Our first “Leadership Letter” to our clients

To Our Clients

This is the first issue of what we intend as a quarterly publication to our clients to share Jefferies’ insights and advice on the markets and other relevant topics, as well as to keep you abreast of developments at our firm. As you hopefully have observed, Jefferies has emerged as a leader in providing investors and issuers insight, advice and the best execution of your capital markets and strategic objectives. In a world where your alternatives are primarily big bank holding companies with innumerable and disparate priorities and interests, we believe we are unique in our intense focus on delivering integrated, global capital markets solutions to our clients.

As we write this note, the S&P 500 is 16% off its all-time high, the FTSE 100 is 13.3% away from its lifetime peak, the B rated high yield index is around 7% and the global markets continue their comeback. While the economy has clearly improved significantly, there remain issues of unemployment, budget deficits, real estate mortgages and looming inflation. The markets generally look forward and hopefully the broad economy will match the level of recovery in the financial markets.

That said, two years ago, few of us would have anticipated the liquidity and risk appetite that engulfs our financial markets today. To our way of thinking, it is a great time for companies to strengthen their balance sheets and to take advantage of strategic opportunities. We ourselves have announced our largest acquisition ever, Prudential Bache, and raised $500 million in new equity and $1.85 billion in longterm debt in the past twelve months, clear testimony to our view of the attractive rates and flexible terms available in the current market.

On the investor side, the lessons of these last few years are to diversify, have a long-term perspective, and take advantage of short-term dislocations and smart opportunity. On the next page, you will find our strategic view of the current market environment. With recovery ongoing and monetary accommodation providing fuel, we encourage investors to embrace risk assets, but with an eye to the inflationary environment that may develop at any time.

We seek to partner with all our clients in helping you achieve your objectives. By serving your interests, our firm’s goals will be achieved. Our greatest asset is our people. We believe our team, driven by great entrepreneurial spirit, is among the best in the world to serve your interests.

While clearly this note is being shared with a large number of clients around the world, we cannot emphasize enough how personally we all take our obligation to you and our mission to serve you. To that end, you will find our phone numbers and our email addresses here to the right. We return every phone call we get and we personally open our mail. You can reach us virtually any time and we expect you will be pleased with the promptness of our response. Jefferies is here to serve you.

Thank you,

Rich and Brian