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Inflation as an Asset ClassRalph SegretiGlobal Inflation Linked & Rates Total Return Product Manager
Intro to the Inflation-Linked Markets
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Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 080
100
200
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500
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800Barcap forecasts
Barclays Capital Inflation-Linked Index Market Value ($bn)
US
Global (LHS)
Euro area
UK
JapanOther developed
All G7 countries now inflation-linked issuers. Largest G7 issuers in 2007 US, UK and Japan. Euro area overall now second
largest market. Brazil largest (USD130bn value) and biggest issuing emerging market, only
became internationalised in 2006. Strong performance here has encouraged increased international activity in other emerging markets.
Globally inflation-linked continues to grow
4
Thanks to better modeling & corporate paying, swaps now centerpiece of European/UK markets
5
Correlation /Delineated Infl.
NBT/Infrastructure/PFI
TRS
Structured & Bespoke Solutions
Structured Notes
Inflation Derivatives
Sovereign Issuance
Rates
Correlation /Delineated Infl.
NBT/Infrastructure/PFI
TRS
Structured & Bespoke Solutions
Structured Notes
Inflation Derivatives
Sovereign Issuance
Rates
Multi CCY/ Cross Market
FX Hybrids
Inflation Capped Floaters
Inflation/CMS
Equity Hybrids
Commodity Hybrids/CCO
Hybrids
Multi CCY/ Cross Market
FX Hybrids
Inflation Capped Floaters
Inflation/CMS
Equity Hybrids
Commodity Hybrids/CCO
Hybrids
Regional TRS
Quanto’d Notes
Structured Notes
Infl. Derivatives
Sovereign Issuance
EM
Regional TRS
Quanto’d Notes
Structured Notes
Infl. Derivatives
Sovereign Issuance
EM
CRA
Repackaged Notes
I/L CDO
Corporate Issuance
Credit
CRA
Repackaged Notes
I/L CDO
Corporate Issuance
Credit
Pooled Liability Funds/Portable Alpha
Dynamic Indices
White Label UCIT-III Mutual Funds
I/L CDs, Deposit Accounts & GICs
UK Property Certificates
Property Derivatives
LDI/ALM
Other
Pooled Liability Funds/Portable Alpha
Dynamic Indices
White Label UCIT-III Mutual Funds
I/L CDs, Deposit Accounts & GICs
UK Property Certificates
Property Derivatives
LDI/ALM
Other
Structured products increasingly utilized to enhance yield & implement complex strategy
6
Brazil Mexico Argentina
Chile Colombia
South Africa
Poland Turkey South Korea
Securities
NTN-Bs,NTN-Cs (12, 5)
Udibonos(8)
Bodens, Bocones, Restructured debt (7)
BCUs(10)
TES UVRs(8)
4 bonds 1 bond 1 bond 1 bond
Maturities
Up to 2045
Up to 2035
Up to 2038
Up to 2022
Up to 2023
Up to 2033
2016 2012 2017
Size (local fx)
BRL 251bn
MXN 172bn
ARS 167bn
CLP 2,050bn
COP 21,300bn
ZAR 44.7bn
PLN 6.4bn
TRY 4.1bn
KRW 625bn
Size (USD)
122bn 16bn 54bn 4bn 10bn 6bn 2bn 3bn 1bn
Size (% of local debt)
23% 10% 58% 13% 22% 9% 2% 2% 1%
Inflation Index
IPCA, IGP-M
UDI CER UF UVR CPI CPI CPI CPI
Primary issuance
Mthly Mthly Mthly Mthly Twice a month
Qtly Qtly Qtly
Secondary market
Very Liquid: BRL1.2bn/ day; bid-offer 5 bp
Liquid: MXN500mn/ day; Bid-offer 5 bp
Very liquid: USD500mn/ day; bid-offer 2-5 bp
Liquid: Bid-offer 5 bp
Liquid bmks: Bid-offer 10 bp
Low liquidity:R50mn/ week; bid-offer 5bps
Barely trades outside of auction
Emerging Markets Poised to be Driver of Future Bond Growth
7
Local inflation & non standard indices becoming commonplace
Barclays Capital provides swaps on the domestic inflation – Market is developing but regularly quoted
Barclays Capital provides swaps on domestic inflation – Market is illiquid & developing
Barclays Capital provides swaps on the domestic inflation – Market is liquid & developed
Why/How Investors Use the Inflation-Linked Market
9
Why/How Investors Use Inflation Tactical Opportunities Strategic Diversification Benefits Information content What about equities & commodities?
