Strictly Private and Confidential

Strictly Private and Confidential BRAZILIAN CREDIT RIGHTS " Brazilian internal debt... at very high spreads over SELIC" EFTA01185747 Table of Contents ■ Introduction ■ Overview of the Credit Rights Market ■ Legal Framework ■ How to Access the Credit Rights ■ Disclaimer EFTA01185748 Brazilian Credit Rights Introduction Underlying Description In this presentation we would like to introduce an investment opportunity related to Brazil. In particular, we will discuss about credit rights issued by the Brazilian Federation, the State of Sao Paulo and their public entities/companies. These credits represent senior debts which have been originated from an irrevocable sentence of last instance with no further options to appeal. The credit rights stem from judicial proceedings against the Brazilian Federation, the Sao Paulo and their public entities/companies. We focus on a particular type of credits called "Precaterios". They can be grouped into two main categories: alimony precaterios (mainly public employees credits against governamental authorities and/or public companies) and non-alimony precaterios (non public employees credits against governamental authorities and/or public companies). These credits can be enforced with a court order by their respective owners against the public debtors. Until the sentence does not become enforceable and irrevocable, the government/public entity can avoid payment and finance its debt. These type of credit rights benefit from Federal constitution protection. In fact, the article 100 of the Brazilian Federal constitution regulates the repayments of precatorios. Risk/Return Proposition These credits have an expected IRR ranging in the region of [25%-30%]; Given the nature of the credit rights, investors bear the following risks: i) Default; ii) Timeliness of payments; iii) Legal risk and changes in the regulatory framework; iv) Liquidity; v) Currency. The case history is so wide that it is possible to define a standard for payments from governmental authorities or other public entities/companies. 3 EFTA01185749 Brazilian Credit Rights Where the Alpha is coming from 1. Very specialized market with high barriers to entry: Access to this type of credit rights is only possible to law firms with extensive local experience: An incorrect legal analysis of the credits would undermine any investment attractiveness: the credit payment depends on the outcome of judicial proceedings. We start the negotiation activity after the irrevocable sentence of last instance and the actual issuance of the credit (legal claim status with the registration in the state budget). A timely reporting of opportunities by law firms, the ability to verify the authenticity of the claims and the knowledge of all the legal steps to enforce the payment of the individual credit are all crucial factors in this market; To operate effectively, a law firm dealing with such credits must have: a strong presence in the region (in order to access a large universe of potential credit holders), credibility, reputation, recognized skills and strong bargaining power; The typical commission structure of the local law firms makes the sourcing, negotiation and management of such credits unprofitable in absence of significant economies of scale. 2. Reliable, direct and experienced channels to access this market are key elements to our investment process. The direct involvement and understanding of all the various phases of the life of a credit are also crucial in the portfolio construction. 3. Local access only: The credit rights market is easily accessible to local players only. We have identified a series of way to make these credits available to foreign investors. 4. "Non-sophisticated" counterparties and low competition: Credits are bought directly from the owners, which are usually non-professional players, via their legal representatives. Professionals such as funds and banks are only focusing on very large credits due to due diligence issues while we can focus on small credits where there is almost not competition. 