Jefferies LLCMember SIPC

Capital Markets Discussion and Case Studies

April 8, 2014

David Moffett3414 Peachtree Road NE, Suite 200Atlanta, GA 30326Office: (404) 264-5058Cell: (404) 242-6475Email: dmoffett@jefferies.com

The Market

1

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

5.50%

6.00%

6.50%

Jan 95 Dec 96 Nov 98 Oct 00 Sep 02 Aug 04 Jul 06 Jun 08 May 10 Apr 12 Mar 14

Rates over the last 20 years…

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

Jan-95 Dec-96 Nov-98 Oct-00 Sep-02 Aug-04 Jul-06 Jun-08 May-10 Apr-12 Mar-14

10-Year Avg. Ratio:9.0x

10-Year Avg:3.92%

Current Ratio: 24.2xCurrent: 3.36%

Flat Yield Curve

SteepYield Curve20

-Yr

MM

D

Despite recent dramatic rise,long-term rates remain below average

Despite recent dramatic rise,long-term rates remain below average

The yield curve remains near its steepest point since 1995:30/1-Yr MMD

The yield curve remains near its steepest point since 1995:30/1-Yr MMD

Flatter Curve

Lower Rates Higher Rates

Jefferies’ Efficient FrontierSteepness of the Yield Curve vs. Absolute Level of Rates (1995 to Present)

Steeper Curve

Current as of March 26, 2014Source: Thomson Reuters Markets Inc.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2.3% 2.8% 3.3% 3.8% 4.3% 4.8% 5.3% 5.8% 6.3%

High Interest Rates/Steep Yield Curve

Increase Floating RateExposure or Borrow Short

Stee

pnes

s th

e of

Yie

ld C

urve

(30-

Year

MM

D le

ss S

IFM

A)

Absolute Level of Rates(30-Year MMD)

Low Interest Rates/Steep Yield Curve

Maintain Mix of FloatingRate and Fixed Rate

Exposure

Low Interest Rates/Flat Yield Curve

Increase Long-TermFixed Rate Debt

High Interest Rates/Flat Yield CurveIssue Debt with

Short Call Features

I II

III IV

January2013

January2012

January2011

Current

10-Year Average

20-Year Average

2

Source: Thomson Reuters Markets Inc. Source: Thomson Reuters Markets Inc.

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14

(4,800)(4,300)(3,800)(3,300)(2,800)(2,300)(1,800)(1,300)

(800)(300)200700

1,200

Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Steepness March 28th: 348 bps

85%

90%

95%

100%

105%

110%

115%

120%

125%

Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14

More recently…the interest rate environment has remained very volatile

MMD Curve has steepened due to recent volatility,but remains lower than its 10- and 20-year averagesMMD Curve has steepened due to recent volatility,

but remains lower than its 10- and 20-year averages

Tax-exempt ratios have risen dramatically along with MMD,but have recently been trending downwards

Tax-exempt ratios have risen dramatically along with MMD,but have recently been trending downwards Early 2014 Inflows are the First Since the Week Ended 9/13/2013Early 2014 Inflows are the First Since the Week Ended 9/13/2013

30-Y

r M

MD

/UST

Rat

io

($’s

in M

illio

ns)

Current = 102.31%10 Yr. Avg. = 101.46%

Steepness May 1st: 259 bps

Steepness January 31st: 368 bps

Approximately $33.4 billion flewout of the market in 2013

May 1st: 2.79%April 1st: 3.55%

30-Year MMD has risen by 76 bps since May 1st, yet decreased by 96 bpssince September 5th including a decrease of 64 bps since January 1st

Although tax-exempt rates have risen dramatically since May,there has been a significant decrease in rates since SeptemberAlthough tax-exempt rates have risen dramatically since May,

there has been a significant decrease in rates since September

3

Source: Thomson Reuters Markets Inc. Source: Thomson Reuters Markets Inc.

Source: EPFR

Source: Bloomberg; Thomson Reuters Markets Inc.

2011

Extraordinary demand had led to tighter credit spreads and AMT premiums in 2012/2013and into 2014

“A” Rated Credit Spreads

103 bps Average

Notes: 10-year spreads represent average spreads in years 1-10; 20-year spreads represent average spreads in years 11-20. Only uninsured spreads are displayed.

78 bps Average 76 bps Average

2012 2013

“A” Rated AMT Penalty

2011 2012 2013

68 bps Average 46 bps Average 35 bps Average

Jan 2011

2011

20122013

2011

2012

2013

March 2014

2014

59 bpsAverage

2014

2014

30bps

2014

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

0.8%

0.9%

SFO SDF ORD(PFC)

ORF MEM IAH(Sub)

SFO SJC ATL SFO DIA DTW SFO IAH(Sub)

ATL FLL ORD(GARB)

ORD(PFC)

DTW FLL DIA MIA SAN DIA MCI ORD FLL MDW ATL(GARB)

10-Year

20-Year

Jan 2011 March 2014

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

DFW DFW SFO DIA MSP(Sub)

PDX(PFC)

DTW DFW SFO IAH(Sub)

ATL DFW FLL LAS(PFC)

ORD(GARB)

ORD(PFC)

DTW FLL DIA DFW MSP(Sub)

MIA SAN RIC DFW STL DIA DFW MCI DFW ORD FLL DFW MDW LAS(Sub)

ATL(GARB)

ATL(PFC)

10-Year

20-Year

4

Source: Transaction Official Statements; Thomson Reuters Markets Inc.

