Fixed Income Services March 14, 2016 Municipal Bond Investor Weekly Ted Ruddock - SVP, Head of High Net Worth Drew O’Neil - Fixed Income Strategist “Who’s who of dot plots…” Yes, it’s going to be one of those weeks: another FOMC meeting with all sorts of “experts” expounding with seemingly high degrees of certainly on what will happen this week and what’s to come in the weeks and months ahead. If there is any doubt that the focus of many market participants has shifted to speculation from long-term investing, one only has to look no further than the famous “dot plots” of the FOMC. Investment houses are happy to state the odds and timing of a certain rate move; in London, odds-makers will gladly take your personal bets. Back home, there are some who believe they have deciphered the dot plots: they “know” who is who (or in this case, which) dot.

Amazing. And I missed my golden opportunity to unlock the mystery as I found myself standing next to Chairman Bernanke in Washington DC over the weekend at the most unlikely of places: the conclusion of the Rock & Roll ½ Marathon. (No, the former Chairman was not a runner, but rather supporting a family member.) Had I asked, I just might have extracted a smile from him at the silliness of it all. And yet, this is what clients are faced with these days: an overabundance of market noise.

And a dearth of clarity. Except when it comes to investing in investment grade municipal bonds. How so? There are few investment options where so much is known before you invest.

There’s no guessing, certainly no speculating. You know what your semi-annual coupon cash flow will be. You know what day you get your money back.

You know that you will get your money back --- with a degree of certainty that exceeds 99%. With that level of clarity, there is little to decipher. Is it any wonder this is where clients want to put their safe money? Granted, yields aren’t what they used to be “in the good old days.” The search for 5s at par is a long lost memory.

But then again, inflation isn’t what it used to be either. And when much of the world is adjusting to negative interest rates, municipal bonds offer extremely attractive risk adjusted and tax-equivalent yields. (See our weekly table below on just how attractive rates are.) For longterm, buy and hold investors, while 5s at par may be long gone, “5s at par” are possible on a tax-adjusted basis --- it’s just a 3 at par for an investor in the highest federal tax bracket! And there are plenty of 3s at par out there --- dots plotted along the curves --credit and term. The Week ahead… “March Madness” continues with Vanderbilt leading the way…no I’m not referring to the highly emotional bubble bid by the Commodores following their heartbreaking loss to Tennessee over the weekend.

This week the Vanderbilt University Medical Center will come to market with the top seeded issue, a $780 million offering through the Metropolitan Government of Nashville and Davidson County. The deal, which is expected to include a $530 million tax-exempt portion and $250 million in taxable, will be rated A3 by Moody’s. NYTFA has the #2 seed with a $750 million transaction rated Aa2/AA/AA.

Connecticut will round out the top three with a $550 million GO issue (Aa2/AA/AA --- all three rating agencies have a negative outlook.) (The UConn Huskies outlook, however, is positive, as it won its division title and a # 9 seeding following a miraculous, four OTs, semi-final win over Cincinnati in the American Athletic Conference tournament. If you somehow missed the shot, check out You-Tube!) See below for additional issues in what is expected to be a $7+ billion week in the market. Let the Madness begin!! And now for the numbers… Treasury rates were down early in the week before bouncing back to into positive territory as the week came to a close.

Yields were down ~10 basis points by Tuesday afternoon before beginning a steady rise through the end of the week, finishing up 10 bp at 10-years and up 5 bp at 5-years. Municipal yields took a similar path early in the week, but without the bounce-back we saw in Treasuries. For the week, the 10-year MMD yield was down 1 bp while the 30-year ended down 4 bp.

This combination of moves resulted in a drop in the muni-Treasury ratios, as can be seen in the chart below. This Week 10 Y Muni MMD 1.89% Treasury 1.98% Ratio 95.5 Tax Equivalent Ratio (Fed 39.6%) 158.0 30 Y 2.86% 2.75% 104.0 172.2 Last Week 10 Y 1.90% 1.88% 101.1 167.3 30 Y 2.90% 2.70% 107.4 177.8 © 2016 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. © 2014 Raymond James Financial Services, Inc., member FINRA/SIPC. All rights reserved. International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863 Change 10 Y -0.01% 0.10% -5.6 -9.3 30 Y -0.04% 0.05% -3.4 -5.6 1 .