4 EFTA01185750 Brazilian Credit Rights Distinctive elements Exclusive Access Competitive Advantage Direct Sourcing Constitutional Protection Interesting Risk/Return No correlation with markets Trasparency We have an agreement with Innocenti Advogatos Associados, one of the main expert in precatorios for the State of Sao Paulo and Brazil; Very specialized market with high barriers to entry. Institutional players focus mainly on large credits, while we can focus on small credits where there is almost not competition; Low sourcing costs: credits are bought directly from the owners via their legal representatives, there are no intermediaries; Art. 100 of the Federal Constitution establishes the payment rules for the precatorios; High returns are mainly due to sourcing activity and market access; The investment is completely decorrelated from any market; The investor is able to access the due diligence of the credit rights on-line. In addition, payments are published monthly by the relevant tribunal; 5 EFTA01185751 Brazilian Credit Rights High Revaluation Rates High Revaluation Rates • Credit Rights are revaluated every year by 6% or 12% as interest on late payments plus the adjustment for inflation (currently roughly 6%) on the notional value of the credit; • The lawsuit is clearly stating if a credit is going to be relavuated at 6% or 12%. Example: Real case I 39.10% • Credit right: Nominal value: R$ 813,530 10.00% Interest rate: 6% Inflation rate: 6% 3.50% 25.60% Purchase price: Paid after: 40%, i.e. R$ 325,412 almost 4 years • Repaid value: R$ 1,218,265 • Total return: 374% 1 • IRR: 39.1% I Brazil Risk I IRR Interbank Premium Difference I Rate Brazil 6 EFTA01185752 Table of Contents ■ Introduction ■ Overview of the Credit Rights Market ■ Legal Framework ■ How to Access the Credits ■ Disclaimer EFTA01185753 Overview of the Credit Rights Market Description Main Players Background Focus Market Size ■ The precatorio market is mainly practiced by specialized law firms involved in lawsuits on behalf of clients which go to them offering their precatOrios for a huge discount. ■ In recent years, banks, mutual/hedge funds and other companies have identified a series of business opportunities in precatOrios, either holding them up to maturity or using them for tax compensation. ■ Players focused mainly on Federal Precatorios, but given the attractive return profile, they have also acquired State and Municipal PrecatOrios (especially from Sao Paulo) ■ Local and foreign Banks ■ Investment funds (FIDCs, Fundo de Investimentos em Direitos Creditorios), including onshore and offshore investors ■ Companies using for tax compensation (i.e. VAT and income tax) ■ It is estimated that the inventory of precatOrios in Brazil, including municipal, state and Union debts, is worth US$ 58 billion*; ■ The state of Sao Paulo has debts in already issued precatOrios of approximately US$ 9 billion, half of them are of alimony nature*. ■ We will only focus on: 1. Federal PrecatOrios; 2. State Precatorios (only issued by the state of Sao Paulo); 3. Credit Rights issued by Public Companies. * Source: IAA. These data exclude credit rights issued by Public Companies 8 EFTA01185754 Overview of the Credit Rights Market Political Geography of Brazil to Understand Different Types of Precatorios Issued • The Brazilian Federation is divided into 26 states (estados) and one federal district (distrito federal), which contains the capital city, Brasilia. • The states are subdivided into 5,564 municipalities (municipios). Different type of Precatorios Federal Precat6rios Federal District Precat6rios States Precatorios Municipal Precat6rios • All of them can be of alimony or non-alimony nature Other Types of Credit Rights Credit Rights issued by Public Companies • These are credits which stem from judicial proceedings against public related companies (sociedade de economia mista) 1 ra Rio Grande jpNorte I iba co N e r a g L o a s Sergipe I Distrito I Federal North s into Santo ■ North-East I • Center-West Santa Catarina I I ma mi Rio South-East Grande do Sul South L I I I EFTA01185755 Table of Contents ■ Introduction ■ Overview of the Credit Rights Market ■ Legal Framework ■ How to Access the Credit Rights ■ Disclaimer 10 EFTA01185756 Legal Framework: Litigation Innocenti Advogados Associados INN'(lNi l Litigation Innocenti Advogados Associados originated from a strong expansion of the Professional activities of the former Advocacia Ricardo Innocenti, founded in the early 80's, and that focused on Administrative Law and Labor Relations. For over 30 years we have been conducting actions for legal