10
Tactical OpportunitiesOutright longs or shortsCurve tradesAsset swapsForward rate tradingCross market trades: US versus UKCross product trades: breakevens versus gasoline
11
Fundamentals and Breakevens: What Matters Where?
Tactical Strategic
Short End
Carry-Seasonals-Energy (Gasoline Futures)
Trends in Headline CPIVolatility
Long End / Forwards
Model Based Leading Data-JOC/CRB/METALS-US$ (EUR, Trade Weighted)-Level of Rates
Trends in Core CPIMonetary Policy
Strategic Trades Tend to be Proactive Tactical Trades Tend to be Reactive
12
Tactical Cross Market Trading Example: Long US versus Europe
13
Tactical Driver: Energy and CPI Inflation
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
9.0%
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Energy Weight (relativeimportance) within CPI
0.27%
2.59%
0.19%0.38%
3.70%
0.18%0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
CPI Energy CPI Ex-Energy
Volatility of Monthly Inflation(1986-2006)Volatility of Monthly Inflation(2002-2006)
The weight of energy within CPI has increased with higher prices However, the main impact on CPI comes through energy volatility Volatility of Energy CPI has been 18x that of non-Energy CPI over the past 5yrs More than 50% of CPI volatility comes from energy, despite the weight of only 8.7%.
Energy Weight within CPI
Inflation Volatility
Source: Haver Analytics, BLS
Source: Barclays Capital
14
Focus on Gasoline
4.3%3.0%
2.8%
2.6%
0.3%
0.3%
1.3%
1.1%
0%1%2%3%4%5%6%7%8%9%
10%
1997 2006
Motor Fuel ElectricityHome Fuel Oil Utility Gas Service
Gasoline (Motor Fuel) is the most important component of Energy CPI, both because of its weight and volatility.
The published December weight likely understates the average gasoline weight because of seasonal factors. We estimate that the relative importance of gasoline reached as high as 5.9% in October 2005.
Gasoline has been 32x as volatile as non-Energy inflation and within energy, has been more than twice as volatile as electricity inflation
3.00%2.52%
4.43% 4.59%4.27%
2.81%
4.27%
6.45%
0%
1%
2%
3%
4%
5%
6%
7%
Utility Gas Service Household Electricity Home Fuel Oil Motor Fuel
Volatility of Monthly Inflation(1986-2006)Volatility of Monthly Inflation(2002-2006)
Source: Haver Analytics, BLS
Source: Barclays Capital
15
Inflation Correlations Tell a Clear Story As a further demonstration of the importance of gasoline in the volatility of overall
inflation, we highlight that Motor Fuel CPI is 93% correlated with Energy CPI and 77% correlated with overall CPI.
Interestingly, even ex-Energy CPI, which makes up 92.3% of the CPI basket, is less correlated with CPI than gasoline. This alone helps explain why inflation-linked investors are so focused on energy price movements, and gasoline in particular.
CPI Energy CPI Ex-Energy
Utility Gas Service
Household Electricity
Home Fuel Oil
Motor Fuel
CPI 1.00 Energy 0.75 1.00 CPI Ex-Energy 0.61 -0.05 1.00 Utility Gas Service 0.15 0.30 -0.12 1.00 Household Electricity 0.11 0.39 -0.26 -0.09 1.00 Home Fuel Oil 0.41 0.41 0.13 0.29 -0.18 1.00 Motor Fuel 0.77 0.93 0.07 0.14 0.11 0.40 1.00
Source: Barclays Capital
16
Strategic InvestmentEfficient frontiers lay the foundation International accounts have their own reasonsThe corporate sector moves in Portfolio theory takes hold
17
Strategic Case for IL Products: TIPS dominate Nominal Treasuries in historical mean/variance
0.58
0.6
0.62
0.64
0.66
0.68
1 1.5 2 2.5 3 3.5 4
Risk (Monthly Standard Deviation)
Aver
age M
onth
ly R
etur
n (%
)
TIPS IncludedNo TIPS
TIPS returns marginally higher than nominal Treasuries since start of market in 1997 but monthly returns volatility only 75% of a comparable basket of nominals.
