1. 2008 OHIO APT CONFERENCE Changes Affecting Municipal Bond Ratings Presented by: David J. Conley, Managing Director (888) 792-0039 Robert W. Baird & Co. October 8, 2008

2. An issuer's willingness to pay debt • An issuer’s ability to pay debt • An issuer’s creditworthiness to pay debt • A rating is not a recommendation to buy, sell or hold a security • A rating is not an opinion on quality of life or the services provided What does a Rating measure? 1

3. States • Counties • Cities • Villages • Townships • Schools • Others? Who receives a Rating? 2

4. Obliged to do so (previously rated and the rating is still out) • To improve market acceptance (lower interest rates) • To get an independent assessment of your performance • Other reasons? Why do issuers get Ratings? 3

5. Investors • Individuals • Administrators • Businesses Who uses Ratings? 4

6. Moody’s Investors Service • Standard & Poor’s • Fitch Ratings Who gives the Ratings? 5

7. Apply for a rating based on a new debt issuance • Manage an existing rating • Present to agencies in person, via phone or video conference • Agency publishes rating What is the Rating process? 6

8. Municipal Bond Rating Scales 7

9. Historical Ratings Distribution – Moody’s See Handout A, B, & C 8

10. Average spread between grades: 0.25% Differences in Yield by Rating 9

11. Credit markets are relying more heavily on underlying ratings • Significant downgrades of Bond Insurance companies • Law suits being filed against the agencies • Historical data supports making a change Why is there a change in the Rating scale? 10

12. Many Ohio governments will see upgrades • The upgrades will likely range one to two rating grades • All three agencies believe changes will occur in a year • Moody’s will use a global scale rating in addition to the MSR • S&P will re-benchmark their MSR What type of change is likely? 11

13. Higher ratings receive lower interest rates from investors • Markets may become complacent and view all debt the same • Investors will need to reassess how to measure credit quality • Potentially lessens the burden on taxpayers What will be the result? 12

14. 2008 OHIO APT CONFERENCE Presented by: David J. Conley, Managing Director 1-800-792-0039 Robert W. Baird & Co. October 8, 2008 13