entities and individuals, meeting their expectations through the daily efforts of a specialized team of professionals, which is committed to the needs of each client. This experience has allowed us to acquire the necessary knowledge and feeling to transform legal matters in efficient ethical solutions, suited to each situation. Our attorneys' and advisors' job is not limited to representing our clients' legal interests, but also to offer them a concrete and customized picture of results. Structure IAA team consists of approximately 100 professionals. IAA have attorneys that represent the office in the main Brazilian cities, as well as a legal team based in the Federal District, which allows for better follow-up of our clients' judicial proceedings brought before superior courts. Marco Antonio Innocenti is currently the president of the Precatorios Commission in Brasilia. Precatorios Commission oste—yate. 94..../ %Lisa OG.Sel 'Les ei rORTAIO A is MI6/2013 "a a Crmiale LiVesal dr ISIS. Soc. Emden, Pelene. 0'rRaccoiosl c Jesse *I mantes. 0 Prepense do Ceeselho Federal dm ()nice des *drones, de Rost so ow doe was atnbuicate 1c 0. c recubintelses. do .cads ern a Pee smenio .11S/2007. RESOLVE alai a ConeRao Especial de Detest des Credence PAM.... (PSivandos)o Meow as mashes.: Marra Asbale hieeitoti (SP) Pesiecatc Ramada fades Araelo de Pairs (AL) - VleGPrtnelente. Met In Jose de Seas Waste (SP) Sean $o; Amen! Minden Garda (SPS Eilearde de Seam Geeverla POE Froictice Aeimste Mem de Oehein. Valnelit (GO): litter M.pSdee Larva (RO). Ricerde Lebo Caveltead de Allmeecreee (MR Telma Ricardo Abridise Scharr 01M Time Meade Welsher (AP) Past literkpn Triaad•frelda (melees (SRO Membee Consuhoi ISsir ceSso c rcerstsse Beisekill*. .11.0 Lk 2013.. Marais Vialelm PROS Coale President 11 EFTA01185757 Legal Framework: Brazilian Federal Constitution - Art. 100 Article IOU. Payments owed by the federal. state. Federal District, or municipal treasuries, by virtue of a court decision, shall be made exclusively in chronological order of submission of court orders and charged to the respective credits, it being forbidden to designate cases or persons in the budgetary appropriations and in the additional credits opened for such purpose. (CA No. 20. 1998: CA No. 30.2000: CA No. 37, 2002: CA No. 62, 2009) Paragraph I. Support-related debts include those arising from wages. salaries. pay, pensions, and their supplementations, social security benefits and compensation for death and disability. such compensation being based on civil liability, by virtue of a final and unappealable judicial decision, and shall be paid before any other debts, except those referred to in Paragraph 2 of this article. Paragraph 2. Support-related debts owed to pawns aged 60 (sixty) or over on the date the respective court order is issued, or to persons with serious diseases, as defined by law, shall be paid before any other debts. up to an amount equivalent to three times the amount stipulated by law for the purposes of Paragraph 3 of this article, parceling for such end being permitted whereas the remaining amount shall be paid according to the chronological order of submission of respective court order. Paragraph 3. The provision contained in the head paragraph of this article. regarding the issuance of court orders, does not apply to obligations defined by law as small amounts, which must be paid by the treasuries herein referred to by virtue of a final and unappcalable court decision. Paragraph 4. For the purposes of the provision of Paragraph 3. different amounts may be stipulated for the federating units through their own legislation and according to their various economic capabilities, whereas the minimum amount shall be equal to the amount of the highest benefit paid by the general Social Security scheme. Paragraph 5. It is mandatory for the budgets of the federating units to include the funds required for payment of debts arising from final and unappealable judicial decisions, stated in court orders submitted until or on July I. and payment shall be made before the close of the subsequent fiscal year. on which date their amounts shall be adjusted for inflation. Paragraph 6. The budgetary allocations and the credits opened shall be assigned to the Judicial Power, it being within the competence of the Presiding Judge of the Court which