Thus TIPS dominate Treasuries in an efficient portfolio Long term TIPS returns may be slightly lower than nominals but volatility benefit should remain TIPS dominance can continue as long as the liquidity premium for nominals is greater than the inflation risk premium
Source: Barclays Capital
0%10%20%30%40%50%60%70%80%90%
100%
0.52
0.54
0.57
0.61
0.65
0.69
0.75
0.80
0.87
0.94
1.01
1.09
1.18
1.27
1.36
1.47
1.57
Risk
Asse
t Wei
ghts
in P
ortfo
lio
GSCISPMBSCORPHYTSYTIPS
Asset Split of Optimal Portfolio with TIPS
18
Inflation within a diversified portfolioAverage annual nominal portfolio returns, 1950 to date
19
Maximum and minimum returns, 1950 to date. Inflation reduces portfolio volatility
20
80
85
90
95
100
105
Jan97 Jan98 Jan99 Jan00 Jan01 Jan02 Jan03 Jan04 Jan05 Jan06
100
105
110
115
120
125
130
135
US TIPS index performance versus nominal TreasuriesBroad Trade Weighted $ (RHS inv)
In theory owning inflation linked bonds as part of unhedged portfolio reduces returns volatility from currency fluctuations, particularly longer term as inflation and currency movements should correlate. In practice long term link between small moves in currency and inflation not strong.
Inflation expectations move in response to currency movements , which makes medium term link between inflation linked returns more correlated with currency than CPI is. Since 2000, monthly correlation has been 85%.
Short term correlations increased from late 2004 as more central banks started to buy TIPS. Correlation is stronger in 10yr sector than elsewhere on curve.
SOURCE (BOTH): Barclays Capital
Strategic Case: Inflation Linked Afford Some Protection Vs Currency
-2.0%-1.5%-1.0%-0.5%0.0%0.5%1.0%1.5%2.0%2.5%
Jan-9
5Jul
-95
Jan-9
6Jul
-96
Jan-9
7Jul
-97
Jan-9
8Jul
-98
Jan-9
9Jul
-99
Jan-0
0Jul
-00
Jan-0
1Jul
-01
Jan-0
2Jul
-02
Jan-0
3Jul
-03
Jan-0
4Jul
-04
Jan-0
5Jul
-05
Jan-0
6Jul
-06
Jan-0
7
-15%
-10%
-5%
0%
5%
10%
15%
20%
Consumer Goods Ex AutoImport PricesTrade Weighted $
]
21
Pension Plans Utilize Inflation Swaps to Defease Liabilities
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
2006 2011 2016 2021 2026 2031 2036 2041 2046 2051
Real
intre
st ra
te
0
10
20
30
40
50
60
70
80
90
Proje
cted C
ashfl
ow (£
m)
Total liabilities [RHS]
Swap real yield [LHS]
Full hedge design: A series of interest rate swaps whose notionals are tied to the identified interest
rate exposure over the maturity range being hedged The hedge is implemented concurrently with inflation swaps to lock-in real interest
rates Hedging possible out to 50 years. Precise hedging term to be decided nearer
implementation in consideration of the traded term structure of real rates to maximise average yield
Partial hedge design: Emphasise hedging of the short to medium term liabilities (say out to 25 years)
where yields are higher. This also correlates better with FRS17 calculations Combine inflation hedge with nominal rate swaptions to “collar” rate risk exposure
Interest rate and inflation risk mitigation
22
Corporate Inflation Risk Inflation-linked procurement contracts Cost of Living Adjustment (COLA) Minimum Wage Indexation Property Rents
Example below diagrams a current discussion with a corporate looking to offer inflation protection to supplier and purchase offsetting protection from Barclays
Corporates utilize inflation to hedge various liabilities
Manufacturer Supplier
Procurement Contracts with
Inflation escalation above
Strike
Barclays
Purchases CPI caps to match
Supplier Contracts
Example: Corporate Looking to Offer Inflation Protection to Supplier and Purchase Offsetting Protection from Barclays using CPI Caps
Example: Corporate Looking to Hedge Cost of Living Adjustment to Employees Using Inflation Swap
Manufacturer
COLA Wage EarnerInflation Adjusted
Wage
Barclays
Fixed RateInflation Adjusted Rate
23
Inflation Swaps also Essential for PFI/PPP Financing & Hedging
Fixed Bond + Liability Swap
Direct IL Bond Financing
An inflation-linked bond is issued by the borrower which pays a real coupon, and a real uplift on each principal repayment.
There is therefore no derivative required to hedge inflation.
A fixed rate bond is issued by the borrower. The bond cashflows are then swapped to create a “synthetic” IL-bond profile.
