City of Stamford, Connecticut

1. Rate Lock Strategies for City of Stamford, Connecticut March 5, 2007 UBS Securities LLC

2. The City currently has the opportunity to realize $625,000 of present value savings (or 3.4% of refunded bonds) by refunding its outstanding 1998 Issue, General Obligation Bonds • Because of tax regulations, the City cannot realize these savings through a traditional fixed rate refunding • The City must wait until within 90 days of the call date (4/16/08) to issue the refunding bonds • By 4/16/08, the interest rate market may be higher than today, thus the City would lose out on these savings • The City can utilize either a Forward Refunding or a Rate Lock to take advantage of current low rates and lock into these savings today

3. With a forward refunding, the City can price the transaction today and deliver the bonds 12-months from now to achieve a refunding within 90 days of the call date Opening of CurrentRefunding Window**DELIVERY** Interest Payment Date&**First Optional Call Date** PaperClosing **PRICING** Today 12 month forward 90 days 03/15/07 05/01/07 04/16/08 07/15/08 04/17/07 • The City would pay a relatively low forward premium today (10-12 basis points) to attract investors to purchase the bonds today to be delivered a year from now (Investors would bear the interest rate risk) • The City would engage in a transaction process similar to a traditional refunding • The City would prepare an offering document to the investors, price the transaction, perform a paper closing and deliver the bonds • The only difference is that the actual delivery of the bonds and transfer of the proceeds would occur on 4/16/08 instead of within 3 weeks of pricing • At that time, the City would purchase an escrow to call the bonds on the 7/15/08 call date • There are some administrative, legal and time considerations with this strategy • It will take the City some time to prepare the offering document • There are also risks during such a long time period prior to closing which may cause the transaction not to close (ie. Circular 230, world catastrophe, city’s credit downgrade etc…) • Overall, it may take at least 3 weeks to complete the process to price a deal Forward Refunding Mechanism

4. The City can also utilize a Rate Lock strategy to lock in savings today **Rate Lock Termination** **First Optional Call Date** **Rate Lock Pricing** Today 12 month forward 90 days 03/15/07 04/16/08 07/15/08 04/17/07 • There are three types of Rate Locks to consider • AAA MMD Rate Lock • BMA Rate Lock • 67% LIBOR Rate Lock • The mechanisms of the Rate Locks are very similar • The Rate Locks preserve the City’s savings by locking in rates using today’s AAA MMD or BMA or 67% LIBOR Indices • The City would pay a rate lock premium (between 2-13 basis points depending on the type of Lock) to lock in rates today • A year from now, the City would compare that future index rate against the locked in interest rate (plus rate lock premium) to determine settlement cost (If rates are higher, UBS makes a payment to the City, if rates are lower, the City makes a payment to UBS) • Whether interest rates have increased or decreased, the City would be indifferent since it has locked into its savings already • In the case of a AAA MMD Rate Lock, the City would simply negotiate a document with UBS to identify the terms of the Rate Lock • With a BMA or 67% of LIBOR Rate Lock, the City would need to negotiate an ISDA Agreement and Credit Support Annex with UBS which also identifies the terms of the Lock • There are fewer administrative, legal and time considerations with this strategy • The City would not need to prepare an offering document, no rating agency involvement, no marketing of bonds • No time period risk since the lock does not involve any investors, but is a simple rate to rate comparison • Locks can be executed within two to three weeks depending on document negotiation • There are however, some considerations – City’s credit risk, basis risk, cash settlement, etc.

5. MMD rate locks generally do not extend past one year forward Examples of Payments to or From Stamford to UBS (AAA MMD Rate Lock)

6. Examples of Payments to or From Stamford to UBS (BMA or 67% LIBOR Rate Lock) _______________ Note: Based on market conditions as of February 27, 2007. Current lock rate and related lock cost shown are for a 3.18-year average life 67% of LIBOR-based rate lock and a 12-month forward period. For illustration purposes only; actual rates will depend on future market conditions, which may vary.

7. 12-month rate lock costs: 13 basis points Mechanics Stamford locks in current MMD scale + rate lock costs On settlement date, Stamford unwinds the rate lock and issues fixed rate bonds If rates rise above the rate lock level, Stamford receives a cash payment on settlement of the lock which offsets higher expected cost of debt If rates fall or riseless than the rate lock level, Stamford makes a cash payment on settlement of the lock which offsets lower expected cost of debt Advantages Stamford locks in today’s market environment against general interest rate movements Disadvantages Rate Lock does not protect Stamford against adverse movements in credit spreads Rate Lock is cash settled regardless of whether or not the bonds are issued, potentially exposing Stamford to payment making a cash from its own funds without repayment from bond proceeds 12-month rate lock costs: 2 basis points Mechanics Stamford executes a forward-starting 67% of LIBOR rate lock today + rate lock costs On the forward date, Stamford unwinds the rate lock and issues fixed rate bonds Advantages Stamford locks-in today’s market environment against movements in the market 67% LIBOR market reflects general interest rate movements in the tax-exempt market Lower rate lock costs than MMD Rate Lock Disadvantages Same as MMD Rate Lock Stamford is exposed to basis risk between tax-exempt bond and LIBOR markets Summary of Rate Lock Alternatives

8. Financing Working Group recommends that if Stamford proceeds with a strategy to preserve savings today, it should use a 67% LIBOR Rate Lock • Lowest cost strategy • Easy documentation • Can be executed within 2-3 weeks • Very transparent and easy to monitor in the market • Relatively low risk