rendered the decision of execution to determine full payment and to authorize — upon petition of a creditor and exclusively in the event that his right of precedence is not respected or that the amount necessary to satisfy the debt has not been set aside — attachment of the respective amount. Paragraph 7. The Presiding Judge of the appropriate Court who, by means of an act or omission, delays or attempts to frustrate the regular payment of a court-ordered debt shall be liable to crime of malversation and shall also appear before the National Council of Justice. Paragraph 8. The issuance of a court order as a supplementation to or in addition to an amount already paid as well as the parceling, apportionment. or reduction of Payment of Credit Rights the amount under execution — so that the provision of Paragraph 3 may be applied to a portion of the total amount — are forbidden. Paragraph 9. At the time a court order is issued, irrespective of the relevant regulation, there shall be deducted from such court order. for the purpose of a set-off. an amount corresponding to clear legal debits, either registered or not under debts in execution and attributed to the original creditor by the Treasury in debt, including future accruing installments of parcclings, save for those whose execution has been stayed by virtue of administrative or judicial challenge. Paragraph 10. Be fore a court order is issued the relevant court shall request that the Treasury in debt must provide, within 30 (thirty) days, otherwise subject to loss of the right to offset. information on the debits which meet the conditions stipulated in Paragraph 9, for the purposes set forth in said Paragraph. Paragraph I I. In accordance with legislation of the federating unit in debt, a creditor may employ court order credits to purchase public property belonging to the respective federating unit. Paragraph 12. As from the date Constitutional Amendment no. 62 is enacted, the amounts stated in court orders, after such court orders arc issued up until effective payment, irrespective of their nature, shall be adjusted according to the official rate applied to savings accounts, whereas, for the purpose of compensation of delay in the payment, simple interest will be applied at the same percentage of interest applied to savings accounts, the employment of compensatory interest being excluded. Paragraph 13. Creditors may assign their court order credits, in whole or in part. to third parties. irrespective of consent by the debtor, and the provisions of Paragraphs 2 and 3 shall not be applied to the assignee. Paragraph 14. Assignment of court order credits shall only produce effects after communication to the court of origin and to the federating unit in debt by filing a relevant petition. Paragraph 15. Without prejudice to the provisions of this article, a supplementary law to this Federal Constitution may establish a special regime for the payment of court-ordered debts owed by States, the Federal District, and Municipalities, providing for earmarked net current revenues and for payment tam and methods. Paragraph 16. The Federal Government may, at its own discretion and under the terms of relevant law, take on debts resulting from cowl orders issued against a State. the Federal District, or a Municipality, and refinance them directly. 12 EFTA01185758 Legal Framework Illustration of Precatorio Timeline Theoretical Sequence in a Lawsuit Resulting in the Issuance of a Precatorio Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Filing of the Final and Award Enforcement Precat6rio Rescissory Lawsuit Unappealable Calculation Claim Issuance Claim Decision Compensation for damages and losses caused by direct or indirect (through governmental entity) actions from the Govemment In case of appeal in a first level court decision, a second level decision is required (sometimes a third level is required up to the s Supreme/Superior " Courts — STF/STJ) Required to calculate the amount of the award. Usually involves the issuance of an expert report and needs ratification in court (can be appealed by both parties) After a final decision is rendered in the award calculation phase, plaintiff can request the inclusion of the amount for payment in the annual budget After issuance of an oficio requisitorio, a precat O'da will be issued. Even after issuance, the