Source: Transaction Official Statements;Thomson Reuters Markets Inc.

2.40%2.60%2.80%3.00%3.20%3.40%3.60%3.80%4.00%4.20%4.40%4.60%4.80%

Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14

63 bps

Where are rates heading? The consensus among Wall Street economists is a continuation of higher rates in the future Since October 2011, the Fed has financed the overwhelming majority of long-term Treasury debt, having purchased 96% of the increase in

30-year Treasury bond issuance; the Fed had been buying $85 billion per month In December, the Fed announced the beginning of “tapering,” reducing its monthly purchases

─ Over the last few months, the Fed has reduced its monthly asset purchases from $75 billion (effective January 2014) to its recentlyannounced $55 billion (effective April 2014)

─ The Fed will buy longer-term Treasuries at a rate of $30 billion per month and mortgage-backed securities at a rate of $25 billion permonth starting in April

Bloomberg economists are forecasting an increase of 86 bps by Q2 2015

30-Year UST (2011-Present)

2014 2015

Current Q2 Q3 Q4 Q1 Q2

Bloomberg Economists

10-YearUST 2.72% 3.05% 3.21% 3.36% 3.48% 3.61%

30-YearUST 3.56% 3.95% 4.08% 4.20% 4.29% 4.42%

RateIncrease N/A +39 bps +52 bps +64 bps +73 bps +86 bps

Interest Rate Forecast

Current as of March 28, 2014

Backload borrowings to lock-in current long-term rates or accelerate borrowing on some portion of newmoney needs

MitigateHigher Rates

Consider use of shorter duration borrowings or variable rate products for some portion of new money needsCapitalize onYield Curve Steepness

What should issuers consider?

Current = 3.56%

10-Year Avg. = 4.19%

The current 10-year MMD is 2.47% – 90.7% of the 10-year Treasury The historical 10-year average of 10-year MMD/Treasury ratio is 91.9% – implying a

10-year MMD of 3.32% in Q2 2015 (an increase of +85 bps)

5

Source: BloombergSource: Bloomberg

Case Studies

6

LAKE CHARLES HARBOR AND TERMINAL DISTRICT$39,615,000

STATE OF LOUISIANA

$6,995,000 $32,620,000REVENUE BONDS REVENUE BONDS

SERIES 2013A (Non-AMT) SERIES 2013B (AMT)

Underlying Ratings: A3 (Moody’s) / A- (S&P)Insured Ratings: A2 (Moody’s) / AA- (S&P)

Case Study: Port of Lake Charles

Transaction Takeaways

In-depth project by project tax analysis –• General / public use facilities: tax-exempt bonds• Qualified use / Dock & Wharf Facility Bonds (AMT)• Private use: taxable bonds

Bond structuring –• Cost of debt for different project components• Interim financing/multiple tranches/take-out• New credit to market – bond covenants including rate

covenant, additional bonds test, debt service reservefund, and use of rollover cash

7

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

2015 2018 2021 2024 2027 2030 2033 2036 2039

Deb

t S

ervi

ce (

$ M

illio

ns)

AMT Debt Service

Non-AMT Debt Service

Revenue Available For Debt Service

Port of Lake Charles Amortization and Debt Service Coverage

Annual Debt Service Coverage = 6.06x

Project List

1. Wharf & Transit Shed2. GSA Project3. New Administration Building at City Docks4. Industrial Canal Railroad5. New Road at BT1 along railroad6. Berth 8 Deck Repairs7. Water Main at BT-18. Road Repairs Along Warehouses9. Farquhar/Reamer Heirs Land Acquisition10. LCCE Offload Improvements11. Loop Tracks at City Docks12. DMMP Dikes and Land Acquisition13. IC Dockside Monopile14. Rehab/Upgrades to Ship Unloader15. Phoenix Development Property16. New Docks at BT-117. Conveyor 6A Rehabilitation

18. Truck wash at BT119. Manlift Purchase20. BT1 Security Access/Guard House21. New wall at stacker/reclaimer at BT122. Paint BT1 water tower (inside & out)23. Dock Rehab at City Docks24. Conveyor 5A repairs25. Berth 8 Dredging26. Ship Loader Rehab27. Sallier Lead Rail Relocation28. Relocation of Alcoa at BT-129. Calcine Dumper Rehab30. Sallier Lead Rail Crossing & Signalization31. 4, 5, & 6 Berth/Transit Shed32. Mx/Operations Shop at City Docks33. Berth 2 & 3 Reconstruction34. BT1 Open Cell Bulk Head

