1. NCSHA 2016 MRB’s – Now and In the Future
September 26, 2016

2. Important Disclosures
This communication is for informational purposes only, is not an offer, solicitation, recommendation or commitment for any transaction or to buy or sell any security or other financial product; and is not intended as investment. The information contained herein is (i) derived from sources that Wells Fargo Securities ("WFS") in good faith considers reliable, however WFS does not guarantee the accuracy, reliability or completeness of this information and makes no warranty, express or implied, with respect thereto; and is (ii) subject to change without notice. WFS accepts no liability for its use or to update or keep it current. Products shown are subject to change and availability. Municipal underwriting and remarketing rankings referenced herein represent combined totals for Wells Fargo Bank, N.A. Municipal Products Group (“WFBNA MPG”) and Wells Fargo Securities, LLC (WFSLLC”). Source information for any ranking information not otherwise provided herein is available on request. Rankings referencing competitive municipal new issues for time periods prior to 2011 include issues underwritten by Wells Fargo Advisors, LLC (“WFA”), a separate broker/dealer subsidiary of Wells Fargo & Company (“WFC”). Underwriting activities of WFA are not managed or otherwise controlled by WFBNA MPG or WFSLLC. Information for 2009 and prior includes transactions that may have been underwritten by other broker/dealers that were acquired by WFC and/or its predecessors. WFS and/or one or more of its affiliates may provide advice or may from time to time have proprietary positions in, or trade as principal in, securities that may be mentioned herein or other securities issued by issuers reflected herein; or in derivatives related thereto. Wells Fargo Securities is the trade name for certain securities-related capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Securities, LLC, member NYSE, FINRA, NFA, and SIPC, and Wells Fargo Bank, N.A., acting through its Municipal Products Group. Commercial banking products and services provided by Wells Fargo Bank, N.A. (“WFBNA”). Investment banking and capital markets products and services provided by WFS are not a condition to any banking product or service. Municipal Derivatives solutions are provided by WFBNA, a swap dealer registered with the CFTC and member of the NFA. This communication is not intended to provide, and must not be relied on for, accounting, legal, regulatory, tax, business, financial or related advice or investment recommendations and does not constitute advice within the meaning of Section 15B of the Securities Exchange Act of You must consult with your own advisors as to the legal, regulatory, tax, business, financial, investment, and other aspects of this communication. Neither WFS nor any person providing this communication is acting as a municipal advisor or fiduciary with respect to any transaction described or contemplated therein unless expressly agreed to in a written financial advisory or similar agreement. 

3. Tax-Exempt Rates Continue to Edge Higher from All Time Lows Reached Earlier in 2016
The market for tax-exempt MRB issuance will continue to be challenged
Historical “AAA” MMD Ranges vs. Today’s “AAA” MMD
Historical “AAA” MMD Yield Curves
Source: TM3; MMD range from January 1, 1990 through September 21, 2016.

4. Cash Market vs. Swap Market(1)
Cash Market versus Swap Market Rates
Cash Market vs. Swap Market(1)
Linda and Marcia, Rick
(1) Sources: Bloomberg and Thomson TM3, Rates as of September 16, 2016 2

5. Forward Premiums and Call Option Pricing is Attractive
The current interest rate environment provides attractive synthetic fixed rate alternatives.
Forward premiums are de minimis allowing HFAs to remain unhedged for a 6 to 12 month period for a minimal increase in the forward rate.
Currently 70% of 1 Month LIBOR swap rates for 20-year average life structures incorporating a 5- or 10-year call are below 2%.
Non-Call
5-Year Call
10-Year Call
Spot
1.26%
1.77%
1.59%
6-Month Forward
1.28%
1.85%
1.64%
9-Month Forward
1.29%
1.89%
1.66%
12-Month Forward
1.30%
1.93%
1.69%
*Information presented herein regarding risk management was prepared by the Wells Fargo Municipal Derivatives Group. All questions regarding the risk management alternatives presented or described herein shall be directed to Andrew Levenson of the Municipal Derivatives Group at All Indications as of September 21, 2016 and subject to future market conditions, credit approval, and final documentation. The swap rates include a 10 basis point spread to mid.

6. Impending Money Market Reform Has Led to a Significant Increase in SIFMA
Over the last 12 months, SIFMA has increased by 68 bps
Source: Thomson Reuters and Bloomberg

7. Strong Retail Demand Seen in Recent Mortgage Revenue Bond Transactions
$62,250,000
New York State Housing Finance Agency
Affordable Housing Revenue Bonds
$62,255, Series E
September 2016
Senior Manager
Retail Orders Totaled $ million
$100,000,000
Alaska Housing
Finance Corporation
General Mortgage Revenue Bonds II
$100,000,000 Series 2016 A
August 2016
Senior Manager
Retail Orders Totaled $ million
Source: IPREO; Percentages represent amount of total allotments for each category.