possibility of a final appeal (rescisOria) remains after 2 years Single installment for both Alimony and Non-Alimony Precat6rios as a result of the EC n.62/2009* (1) Precatorios issued until June 30 of a determined year (y) must be paid until December 31 of the following year (y+1). Precatorios issued in the second semester of a determined year must be paid until December 31 of the year following the subsequent year (y+2). * Non-Alimony federal precatorios are still paid in instalments 13 EFTA01185759 Legal Framework Main Changes Introduced by Constitutional Amendment n.62/2009* Main changes and characteristics of the new regime ■ Effectiveness: Immediate effectiveness, encompassing all outstanding precatorios and derived lawsuits ■ Special Regimes: States and municipalities have 2 alternatives to pay precatorios debts ("Special Regimes"): - (A) Mandatory annual deposits of amounts equivalent to certain fixed percentages of current revenues - (B) Linear yearly amortizations in order to zero the inventory in up to 15 years ■ Chronological order: At least 50% of precatorios shall still be paid according to chronological order of issuance (within each year alimony precatorios have priority over the non-alimony ones) ■ Auction: Residual 50% shall be paid using an auction mechanism (3 options are available to Public Debtors) ■ 1st Priority: Alimony precatorios for holders with at least 60 years old or which are seriously ill (in some specific cases established by law), regardless of the year of issuance, will have first priority over any other precaterio up to a value established by law. ■ Instalments: following Constitutional Amendment n.62/2009 the non-alimony precatorios, except for the federal ones, will not be paid in instalments anymore, but with a bullet payment as per alimony precatorios ■ Seizure remedy: Seizure route limited to breach of mandatory payments established in (A) or (B), but the President of the Court which causes delay to the regular payment of precatorios can incur in criminal responsibility. ■ Discretional Union refinancing: The Union, at its sole discretion, can decide to refinance precatorios of other public entities; ■ Tax compensation: Possibility of tax compensation for precaterio holders ■ Adjustment Rates: Precaterios, including the federal ones, shall be adjusted by official rates applicable over savings deposit accounts, as opposed to inflation rates + interest rates, which were previously in force ■ Incentive to avoid insolvency: as long as Public Debtor is in the default, the entity a) may not contract a foreign or domestic loan; b) cannot receive voluntary transfers; ■ Fungibility with Public Real Estate: following EC n.62/2009, creditors have the possibility to purchase public properties using precatorios of same public entity *Amendment No. 62, of 9 December 2009, which modify art. n.100 of 14 the Federal Constitution and art. 97 of the Transitory Constitutional Provisions Act EFTA01185760 Legal Framework Payment Mechanism for Precatorios following EC n.62/2009 Federal Precatorios • In principle, federal precatorios are not affected by EC n.62/2009, so they will still be paid in installments; they will follow chronological order with no annual budget limit and without any priority or exception; • Only the interest rates calculations have been affected; from 2011 they shall be adjusted by official rates applicable over savings deposit accounts, as opposed to inflation rates + interest rates, which were previously in force; All precaterios will be paid within 15 years, allocating a pro rata annual amount States*. '): 1.5% to 2.0% of annual net revenues Municipalities*: 1.0% to 1.5% of annual net revenues 50% in chronological order: (1) 1st Priority, independently of the year of the inclusion in the budget (only breach of chronological order allowed): - Creditors over 60-yrs holders capped at a predetermined amount** - Sick/ill creditors, in specific cases established by law, capped at a predetermined amount** (2) For each year, alimony precaterios will have preference with respect to non-alimony of the same year 50% residual, debtors have 3 options: a) Reverse Auction under CVM or Central Bank Supervision b) Size Ordero) c) Direct agreement with the creditors Annual Amount Allocated to Pay Precaterios * According to the geographical location of the state or municipality 15 •* Each state can choose a threshold (1) The State of Sat Paulo has adopted this regime (link: http://www.tj.sp.gov.br/Depre/Pagamentos/Estaduais/Default.aspx) EFTA01185761 Legal Framework: Latest News Declarations of unconstitutionality Federal Supreme Court In 2013 the Emenda Constitutional EC 62/2009 has been declared unconstitutional tepee* 77coo 507 L INPRINSA Rosa re Cocreehrat Beton ArSO4 ellSo IAN* [WO* free Aped.