This route has recently been cheaper than issuing direct inflation-linked bonds due to asymmetries of supply and demand in the inflation market.
Loan Financing + Revenue Swap
The loan is hedged into fixed rates as usual with an Interest Rate Swap.
Separately, the real revenue stream compounded by inflation is swapped for the same real revenue stream but inflated by a fixed inflator. Thus, the project has effectively fixed the rate of inflation on its revenues.
There are three principal financing routes for achieving inflation hedging. The choice of route depends firstly on the feasibility of each one in the size and risk of the project, and then on the relative pricing of each of the feasible options.
Loan Financing + Revenue Swap
This is the same as the above except that the loan and interest rate swap is replaced by a fixed rate bond
24
Information ContentForward rates closely watched But the market is watching the watchers
25
Forward breakevens useful measure of expectations & risk premia
5yr5yr forward TIPS breakevens remain favoured measure by Fed of structural inflationary fighting credibility.
Euro breakevens eased on back of ECB hawkishnes, now at one year lows.
UK forwards close to multi-year high. Not inconsistent with increases in headline RPI or public surveys of inflation expectation, but sector stands out as rich on curve.
2.0%
2.2%
2.4%
2.6%
2.8%
3.0%
3.2%
3.4%
Jul 04 Oct 04 Jan 05 Apr 05 Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 Oct 06 Jan 07
TIPS 5yr5yr forward breakevenUK zero-coupon inflation swap 5yr5yr forward brekeven€i zero-coupon inflation swap 5yr5yr forward breakeven
26
Forward inflation swaps routinely traded1yr forward breakevens
1.41.61.82.02.22.42.62.83.03.23.4
1y 2y 3y 4y 5y 6y 7y 8y 9y 10y 15y 20y 25y 30y
EUR HICPxFrench CPIxUK RPI
Forward curves are useful to assess value but are increasingly traded directly in both breakeven and real yield. Generic inflation swaps are zero coupon so forward trading easier than in bonds. Convexity adjustments are small but rebalancing needed as positions acquire value.
European inflation swaps markets see active trading in forward breakevens and real yields, including spreads between Euro HICPx, French CPIx and UK RPI.
5yr 5yr most commonly traded breakeven forwards, partly due to importance attached to interpretation by central banks, particularly Fed. Barclays Capital trades this in Japanese CPI (63 mid) as well as more established markets.
1yr forward swap real yield
0.8
1.2
1.6
2.0
2.4
2.8
3.2
1y 2y 3y 4y 5y 6y 7y 8y 9y 10y 15y 20y 25y 30y
EUR HICPxFrench CPIxUK RPI
27
US inflation expectations correlate with business cycle fluctuations
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
1998 1999 2000 2001 2002 2003 2004 2005 2006 20070.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50Global Business Confidence (LHS)US 5yr, 5yr forward breakeven inflation (RHS)
28
Inflation markets are impacted by Fed Policy:
Breakeven model incorporates business sentiment, gasoline prices and monetary policy expectations
The model implies that a 10bp steepening of the fed funds curve is associated with a 3bp move higher in breakevens
Fed watches inflation expectations with a focus on 5yr forward 5yr breakevens
Fed Gov Mishkin: “The most important development in monetary economics that I have witnessed over my now-long career has been the recognition that expectations are central to our understanding of the behavior of the aggregate economy.”
Chicago Fed Pres Moskow: “If measures of inflation expectations were to rise persistently, then policy would clearly have to be tightened further.“
St Louis Fed Pres PooleL “If the inflation rate rises in a sustained fashion and particularly if inflationary expectations start to develop, that is a harder process to reverse…I pay a lot of attention to inflation expectations.”
2.0%
2.2%
2.4%
2.6%
2.8%
3.0%
3.2%
3.4%
Jul 04 Oct 04 Jan 05 Apr 05 Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 Oct 06 Jan 07
TIPS 5yr5yr forward breakevenUK zero-coupon inflation swap 5yr5yr forward brekeven€i zero-coupon inflation swap 5yr5yr forward breakeven
US BE model: Business sentiment, gasoline prices and monetary expectations
0.5
1.0
1.5
2.0
2.5
3.0
Jan 98
Jul 98
Jan 99
Jul 99
Jan 00
Jul 00
Jan 01
Jul 01
Jan 02
Jul 02
Jan 03
Jul 03
Jan 04
Jul 04
Jan 05
Jul 05
Jan 06
Jul 06
Jan 07
10 year TIPS breakevenFitted values
5yr5yr Breakevens
Inflation Markets as an Information Tool: Fed Watching the Markets Watching the Fed
29
What about equities & commodities? Analysis of returnsBalanced portfolios necessary Is real return the true asset class?
