Meeting with Puerto Rico Fiscal Agency and Financial Advisory Authority January 18, 2017 AAFAF, San Juan, PR

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1 Meeting with Puerto Rico Fiscal Agency and Financial Advisory Authority January 18, 2017 AAFAF, San Juan, PR

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3 A straightforward discussion on all financial and legal aspects of the GDB s Voluntary Restructuring Agreement (RSA) Restructuring Transaction June 7, 2017

4 Legal Disclaimer (1 of 2) Information presented in this document has been compiled from publicly available data that is believed to be factual and up to date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of authors as of the date thereof and are subject to change. Any statements and assumptions contained in this document, whether forward-looking or historical, are not guarantees of future performance and involve certain risks, uncertainties, estimates and other assumptions made in this document. Nothing in this document should be considered as an express or implied commitment to do or take, or to refrain from taking, any action by Bonistas del Patio, its representatives or advisors, or an admission of any fact or future event. Nothing in this document shall be considered a solicitation, recommendation or advice to any person to participate, pursue or support a particular course of action or transaction, to purchase or sell any security, or to make any investment decision. By accepting this document, the recipient shall be deemed to have acknowledged and agreed to the terms of these limitations. This document may contain capitalized terms that are not defined herein, or may contain terms that are discussed in other documents. You should make no assumptions about the meaning of capitalized terms that are not defined, and you should consult with advisors on the meanings of the terms should clarification be required.

5 Legal Disclaimer (2 of 2) Today s session is intended to inform you about the Restructuring Support Agreement entered into by the GDB, AAFAF and a number of GDB s creditors. We have invited representatives of the GDB and the creditors that signed the Restructuring Support Agreement here to explain the agreement s terms. This session is intended to be for informational purposes only. Any offer to participate in any eventual restructuring will be made only by the GDB in a solicitation statement or other communication made by them in the future. Today s presentations are not intended to be and do not constitute an offer of any securities. Any offer of securities will be made only by the GDB, independently of today s session. La reunión de hoy es para informarles sobre el Restructuirng Support Agreement otorgado entre el BGF, AAFAF y un grupo de acreedores del BGF. Hemos invitado representantes del BGF y los acreedores que firmaron el Restructuring Support Agreement para explicar los términos del acuerdo. Esta reunion es de naturaleza informativa solamente. Cualquier oferta para participar en una eventual reestructuración se hará a través del BGF en un documento de solicitación u otra comunicación. Las presentaciones de hoy no son ni deben entenderse que son una oferta para comprar o vender ningún valor. Cualquier oferta de valores la hará el BGF, independientemente de esta reunión.

6 Bond Exchange Terms Jorge Irizarry Executive Director A straightforward discussion on all financial and legal aspects of the GDB s Voluntary Restructuring Agreement (RSA) Restructuring Transaction June 7, 2017

7 Background On-island and off-island creditors have worked together to develop a transaction framework ( GDB Restructuring Transaction ) through a Qualifying Modification under Title VI of PROMESA The transaction also addresses government depositors, some of which are included in the first lien structure and others, the Designated Depositors, are covered with separate collateral The GDB Restructuring Transaction is consistent with the GDB Fiscal Plan, which was approved by the Governor and certified by the Oversight Board on April 28, 2017 Close to a majority of GDB bondholders have expressed support for the GDB Restructuring Transaction

8 Proposed Bond Exchange Holders of Participating Bond Claims may elect one of three tranches of New Bonds: Tranche A Exchange Rate: 55% of Par + Accrued Interest Collateral: First lien on New Bond Collateral Coupon Rate: 7.5% annually (cash pay with PIK election if cash flows are insufficient) Amortization: Any Available Cash shall reduce, on a pro rata basis the principal balance of the Tranche A Bonds and the Tranche B Bonds. Any excess cash flow after coupon payments to all tranches to be used for amortization pro-rata with Tranche B Maturity Date: July 1, 2040.

9 Proposed Bond Exchange Tranche B Exchange Rate: 60% of Par + Accrued Interest Collateral: First lien on New Bond Collateral Coupon Rate: 5.5% annually (cash pay with PIK election if cash flows are insufficient) Amortization: Any Available Cash shall reduce, on a pro rata basis the principal balance of the Tranche A Bonds and the Tranche B Bonds. Any excess cash flow after coupon payments to all tranches to be used for amortization pro-rata with Tranche B Maturity Date: July 1, 2040.

10 Proposed Bond Exchange Tranche C Exchange Rate: 75% of Par + Accrued Interest Collateral: Second lien on New Bond Collateral Coupon Rate: 3.5% annually (cash pay with PIK election if cash flows are insufficient) Amortization: Excess Available Cash shall be used to amortize the unpaid principal of the Tranche C Bonds, provided that such principal amortization shall occur on or after the interest payment date upon which principal of the Tranche A Bonds and Tranche B Bonds has been paid in full. Maturity Date: July 1, 2040.