* aop tete /gni. In Atitrai Aida I :AtalS05 trae‘tstas Qom.* Aid* Sre I01tailpf m no hoer NObCillS STF finefinre. I 4 It -*Co * 0: J SIT *pa parceeksente inaostiblemelemesda 40e pretatonoa Perim do %aro 7,0,00 ffledni reera aµv poweberebr proordren se Ade• 01,24. ee Yieraetu:CeaKe67 44.Wi 4357e 4425 On *drat a netesOLOceoldee de tel. ca fretlaCcesaboanal smai, a.. new. o nen rap., neead b peewee° d• mesa Can • Salo. kw ,, *dub* reOre0h.cenel .510*Auce a NW 100 at CON012.03 aides!. M nob 'ego pets Na peobios. I fog Sett mantrarta-slo rev I 7* AS am Paco:Kt. co-at-coral tweesial (ADM. pa*, • ter* eiVe0* de peterrtOL 0 fore refteui rank*** eC Cm -ern 74. Sock d• mete. de ON lee.••••0 di IS Wt• I. detts. t.'Rbla*a re** OJe *sena oticela env.% cot Ms 2% Zo mama* crates e ertrtmos Wald tones .wtod eduoopo•noseirerito*peem*ot 50% sic earn om AO pecrents CW010041.104 , woree Pm-netts 3 tat istan•afiecceena paorte*t pr (tom await* re a or -co or Yin co as scot dr400%COACIPS.witt %a ten& *Its asee la. e ewe doSe007007•CCeorteu 0 feLsta. msto Ara erne (70VieltSce. • rowan* 0 attkp 07* ACC no:nate:oral per afro deaser Can.. awe a Of p.a+ua ArAIAO A Acta. a rdecereas owe as Poetic e vo e vox< p***CredonYWearc:60. Titre us: Iva, nee.* 04 One,. franc (Aso to, revere ao Ma'n or • t ro:U.:10 doe .&t •te,$00* • pd** occno es eszr:Las C gnaw% or exaorrca colas eft.= 01 erce00 %be wecearrcreac en an, e Pegnee -eal:seeetob • *Into do fleet% • Two are the main changes that have been declared unconstitutional: The credit rights market has be fully repaid in 15 years; The revaluation of the credit rights has to be done at savings deposit accounts rather than 6% or 12% plus inflation; What happened as a result of the Declarations of unconstitutionality? • Credit rights are now revaluated again at 6% or 12% plus inflation; • In order to repay the full stock of credits the president of the precatorios commission, Marco Antonio Innocenti and the government minister Luiz Fux are discussing the possibility of a "Modulacao" , i.e. how to repay the credits within a maximum of 5 years. Link: http://stfjus.briportal/cms/verNoticiaDetalhe.asp?idConteudo=233520 16 EFTA01185762 Legal Framework: Latest News Press Article: "Modulação" "Modulação" Ministro do STF Luiz Fux propõe que precatórios sejam pagos até 2018 a A dívida dos Estados e municípios com precatórios deve ser paga até 2018, conforme proposta apresentada pelo ministro Luiz Fux, nesta quinta-feira. Em breve, o Supremo Tribunal Federal (STF) terá de decidir como os débitos, que somam cerca de R$ 90 bilhões, serão pagos. a Em março 2013, a Corte considerou inconstitucional a emenda que permitia o parcelamento dos precatórios em até 15 anos e previa a realização de leilões de títulos. a Em 25 março 2015, o Supremo Tribunal Federal (STF) decidiou que Estados e minicipios devem quitar seu estoque de precatorios até o fim de 2020. Link: precatorios-ate-2020-decide-stf.shtml 17 EFTA01185763 Legal Framework: Latest News "Estados e municípios devem quitar precatórios até 2020, decide STF" Ministro do STF Luiz Fux propõe que precatórios sejam pagos até 2018 O STF (Supremo Tribunal Federal) decidiu nesta quarta-feira (25) que Estados e municípios devem quitar seu estoque de precatórios —dívidas do poder público reconhecidas pela Justiça— até o fim de 2020. A estimativa do CNJ (Conselho Nacional de Justiça) é que o montante esteja na casa dos R$ 94 bilhões. O tema estava sendo discutido pelo Supremo desde 2013, quando a corte derrubou uma emenda constitucional de 2009 que instituía um sistema de parcelamento dos pagamentos em até 1,5 anos. A legislação ainda fixava a TR (Taxa Referencial) como índice para a correção dos títulos e abria a possibilidade dos chamados leilões inversos, quando o credor que oferecesse o maior desconto ao Estado teria preferência para o recebimento. De acordo com a decisão do STF desta quarta, todos os precatórios