge funds; insurance companies; and structured funds *PwC US IPO Watch **Source: SIFMA  4

KIRKLAND & ELLIS LLP Contributors to Active Capital Markets  Established history/case law  Strong secondary markets – there’s almost always a buyer  Bankruptcy Reorganization Laws  Established Disclosure Regime  5

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