30
Another look at our efficient frontiers, this time with commodities
Source: Barclays Capital
The highest efficient frontier includes both commodities and global linkers In fact, as allowed risk is increased, the optimal portfolio contains nothing but commodities and linkers
0.44
0.48
0.52
0.56
0.6
0.64
0.68
0.5 0.7 0.9 1.1 1.3 1.5 1.7 1.9 2.1 2.3 2.5Monthly volatility (%)
Mon
thly re
turn
(%)
Global linkers with commoditiesNo linkers with commoditiesTIPS with commodities20% max on linkers and commoditiesNo linkers, no commodities
Global linkers with commodities
0%10%20%30%40%50%60%70%80%90%
100%
0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3
Global Linker Index
GSCI
TIPS
S&P 500
Corporate Index
World GovernmentBond IndexHigh Yield Index
Treasury
Mortgage
31
Constraints are necessary, but real assets are clearly favored
No Linkers, Commodities Unconstrained
0%
10%20%
30%40%
50%
60%70%
80%90%
100%
0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3
Global LinkerIndexGSCI
TIPS
S&P 500
Corporate Index
World GovernmentBond IndexHigh Yield Index
Treasury
Mortgage
Source: Barclays Capital
When linkers are excluded, the optimal portfolio overweights mortgages for low risk tolerances and picks up corporates, S&P and commodities as allowed risk rises. When linkers and commodities are constrained to 20% each, linkers hit this max at relatively low risk and commodities hit the max as risk is increased.
Max 20% Linkers, 20% Commodities
0%
10%
20%30%
40%
50%
60%
70%80%
90%
100%
0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3
Global Linker Index
GSCI
TIPS
S&P 500
Corporate Index
World GovernmentBond IndexHigh Yield Index
Treasury
Mortgage
32
Real returns under different economic stages
-10%
-5%
0%
5%
10%
15%
20%
Equities Bonds Linkers * Art Property Commodities
Aver
age A
nnua
l Rea
l Tot
al Re
turn
sStrong inflation & growthStrong growth & low inflationWeak growth and inflationHigh inflation & weak growth
33
Real asset returns ~ deflation, stagflation and low stable inflation
2002 1979 1974 1929Equities -24.5 -4.9 -58 -14.1Gilts 6.7 -11 -29 -1Inflation 2.9 17.2 19.1 -0.6Property 6.6 5.1 -29.4Commodities 16 5 15.8
34
Returns during the 1970s were narrowly distributed
UK all property 2.66% US residential real estate 2.64% UK equity 0.40% US equity 1.40% UK bonds -3.20% US bonds -3.60% UK Cash -3.10% US cash -1.10% Commodities 7.27% Commodities 13.16% Oil 18.90% Oil 24.84%
35
Rising oil prices derate US equity valuations
14.0
14.5
15.0
15.5
16.0
16.5
17.0
17.5
18.0
Nov 04 Mar 05 Jul 05 Nov 05 Mar 06 Jul 06 Nov 06 Mar 07
US 12 mnth forward PEForward PE regressed from Oil
Assuming $70 oil
36
Volatile assets will not provide an adequate short run inflation hedge
Volatility of annual returns
0
5
10
15
20
25
30
UK equity Commodities UK bond Property UK Linkers UK Inflation UK cash
Volatility over the last 30 years
0
5
10
15
20
25
Equities Property Commodities UK linkers*
Holding period (years)
Minimum holding period to ensure inflation protection
37
Conclusions Inflation-linked markets have developed globally in a logical
mannerStrategic allocations are taking hold for diversification reasonsAdvances in modeling have allowed complex solutions to be
adopted in different areas Information content in the markets is closely watched, but still
validAs the market evolves Real Return likely to emerge as the true
asset class
Inflation Derivatives
House of the Year
January 2007
Inflation Derivatives
House of the Year
January 2006
Debt House Poll
No 1 Inflation-Linked Products
June 2006
Institutional Investor
End User Survey
No 1 US DollarInflation Swaps
June 2006
Institutional Investor
End User Survey
No 1 SterlingInflation Swaps
June 2006
Institutional Investor
End User Survey
No 1 Euro Inflation Swaps
June 2006
39
40