Raymond James Municipal Fixed Income Sources: (1) Municipal Market Data (2) Tax Equivalent Yield calculations on AAA-rated tax exempt yields assume a 39.6% tax rate (3) Treasury, Corporate yields from Bloomberg. Lipper Total Returns from Lipper and The Wall Street Journal (YTD = Year To Date). Short Term Yields are from Bloomberg, Federal Reserve and Securities Industry and Financial Markets Association. The SIFMA Weekly Index is a 7-day high-grade market index comprised of tax-exempt variable rate demand obligations (VRDO's) that are not subject to AMT, are greater than $10 million issuance size and have an AA or better rating.

* In Basis Points. Historical Perspective on the Municipal Market AAA General Obligation (GO) Yields 6.00% 5.00% 4.00% 30-YR 3.00% 10-YR 2.00% 1.00% 0.00% Mar-06 5-YR Nov-06 Jul-07 Mar-08 Nov-08 Jul-09 Mar-10 Nov-10 Jul-11 Mar-12 Nov-12 Jul-13 Mar-14 Nov-14 Jul-15 Source: MMD Historic AAA Muni/Treasury Ratio (30-Year Maturity) 125% 120% 115% 110% 105% 100% 95% 90% 85% Comparative Yield Curves 5.0% Tax Equiv Mu nis Treasuries 4.0% Corporates (A) 3.0% 2.0% 1.0% 0.0% 1 © 2016 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. © 2013 Raymond James Financial Services, Inc., member FINRA/SIPC. All rights reserved. International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863 2 3 4 5 7 Years To Maturity 10 15 20 25 30 2 .

