T. Rowe Price, Invest With Confidence and the Bighorn Sheep logo is a registered trademark of T. Rowe Price Group, Inc. Bank Loan Environment November 2010

2 A Bank Syndicate lends money to a corporation  that loan is sold to investors Considered a “leveraged loan” if the borrower is a non-investment grade company Loans carry a floating rate coupon  typically expressed by a spread over 3-month LIBOR −Ex: if LIBOR is currently 0.3%, an L loan would have a coupon of 5.8% −LIBOR portion of the coupon typically resets every 3 months Callable at par at any time  borrower can generally choose to re-pay the loan any time prior to maturity Loans are at the highest level of the capital structure Loans are secured  structured to include a lien against assets of the borrower What are Bank Loans?

3 Why Invest Now? Fundamental improvements to underlying credits over the last two years Valuations remain attractive Upgrade quality by investing in the senior portion of the capital structure Floating-rate nature provides upside potential in the event of rising interest rates

4 Loan Spreads are Tightening as The Rate of Defaults Slows * Based on principal amount. Source: S&P LCD

5 Valuations Appear to Compensate For Default Risk Estimated Loan Market Spread Given Default and Recovery Rate Assumptions As of September 30, 2010 Current Loan Market Spread Source: S&P LCD. The distressed ratio is the percent of performing loans trading below 80. The data is based on principal amounts.

6 Default and Recovery Rates Source: JPMorgan Defaults are par weighted. As of September 30, 2010 Default RatesRecovery Rates High Yield Bonds LoansHigh Yield Bonds Loans %1.5%21.0%56.7% Average3.9%4.0%36.2%69.1%

7 Potential Attractive Risk/Reward Profile For Bank Loans Source: JPMorgan and S&P LCD Average Recovery Price: $69.51

8 Periods of Rising Interest Rates 5/1/99 - 5/31/006/1/04 – 6/30/06 Change in Fed Funds Rate+153 bps+399 bps Change in LIBOR+163 bps+420 bps S&P/LSTA U.S. Leveraged Loan Index4.19%11.40% Barclays Capital U.S. Aggregate Index2.11%6.55% JP Morgan High Yield Index-4.16%8.16% Barclays Capital U.S. Treasury Index3.55%5.67% The floating rate nature of bank loans led to strong performance during the last two periods of rising interest rates. Sources: JPMorgan, S&P/LSTA Performing Loans Index, Barclays Capital U.S. Treasury and Aggregate Indices and Bloomberg. Past performance cannot guarantee future results.

9 Time Periods When Treasury Yield Rose 100 bps+ 12 Months Ended10 Year Treasury Yield Move Leveraged Loan Market Return Investment Grade Market Return Citigroup BB Index 31 Dec bps3.58%-0.82%2.24% 31 May bps June bps Sources: JPMorgan, S&P/LSTA Performing Loans Index, Barclays Capital U.S. Aggregate Index and Citigroup. Past performance cannot guarantee future results