DisclaimerThis presentation has been prepared by Barclays Capital, the investment banking division of Barclays Bank PLC ("Barclays"), for information purposes only. This document is an indicative summary of the terms and conditions of the securities/transactions described herein and may be amended, superseded or replaced by subsequent summaries. The final terms and conditions of the securities/transactions will be set out in full in the applicable offering document(s) or binding transaction document(s).This document shall not constitute an underwriting commitment, an offer of financing, an offer to sell, or the solicitation of an offer to buy any securities described herein, which shall be subject to Barclays’ internal approvals. No transaction or service related thereto is contemplated without Barclays' subsequent formal agreement. Barclays is acting solely as principal and not as advisor or fiduciary. Accordingly you must independently determine, with your own advisors, the appropriateness for you of the securities/transaction before investing or transacting. Barclays accepts no liability whatsoever for any consequential losses arising from the use of this document or reliance on the information contained herein.Barclays does not guarantee the accuracy or completeness of information which is contained in this document and which is stated to have been obtained from or is based upon trade and statistical services or other third party sources. Any data on past performance, modelling or back-testing contained herein is no indication as to future performance. No representation is made as to the reasonableness of the assumptions made within or the accuracy or completeness of any modelling or back-testing. All opinions and estimates are given as of the date hereof and are subject to change. The value of any investment may fluctuate as a result of market changes. The information in this document is not intended to predict actual results and no assurances are given with respect thereto.Barclays, its affiliates and the individuals associated therewith may (in various capacities) have positions or deal in transactions or securities (or related derivatives) identical or similar to those described herein.This document is being made available in the UK to persons who are investment professionals as defined in Article 19 of the FSMA 2000 (Financial Promotion Order) 2005. Outside of the UK, it is directed at persons who have professional experience in matters relating to investments. Any investments to which this document relates will be entered into only with such persons. This document is not for distribution to retail customers.NO ACTION HAS BEEN MADE OR WILL BE TAKEN THAT WOULD PERMIT A PUBLIC OFFERING OF THE SECURITIES DESCRIBED HEREIN IN ANY JURISDICTION IN WHICH ACTION FOR THAT PURPOSE IS REQUIRED. NO OFFERS, SALES, RESALES OR DELIVERY OF THE SECURITIES DESCRIBED HEREIN OR DISTRIBUTION OF ANY OFFERING MATERIAL RELATING TO SUCH SECURITIES MAY BE MADE IN OR FROM ANY JURISDICTION EXCEPT IN CIRCUMSTANCES WHICH WILL RESULT IN COMPLIANCE WITH ANY APPLICABLE LAWS AND REGULATIONS AND WHICH WILL NOT IMPOSE ANY OBLIGATION ON BARCLAYS OR ANY OF ITS AFFILIATES.THIS DOCUMENT DOES NOT DISCLOSE ALL THE RISKS AND OTHER SIGNIFICANT ISSUES RELATED TO AN INVESTMENT IN THE SECURITIES/TRANSACTIONS. PRIOR TO TRANSACTING, POTENTIAL INVESTORS SHOULD ENSURE THAT THEY FULLY UNDERSTAND THE TERMS OF THE SECURITIES/TRANSACTION AND ANY APPLICABLE RISKS. THIS DOCUMENT IS NOT A PROSPECTUS FOR ANY SECURITIES DESCRIBED HEREIN. INVESTORS SHOULD ONLY SUBSCRIBE FOR ANY TRANSFERABLE SECURITIES DESCRIBED HEREIN ON THE BASIS OF INFORMATION IN THE RELEVANT PROSPECTUS (WHICH HAS BEEN OR WILL BE PUBLISHED AND MAY BE OBTAINED FROM BARCLAYS), AND NOT ON THE BASIS OF ANY INFORMATION PROVIDED HEREIN.Barclays Bank PLC is registered in England No. 1026167. Registered Office: 1 Churchill Place, London E14 5HP. Copyright Barclays Bank PLC, 2007 (all rights reserved). This document is confidential, and no part of it may be reproduced, distributed or transmitted without the prior written permission of Barclays.Barclays Capital is the investment banking division of Barclays Bank PLC, which is authorised and regulated by the UK Financial Services Authority and a member of the London Stock Exchange.
© 2006 Barclays Bank PLC. All rights reserved. Barclays, Barclays Capital and
Barclays Global Investors are trademarks of Barclays Bank PLC and/or its affiliates.
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