devem ser quitados até 2020. A partir daí, as dividas reconhecidas até julho terão de entrar no orçamento do ano seguinte, o que evitaria novo acúmulo de débitos. Os ministros ainda definiram que, até esta quarta, as títulos serão corrigidos pela TR, mas, a partir desta quinta, passa a valer um índice de preços, o IPCA- E. Para evitar futuros questionamentos na Justiça, os ministros validaram todos os pagamentos já realizados, inclusive os feitos através de leilões inversos, que passam a ser proibidos. Apesar disso, até 2020 os credores poderão fazer negociações diretas com o Estado para tentar furar a fila de pagamentos, mas o desconto máximo permitido será de 4o% sobre o valor da dívida. A decisão da corte ainda mantém a obrigação de Estados e municípios destinarem o mínimo de i% a 2% de suas receitas correntes liquidas até 2020 para o pagamento dos precatórios. Aqueles que descumprirem a regra ficam sujeitos a sanções. Durante o julgamento, o único ministro a se manifestar contrariamente às regras definidas foi Marco Aurélio Mello. De acordo com ele, caberia ao Si? somente dizer se a emenda que tratava de precatórios era ou não constitucional, sendo inviável se criar mecanismos para futuros pagamentos, o que só poderia ser feito pelo Legislativo. "Estamos a substituir o Congresso Nacional. Estamos a reescrever a Constituição Federal (...) quando o STF avança e extravasa limites lança um bumerangue que pode voltar å respvdiva testa", disse. O ministro Gilmar Mendes, por sua vez, ponderou que uma vez derrubada a emenda constitucional, que de uma forma ou de outra havia permitido a retomada do pagamento de precatórios, era preciso que se criassem regras de transição. "Se só declarássemos a nulidade as consequências também seria desastrosas." 18 EFTA01185764 Table of Contents ■ Introduction ■ Overview of the Credit Rights Market ■ Legal Framework ■ How to Access the Credit Rights ■ Disclaimer 19 EFTA01185765 Structuring How to Repackage the Credit Rights Available Vehicles ■ In order to invest in these credit rights we can offer two types of vehicles: Fund ■ Issued in Luxembourg by a German Issuer with very good reputation; ■ Daily valuation; ■ Listed on the Frankfurt Stock Exchange; ■ Bahamas Fund with quarterly NAV; ■ Audited Fund; 20 EFTA01185766 Note - Terms and Conditions C Chartered Nair Opus Instrument Name Issuer ISIN Global Custody Listing Maturity Date Currency Minimum Denomination Minimum trading amount Issue Price Governing Law Note 7Y USD Enhanced Brazilian Credit Linked Bonds 2014(21) Opus - Chartered Issuances S.A. - Luxembourg DE000A13TYW2 Clearstream Banking AG, Frankfurt Frankfurt Stock Exchange (Open Market) with daily quotation 7 Years USD 50'000 USD 250'000 USD 100% German 21 EFTA01185767 Fund - Terms and Conditions EQUITY Fund Denomination Investment Manager Administration Agent Structure Investors ISIN Code Class of Share Minimum Investment Redemption NAV Mgmt Fees Performance Fee Enhanced High Yield Fixed Income Fund Prudentia Group Ltd Equity Bank And Trust Bahamas Limited Lux Open-ended Fund Qualified Investors BSP3720H1081 USD Euro 125k Quarterly Quarterly 1% 0% 22 EFTA01185768 Table of Contents ■ Introduction ■ Overview of the Credit Rights Market ■ Legal Framework ■ How to Access the Credit Rights ■ Disclaimer 23 EFTA01185769 Disclaimer ■ The material provided herein is for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein, notwithstanding that any such securities may be currently being offered to others. ■ This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. ■ It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction. Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship, residence or domicile which might be relevant to the subscription, purchase, holding, exchange, redemption or disposal of any investments. ■ The given material is subject to change and, although based upon information which we consider reliable, it is not guaranteed as to accuracy or completeness. ■ Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up. Future returns are not guaranteed and a loss of principal may occur. Opinions expressed are current opinions as of the date appearing in this material only. No part of this material may be i) copied, photocopied or duplicated in any form, by any means; or ii) redistributed without prior written consent. 24 EFTA01185770