Raymond James Municipal Fixed Income New Issue Calendar Date Amount 3/14 3/14 3/14 3/14 3/14 3/14 3/15 3/15 3/15 3/15 3/15 3/15 3/15 3/16 3/16 3/16 3/16 3/17 3/17 3/17 3/17 3/17 3/17 3/17 3/17 3/17 $473MM $750MM $14MM $25MM $25MM $21MM $7MM $550MM $38MM $9MM $0MM $12MM $45MM $84MM $20MM $11MM $118MM $2MM $50MM $250MM $530MM $12MM $17MM $40MM $15MM $24MM Issuer ST Description Moody's/S&P/Fitch Maturity Wes tches ter County Loca l New York Ci ty Tra ns i tiona l Fi na nce Ma s s a chus etts Hous i ng Fi na nce Ma s s a chus etts Hous i ng Fi na nce Ma s s a chus etts Hous i ng Fi na nce Ci ty of Stamford Tri ni ty Ri ver Authori ty of Texa s State of Connecticut Os ceol a County New Fa i rfi el d Nebra s ka Inves tment Fi na nce Ci ty of Ama ri l l o Ba rtow County School Di s tri ct State of Oregon DeKa l b-Ja cks on Coop Di s t Ci ty of Wi ns ton-Sa l em Ci ty of Wi ns ton-Sa l em Tri ni ty Ri ver Authori ty of Texa s New Ri ver Va l l ey Regi ona l Ja i l Hl th & Ed Fa cs Met Gov of Hl th & Ed Fa cs Met Gov of Ci ty of Mes qui te Ci ty of Mes qui te Ci ty of Mes qui te Ci ty of Da nbury, Connecticut Bra zos port Col l ege Di s tri ct NY NY MA MA MA CT TX CT FL CT NE TX GA OR AL NC NC TX VA TN TN TX TX TX CT TX Revenue Bonds , Seri es 2016 (Wes tches ter Bui l di ng Ai d Revenue Bonds , Fi s ca l 2016 Hous i ng Bonds (AMT) Hous i ng Bonds (Ta xa bl e) Hous i ng Bonds (Non-AMT) Genera l Obl i ga tion Refundi ng Bonds Denton Creek Regi ona l Wa s tewa ter Genera l Obl i ga tion Bonds 2016 Sa l es Ta x Refundi ng Revenue Bonds Genera l Obl i ga tion Refundi ng Bonds Si ngl e Fa mi l y Hous i ng Revenue Bonds Hotel Occupa ncy Ta x Revenue Bonds Genera l Obl i ga tion Genera l Obl i ga tion Bonds (Hi gher Revenue Bonds Ta xa bl e W&S Rev Ref Bonds W&S Revs Mountai n Creek Regi ona l Wa s tewa ter Regi ona l Ja i l Fa ci l i ty Refundi ng Revenue (Va nderbi l t Uni vers i ty Medi ca l Center) (Va nderbi l t Uni vers i ty Mei di ca l Center) Combi na tion Ta x a nd Li mi ted Surpl us Wa terworks a nd Sewer Sys tem Revenue Genera l Obl i ga tion Refundi ng a nd Impt Refundi ng Li mi ted Ta x Refundi ng Bonds Ba a 2 /BBB / Aa 2 /AA /AA Aa 3 /AA- /AAAa 3 /AA- /AAAa 3 /AA- /AAAa 1 /AAA / /AA+ / Aa 3 /AA / A1 / /AA/AAA / /AA+ / /A+ / NR /AA+ /NR (NR /AA- /NR Aa 1 /AA+ /AA+ /AA / ( /BBB+ / ) AGM Aa 1 /AAA /AA+ Aa 1 /AAA /AA+ /AAA / Aa 3 / / A3 / / A3 / / Aa 2 /AA / Aa 2 /AA / Aa 2 /AA / Aa 1 / / Aa 2 /AA- / 16-46 7/1/17-35,40,45 2016-26,30,35,40,48 2016-26,30,35,45,55 2018-26,30,35,40,46, 8//1/23-27 02/01/2018-36 tbd 2019-38 2016-29 2017-27, 31, 36, 46, 08/15/2019-43 10/1/18-22 2017-36, 41 1/1/19 - 2056 06/01/2016-2019 6/1/18 - 2039 08/01/2017-35 2016-38 7/18/1905 2021-46 2/15/17-36 03/01/2017-36 02/15/2017-36 23-30 2/15/2019-28,31-36 BQ: Bank Qualified, SG: Selling Group, PSF: Permanent School Fund, GO: General Obligation, UT: Unlimited Tax, LT: Limited Tax. New issues are offered by Official Statement only. Free copies on request. For full calendar of New Issues visit www.raymondjames.com/fixed_income_municipal_bonds_calendar.htm . This communication is not an offer to sell or a solicitation to buy any securities mentioned herein. High grade and High yield securities mentioned herein may not be suitable for all investors. A credit rating of a security is not a recommendation to buy, sell or hold securities and may be subject to review, revisions, suspension, reduction or withdrawal at any time by the assigning rating agency. Raymond James & Associates, Inc.

(RJA) or its affiliates may perform investment banking or other services for, or solicit investment banking business from, any company or issuer mentioned in this report. RJA or its officers, employees, or affiliates may own shares, options, rights or warrants and/or execute transactions in the securities mentioned in this report which may not be consistent with the report’s conclusions. Additionally, RJA may at times elect to make markets in particular high yield securities, but there can be no guarantee that our market making activities will be uninterrupted.

All expressions of opinion reflect the judgment of the Fixed Income Municipal Department of RJA at the time of publication and may be subject to change without notice. Information has been obtained from sources considered reliable, but we do not guarantee that the foregoing report is accurate or complete. Other departments of RJA or its affiliates may have information that is not available to the Fixed Income Municipal Department about companies or Issuers mentioned in this report.

Further information on the securities mentioned herein is available upon request. © 2016 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. © 2013 Raymond James Financial Services, Inc., member FINRA/SIPC. All rights reserved. International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863 3 .