<table><tr><th>From:</th><th>jeffrey E. &lt;jeevacation@gmail.com&gt;</th></tr><tr><td>Sent:
To:</td><td>Thursday, November 5, 2015 11:28 PM
Jabor Y.</td></tr><tr><td>Subject:</td><td>Re: Fwd: Saudi rates and CDS</td></tr></table>

I m glad , was she helpful ? if possible=i would like to take you up on the offer to fly with you to paris.=C2 sat is fine. just me am

=div class="gmail_extra">

On Thu, Nov 5, 20=5 at 5:45 PM, labor Y. wrote:

Thanks my friend Jennie was soo=nice

On 5 Nov 2015 10:51 am, "jeffrey E." &=t;jeevacation@g=ail.com <mailto:jeevacation@gmail.com> > wrote:

S&P cut Saudi Arab=a from A+ to AA- earlier this week as they expect the fiscal deficit will =ncrease to 16% of GDP in 2015, from 1.5% in 2014, primarily reflecting the=sharp drop in oil prices As a follow-up to the below, it is also interesting to look at playi=g the idea through FX.

## </=pan>

USD/SAR is currently p=gged. While our base case is that the government will defend the peg, if h=adlines get worse, revenues collapse from depressed oil prices and the gov=rnment has to address fiscal spending, we believe forward points and volatility will continue to increase. Althou=h, it may be a low probability event that the government breaks the peg, i= we look at Kazakhstan's actions in August (see chart below), we s=e buying USD call/ SAR put options as an interesting risk reward.

</=pan>

USD/KZT 1yr<=>>

Source: Bloomberg 11/0=/2015

Chart 2 below shows Saudi CDS

## </=pan> (cont.)

## please =ote

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