11 Proposed Bond Exchange Summary Tranche A Tranche B Tranche C Lien Priority 1st Lien 1st Lien 2nd Lien Amort Priority First Out First Out Last Out Illustrative Claims Exchanged $2,119 $2,119 $500 Exchange % on Par + Accrued 55.00% 60.00% 75.00% Face Amt Issued ($mm) $1,165 $1,271 $375 Coupon Rate (%) 7.50% 5.50% 3.50% Illustrative Full Amort Year Weighted Avg. Life (yrs)

12 Proposed Bond Exchange Summary Tranche A Tranche B Tranche C Lien Priority 1st Lien 1st Lien 2nd Lien Amort Priority First Out First Out Last Out Illustrative Claims Exchanged $2,119 $2,119 $500 Exchange % on Par + Accrued 55.00% 60.00% 75.00% Face Amt Issued ($mm) $1,165 $1,271 $375 Coupon Rate (%) 7.50% 5.50% 3.50% Illustrative Full Amort Year Weighted Avg. Life (yrs)

13 New Bonds and Collateral Carlos Rodriguez Rioja

14 New Bonds and Collateral- Useful Terms Original Claims New Bonds New Bond Collateral $4,780 million ~$2,600-$3,100 $5,332 million Amount the GDB owed to certain creditor before restructuring Amount the settlement trust will owe creditors after the restructuring Face value of assets that will be segregated in trust to pay off the New Bonds

15 Original Bond Claims Holders of $4.78 billion of claims are eligible to participate in the Title VI restructuring $6,000 $5,000 $4,000 $3,000 $2,000 $4,780 $885 million NOT PART OF THE ORIGINAL BOND CLAIMS Public Entity Deposits & Federal Fund Deposits $344 million Contingent Claims (letters of credit) $465 million Municipal Deposits & Non governmental agencies $1,000 $0 Original Claims $3,971 Million GDB Notes + Accrued and interest

16 New Bonds Original Claims will be exchanged into New Bonds. Depending on the proportion of Trance A, B, or C the effective par will be between ~55-75% of original claim* $6,000 $5,000 $4,780 Face value reduction of 25%-45% $4,000 $3,000 $2,000 $1,000 ~$2,600-$3,100 Tranche C Bonds are Subordinated and have a face amount of 75% Tranche A & B Bonds are Senior and have face amount of 55%-60% $0 Original Claims New Bonds* *Assumes that 1/3 of holders chose each class. Actual selection may be materially different

17 New Bond Collateral New Bonds will be secured by a segregated pool of assets Appropriation-backed loans without security will be excluded from collateral $6,000 $5,000 $4,000 $3,000 $4,780 Series A&B have less exposure Over to 70% Public face Entity overcollateralization Obligations on A,B & C Bonds but material uncertainty in new bond collateral ~$2,600-$3,100 ~$5,300 Certain Public Entity Obligations $3,446 million $2,000 Municipal Loans and COFIM advances ~$1,800 million $1,000 GDB Properties $85 million $0 Original Claims New Bonds* New Bond Collateral Cash (TDB) *Assumes that 1/3 of holders chose each class. Actual selection may be materially different

18 Process Timeline & Hurdles Rafael Rojo Chairman

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20 Title IV Vs. Title III Ana del Toro, Esq. Pico & Blanco

21 Title III vs. Title VI Process under PROMESA Title III Court restructuring process that is similar to Chapter 9 of the Bankruptcy Code Automatic stay Financial and nonfinancial obligations All legal issues are resolved in one legal proceeding Cram-down

22 Title III vs. Title VI Process under PROMESA Title VI Voluntary negotiations, a pre-requisite for Title III eligibility Only financial obligations Good faith agreements among the Government and creditors Voting requirements ensure that all bondholders will receive the information to make a consensual decision Diversity of transaction proposals May obtain more value

23 Amortization of New Bond Collateral Paul Hopgood Atlas Financial

24 Bond Amortization Any excess cash flow after coupon payments to all tranches to be used for pro-rata amortization between Tranche A and B Semi-annual pass through cash flow mechanism Tranche C receives principal payments only when Tranche A and B are paid in full Majority of principal and interest payments derived from municipal loans with average life of approximately 9 years and stated final in 2040

25 Bond Amortization $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 7/1/2017 7/1/2018 7/1/2019 7/1/2020 7/1/2021 7/1/2022 7/1/2023 7/1/2024 7/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029 7/1/2030 7/1/2031 7/1/2032 7/1/2033 7/1/2034 7/1/2035 7/1/2036 7/1/2037 7/1/2038 7/1/2039 7/1/2040

26 Modeling and Valuation Brad Meyer Ducera Partners

27 Legal Disclaimer The leadership of the Bonistas del Patio invited me here today to explain the financial terms of the Restructuring Support Agreement, which I will endeavor to do. I am the financial advisor to the Ad Hoc Group of GDB Bondholders, which is comprised of certain institutional GDB bondholders that entered into the Restructuring Support Agreement. My presentation will describe certain of the financial terms of that agreement but I will not offer any view as to whether the agreement is a good one for any investor. Should the GDB seek your support for this restructuring, you will need to consult your own financial advisers at that time to determine whether or not it would be in your interest to support the restructuring. I am here only to describe the Restructuring Support Agreement, not evaluate its merits or provide any insight into the pros and cons of the agreement for those of you here today. Los directores y oficiales de Bonistas del Patio me han invitado hoy a esta reunión para explicar los términos financieros del Restructuring Support Agreement; y asi lo haré. Soy el asesor financiero de un grupo ad hoc de bonistas del BGF, compuesto por varios bonistas institucionales que firmaron el Restructuring Suport Agreement. Mi presentación describirá algunos delos términos financieros de dicho acuerdo pero no ofreceré mi opinión sobre si el acuerdo es beneficioso para un inversionista. Si el BGF busca su apoyo para esta reestructuración, usted va a tener que consultar su propio asesor financiero en ese momento para determinar si está o no en su mejor interés apoyar la reestructuración. Estoy aquí solo para describir el Restructuring Support Agreement y no para evaluar sus meritos o proveer una perspectiva sobre los aspectos positivos o negativos del acuerdo para ustedes.

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32 Need More Information? GDB RSA Go to Bonistasdelpatio.com and click on GDB RSA This will take you to the MSRB EMMA website Download RSA from the MSRB Emma website After reading the document carefully, if you accept the terms thereof, print the Note Holder Questionnaire, sign and send it by mail to: Jorge Irizarry Bonistas Del Patio PO Box San Juan, PR 00928