Case Study: MAS Energy / Coca-Cola – Industrials Seeking Micro Energy SolutionsJefferies executed a $25.7 million transaction for the construction of a landfill gas fired plant

Jefferies priced the $25.7 million taxable municipal bonds for theDevelopment Authority of Fulton County – on behalf of MAS ASBCogen, LLC Project

Proceeds of the bonds were used to finance the acquisition,construction, and equipping of a portion of a landfill gas firedcombined heat and power generating facility for the benefit of CocaCola (“Company”)

This project alone will reduce the Company’s international carbonfootprint by nearly 5%

The capacity payment paid by the Company is designed to coverdebt service and fixed operating expenses and the underlyingcontract is structured with a built-in pass-through mechanism thatshifts most variable rate costs to the Company

The Cogen Facility consists of three GE Jenbacher 2.125 MWreciprocating engines (total of 6.375 MW), three heat recoverysteam generators, post combustion exhaust clean-up systems andone 1050 ton JCI steam turbine chiller

In order to take advantage of the QECB allocation, Jefferies workedwith MAS Energy and the Investor to initiate a bond exchange

Issuer: Development Authority of Fulton County

Issue: Taxable Municipal Offering

Ratings: BBB-

Principal Amount: $25,677,000

Equity Contribution: $6,419,250

Pricing Date: March 3, 2011

Settlement Date: March 11, 2011

Final Maturity: April 1, 2032

Structure: $25.677 million maturing 4/1/2032 (6.79% Coupon)

Yields: 15.2Y T + 305 bps (6.79%)

Offering Type: Private Placement

Placement Agent: Jefferies, LLC

8

Could be applicable for solar, wind, biomass, landfill gas and/or natural gas projects.

City Public Service of San Antonio (“CPS Energy” or the“Company”) is the nation's largest municipally owned naturalgas and electric company, providing service to approximately741,000 electric and 331,000 natural gas customers in theGreater San Antonio area

The Company provides electricity from coal, nuclear energy,wind, solar, landfill-generated methane gas, and natural gas

CPS Energy owned 71 communications towers throughoutthe San Antonio, Texas area, with an average tower height of174 feet

Founded in 1942 and is based in San Antonio, Texas

Case Study: CPS Energy (San Antonio) – Muni Selling Non-core AssetJefferies acted as Sole Financial Advisor to CPS Energy on the Sale of its Communications Tower Portfolio to Crown Castle

Key Points

Jefferies was selected toserve as sole sell sideadvisor based on our long-standing Municipalrelationship with CPS Energyand expertise in the wirelessinfrastructure sector

Transaction represents ajoint effort of the JefferiesMunicipal Finance and Media& Telecom groups and thefirst marketed sale ofmunicipal towers in the US

Success of the transactionprovides validation andsupport for othermunicipalities to considermonetizing non-core telecomassets

Crown Castle International Corp. (“Crown Castle”) is thelargest independent owner and operator of shared wirelesscommunications infrastructure in the U.S.

Crown Castle owns, operates and manages over 40,000 andapproximately 1,700 wireless communication sites in theU.S. and Australia, respectively

LTM 9/30/2013 Revenue and EBITDA of $2.9 billion and$1.7 billion, respectively

Market Capitalization of $24.8 billion

Founded in 1994 and headquartered in Houston, Texas

Transaction Rationale

CPS Energy monetized a non-core asset, while retaining use of a portion of the tower space for internal needs at no cost

Crown Castle will now own and manage the communications towers and take over third party leases

CPS Energy has used the proceeds from the sale to pay down existing debt

Transaction Highlights

On January 15, 2014, Crown Castle acquired CPS Energy’s communications tower portfolio for $41 million

─ Acquisition represents a cash value per tower of $578k and an implied purchase price per tower of $789k (1)

Jefferies organized an accelerated process, fast-tracking Tier 1 bidders through on-site visits and data room access privileges

─ Process successfully produced indications of interest from nearly all of the Tier 1 bidders, and Jefferies was able to extractadditional upfront value from the winning bidder during the final round of negotiations

Establishes a framework that Jefferies is leveraging to assist other municipal clients divest towers as well as other non-core assetssuch as fiber and data centers

Sole Financial Advisor

$41,000,000

January 2014

Sale of Communications TowerPortfolio to

(1) Implied purchase price per tower adjusted for the present value of utility payments from tenants/licenses and the present value of foregone lease payments, net.

9

Jefferies LLCMember SIPC

Capital Markets Discussion and Case Studies

April 8, 2014

David Moffett3414 Peachtree Road NE, Suite 200Atlanta, GA 30326Office: (404) 264-5058Cell: (404) 242-6475Email: dmoffett@jefferies.com

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