bnbg, page-60

Rowscoe,

One thing people do not "get" is that infrastructure assets, in the past, now, and in the future, will be bought and held with leverage capital.

People do not acknowledge that BNB, right now, is capable of funding the debt backing infrastructure assets, at current levels.

The only threat is akin to a "run on the bank". This is where rolling over existing debts is impossible due to the lack of available money or high margins associated with the new debt so as to make the projects uneconomic.

The "golden dream" of firms like BNB is to have control of a $billion asset with 1cent of capital. It is only the constraints imposed by those lending the $billion that stops this from happening.

Fact of the matter is that the banks have been happy to lend maximal amounts, up to now. They are now seeking to more carefully assess risk. The essence of the "credit crisis" is that they are further seeking to de-leverage their own asset exposure in light of their own very poor risk assessment.

BNB has also had some exposures. The property groups will take a bath, for example. Some of the structured finance units will offer significant impairment. The '08 final will fully and completely expose these sins.

The refocus on infrastructure is the correct strategic choice. The complexity of BNB will continue. There are a number of AUM (assets under management) held in a variety of public, private, internal fund structures - funded with recourse debt.

The time for banks to assess the viability of BNB has past. They have already voted "aye". We are now holding our breath to see what position is left for the BNB ordinary holders.

The BNBG holders should be very optimistic, at this point. I do not believe they will be asked to underwrite the ordinary holders partial equity loss.