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Monthly Municipal Market Summary October 2009

National, GO, Par Bond,Current Call Yield Curve   AAA Ins BBB Ins Zero 5 yr 1.91 2.27 3.88 2.60 10 yr 3.08 3.43 5.04 4.01 15 yr 3.55 3.99 5.39 4.56 20 yr 3.84 4.29 5.65 4.84 25 yr 4.16 4.64 5.75 5.13 30 yr 4.22 4.72 5.81 5.16   Yield Differential From Previous Month   AAA Ins BBB 5 yr 0.31 0.33 0.05 10 yr 0.47 0.45 0.30 15 yr 0.47 0.56 0.18 20 yr 0.35 0.47 0.19 25 yr 0.35 0.51 0.19 30 yr 0.35 0.51 0.20

Coupon Spreads for Insureds (Assumes - callable to 2019 at 100 with 25 basis point OID)   4.00% 4.25% 4.50% 4.75% 5.000% 5.25% 5.50% 5.75% 6.00% 30 yr 5.04 4.86 4.84 4.78 4.72 4.72 4.63 4.56 4.48

Key Financial Indicators     US 30 Yr Treas Yield 4.23%     US 10 Yr Treas Yield 3.39%     DJ Industrial Average 9712.73     Nasdaq 2045.11     S & P 500 1036.19   PreRefunded Scale (Mid Year, Rerated) 2010 0.41 2011 0.79 2012 1.09 2013 1.57 2014 1.88 2015 2.27 2016 2.56 2017 2.70 2018 2.91 2019 3.07

General Market Comments: Municipal prices reversed themselves in October.   Low supply and loads of cash had driven muni yields to historic lows the previous two months.   Supply increased to the highest levels in months and investors hesitated to buy at the low return.   As a result cash remained in the short end of the market.    Concerns also arose as the Fed indicated it would tighten policy as an economic recovery took hold in order to prevent inflation.    Prices fell as dealers bid cautiously trying to avoid any setbacks from a profitable year and new issues, accordingly, were priced to move quickly.   Some improvement in equity markets also diverted interest away from low tax exempt returns.    Price levels stabilized somewhat near month end as municipal yield ratios to the treasury market became more realistic.   For October money market levels remained relatively flat , five year yields rose almost thirty basis points, intermediate yields increased about forty five, and long yields rose thirty five basis points.

High Yield Report: In October, the municipal high yield market outperformed high grades with a total return of -1.757% as measured by the Standard & Poors/Investortools High Yield Index vs. -2.304% return on the investment grade index for the same period. The health care sector priced two new issues totaling $143 million. The larger deal totaled $100 million and was issue by Tarrant County, TX for construction of a senior living facility, the max yield term in 2044 structured to yield 8.50% + 400 over the AAA curve. In addition, investors had to deal with the Chapter 11 bankruptcy filing by Erickson Retirement Communities, one of the largest management companies in the industry. Erickson manages approximately 19 continuing-care retirement communities (CCRC’s) totaling approximately $510 million in muni debt outstanding. The land sector was off approximately 15 to 20 basis points with two new issues priced totaling $10 million. In the charter school market, a $65 million ‘BBB’ rated charter school in Texas was priced to yield 6.30% in 30 years. In the secondary market, several non-rated charter school’s traded throughout the month which resulted in higher yields at around 30 to 50 basis points. In the IDR sector, airline issues closed the month off in price by 3 to 6 points with yields up from 50 to 90 basis points on weaker bids and offerings for both secured and unsecured issues. Finally, tobacco securitization bonds were significantly off on weaker markets. Prices on the long bonds were down from 6 to 9 points and yields rose by 70 to 100 basis points.

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