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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