Inflation as an Asset ClassRalph SegretiGlobal Inflation Linked & Rates Total Return Product Manager

Intro to the Inflation-Linked Markets

3

0

200

400

600

800

1000

1200

1400

1600

Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 080

100

200

300

400

500

600

700

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.