Fitch Ratings

Fitch Ratings is a global credit rating agency committed to providing the world's markets with independent, timely, and prospective credit opinions. With 50 offices worldwide, Fitch Ratings' global expertise, built on a foundation of local market experience, spans across capital markets in over 150 countries. Fitch conducts analysis of the credit markets covering Corporate Finance, including Financial Institutions and Insurance, Structured Finance, Public Finance, and Global Infrastructure and Project Finance.

Fitch's ratings and research products and services offer the debt capital markets an opinion on the relative ability of an entity or a transaction to meet financial commitments, such as interest payment, repayment of principal, insurance claims or counterparty obligations. Fitch's credit ratings are used by investors worldwide as an indication of the likelihood of receiving their money back in accordance with the terms on which they invested.

In addition to ratings, Fitch offers fixed income research, analytics, data, and pricing and valuation services under the Fitch Solutions brand.

SIGNIFICANT EVENTS

Conditions in the financial markets remained difficult in 2009. What began nearly two years ago as stress focused on the global debt markets evolved into a severe global economic slowdown. The impact of deleveraging, low liquidity, and increased risk aversion was seen across asset classes, industries and regions. Important sectors in the fixed income markets were effectively closed and certain sectors, such as commercial and residential mortgage-backed securities experienced performance strain on their underlying assets. While it appears the period of most intense market stress has passed, overall macro-economic conditions were nonetheless challenging throughout the year.

During 2009, governments and central banks took extraordinary measures to assist the financial markets and restore global growth. Central banks, such as the European Central Bank, the Bank of England and the Federal Reserve, injected massive amounts of liquidity to ease market conditions and provide for greater inter-bank funding stability. To further combat the economic decline, a number of new government programs were introduced, including direct investment in financial institutions, credit guarantees, and liquidity support facilities. Many of these programs helped to restart consumer lending and to encourage investment in the asset-backed markets.

The securitization markets continued to be affected by high delinquency and foreclosure rates, declining real estate prices, and tighter underwriting guidelines. Over the course of 2009, trading in securitized instruments was thin and primary issuance in the US and European securitization markets was limited. However, there was elevated non-primary issuance for repo purposes under European Central Bank and Bank of England programs. In the US, the Term Asset-Backed Securities Loan Facility ("TALF") program spurred some market activity, particularly in the ABS sector.

Despite ongoing economic stress, new issuance in the corporate sector has been robust. Reacting to tighter bank lending standards, many companies were forced to issue bonds to access capital. In Europe and the United States, government guaranteed debt was a main source of issuance activity. In addition, many corporate issuers took advantage of low interest rates to refinance outstanding debt. As market conditions eased over the year, the debt capital markets saw increased issuance activity starting with investment grade issuers, then moving to high yield and emerging markets as investor risk appetite increased.

Fitch Ratings implemented a broad and deep range of initiatives that enhance the reliability and transparency of rating opinions and related analytics in 2009. The company has focused on vigorously reviewing analytical approaches and changing ratings to reflect the current risk profile of securities. It has conducted extensive rating reviews across most asset classes, revised ratings where necessary, and updated criteria and models with new approaches and assumptions. In doing so, Fitch's objective is to offer ratings that are more stable and reliable. The company has also focused on publishing frequent, timely and relevant research on the performance of asset classes and individual issuers. Updated ratings and research have been released transparently and publicly, and the latest information and analysis has been communicated directly to investors.

In parallel, Fitch has been engaged in active and constructive dialogues with policymakers, regulators and market participants. Policies, procedures, and organizational structures have been reviewed and, where appropriate, changed to manage conflicts of interest better and to ensure that Fitch's operations are consistent with the revised rules put forth by global regulators. By way of example, Fitch implemented an updated and IOSCO-compliant Code of Conduct, and IOSCO itself has noted Fitch's conformity with the standards they have set forth. The rating agency has also implemented, or is in the

process of so doing, a range of policies that will enable compliance with rules set forth by the EU and the SEC. In addition, other measures have been introduced to ensure the full separation of our rating analysts from any commercial considerations for issuers they cover.

Fitch Solutions

Fitch Solutions delivers fixed income products and services to the capital markets. Its product offerings include Fitch Ratings' research delivery, risk and performance analytics, surveillance tools, structured finance workflow solutions, and pricing and valuation services. The division's service offerings include Fitch Training, a specialist training firm for finance professionals, and Advisory Services, which provide customized consulting to help clients better understand their risk.

Examples of new and/or enhanced products distributed by Fitch Solutions in 2009 include :

• New version of FitchRatings.com Fitch Solutions launched a new, single platform website for Fitch Ratings and Fitch Solutions' products and services. The new single site offers significantly enhanced search features and simplified access through one portal for free-to-view and premium content. The introduction of these features demonstrates Fitch's commitment to providing market participants with the highest level of transparency.

• Liquidity Scores for CDS Assets To help buy-side market participants strengthen their liquidity risk management procedures and meet regulatory requirements, Fitch Solutions launched liquidity scores and percentile rankings for widely traded credit derivative (CDS) assets. This product enables the buy-side community to assess the relative liquidity of global CDS assets and the global CDS market.

• CDS of ABS Market Indice for US Subprime Assets Fitch Solutions expanded its pricing and valuations platform with the launch of five new ABS of CDS broad market indices for US subprime assets. These new indices help market participants perform broader trend analysis and improve relative valuation techniques across different asset classes. 2009

• Default Data Service. The Fitch Default Data Service was launched to provide comprehensive information on global corporate defaults. The service provides comprehensive coverage of defaults and gauges how current credit events compare to those of the past.

FINANCIAL REVIEW

Fitch Ratings generates revenue by assigning ratings to new debt issues and by monitoring previously rated fixed income obligations. The company's fiscal 2009 revenues amounted to $614.6 million, a decline of 15.9% compared with $731.2 million the previous year. After translation into euros, its contribution to consolidated revenue came to €453.7 million versus €486.8 million for the previous year, a decrease of 6.8% on a reported basis and 7.5% on a like-for-like basis. Recurring operating profit was $222.5 million, down 20.8% from fiscal 2008. Translated into euros, recurring operating profit contracted by 7.8% on a reported basis and 10.7% like-for-like.

Revenue by Geographic Region

• North Africa
Revenue from North America was $256.8 million in fiscal 2009, a 12.6% decrease. The decline in revenue was largely attributable to the reduction in structured finance debt issuance due to the ongoing dislocation in the housing, employment, and financial markets. In particular, new issuance of commercial mortgage backed securities was largely frozen. Declines within Financial Institutions also negatively impacted revenue. Various government financial and guarantee programs removed large amounts of issuance from normal billable channels. However, non-financial corporate and global infrastructure saw a modest increase in annual revenue, resulting from strong issuance activity as issuers took advantage of attractive markets to refinance existing debt.

• Europe, the Middle East & Africa (EMEA)
In the Europe, Middle East & Africa (EMEA) region, revenue was $229.5 million in fiscal 2009, a 21.9% decrease. The weakened Structured Finance sector combined with currency fluctuations drove much of this decline. Primary issuance in the European securitization markets was limited in the absence of government support. Declines in revenue were also seen in the Financial Institutions group due to the impact of government programs which weakened demand for ratings. The Global Infrastructure group was also negatively impacted as project financings faced a tougher environment than in the previous year. In contrast, issuance growth among non-financial corporates in emerging markets as well as growth in issuance of covered bonds offset some revenue contraction.

• Asia/Pacific
Revenue generated from the Asia-Pacific region was $79.5 million in fiscal 2009, a decrease of 17.2%. This decline in revenue was driven by reduced activity in the Structured Finance and Non-Financial Corporates businesses.

• Latin America
Revenue generated in Latin America was $48.9 million, an increase of 2.3%. Increases in Financial and Non-Financial Corporates revenue helped offset the decline in Structured Finance business.

Fitch Solutions

Revenue from Fitch Solutions declined 5.8% in fiscal 2009 to $102.3 million due primarily to currency fluctuations and some customer attrition. Fitch Solutions' main source of revenue is its subscription and research business, which enjoys a strong, recurring revenue stream.

MARKET SHARE AND COMPETITION (Source: Fitch Ratings)

Fitch Ratings competes with other credit rating agencies, on a local and global scale, along with investment banks, brokerage houses, asset managers, and independent research firms that offer credit research, analysis, and opinions. Its largest competitors in the global credit rating business are Moody's Investor Service ("Moody's") and Standard & Poor's Credit Market Services ("S&P"), a division of The McGraw- Hill Companies, Inc. The US Securities and Exchange Commission designates ten firms, including Fitch, Moody's and S&P, as Nationally Recognized Statistical Rating Organizations ("NRSROs"). Based on global debt issuance of approximately $4.6 trillion for the twelve months ended September 30, 2009, Fitch Ratings' market share, measured in terms of the dollar issuance volume, stood at an estimated 69%. The table below lists global market share for the individual sectors where Fitch is an active player.

Non-Financial Corporates          67%
Financial Institutions                   86%
Structured Finance                   43%
US Public Finance                      61%
Sovereigns                               97%
Total                                          69%

Fitch Ratings currently maintains coverage of approximately 5,500 financial institutions, including over 3,200 banks and 1,100 insurance companies. Finance & leasing companies, broker-dealers, asset managers, managed funds, and covered bonds make up the remainder of Fitch Ratings' financial institution coverage universe.

Additionally, the agency currently rates more than 1,700 corporate issuers, 100 sovereigns, 200 subsovereigns, 300 global infrastructure ratings, and 45,000 US municipal transactions. Fitch Ratings maintains surveillance on over 6,900 US, 1,500 European and 600 Asian structured finance transactions.

FISCAL 2010 OUTLOOK

Fitch's analytical and research capabilities continue to be widely valued by market participants. Fitch endeavors to provide ratings opinions and research that are predictive, insightful and forward-looking. The company's performance in fiscal 2010 will also be somewhat dependent on improvements in macroeconomic and capital market conditions. Such factors include interest rates, issuance activity, credit conditions, and GDP growth. Should conditions in the credit markets continue to improve, Fitch will be poised to meet the increased ratings needs of issuers and investors. While the turmoil in the debt markets has affected Fitch Solutions' subscriber base, it has also increased focus on data, pricing, valuation, and analytic requirements of issuers and investors. Fitch Solutions should see new growth opportunities in fiscal 2010 provided market conditions continue to improve.