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I totally agreed with the point raised by Mars and moderated by
LionInvestor on MiniBond Ltd continuing as a viable entity, without
Lehman Bros.
The early redemption of the underlying securities held by Zircon, Beryl or whatever institution would result in massive loss in the current market condition.
Legally I think there is ground for Mini Bond Ltd to obtain coupon payment from the lending institutions because the former, unlike Lehman Bros, has not filed for bankcrupcy protection.
We then take it one step at a time from there.
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Maybank relationship Manager (RM) called me only last sat (20th Sep) to inform me the minibond series 6 arranged by Lehman brothers went burst. Why are they called after so many days and a lot questions i answered the RM can’t answer.
My minibond series 6 has 6 reference entities, Lehman brothers is only the arrangers, why is it affect me? anyone can tell me? The interest payment is overdue (20th sep) what is my rights?
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Interest on Minibond series 6 is due on 20th Sept. If interest is not paid 15 days after due date, the trustee, in this case HSBC Institutional Trust can call a default. The Trustee can take several actions, among them, liquidated the assets of Minibond series 6 and distributed the proceeds to the bondholders after deducteding various charges and fees like sales commission, legal fees, etc.
This action is not advisable at the moment as the underlying assets would probably not fetch a good price. The amount you can expect to recover depending on the underlying assets, in this case is portfoilio notes from Zircon Finance Ltd. Please refer to HSBC website, http://www.hsbc.com.sg – under Minibonds, frequently asked questions.
Hi,
My mom bought the lehman brothers minibonds series 2 & 3 from ABN Amro last year. Now she may not get anything back since the lehman brothers have gone bust. But according to her the contract itself was misleading so there may be some misrepresentation from the Relationship Manager (RM). When she called the RM,she told her have to wait till end of the month for further news.
Not sure at this point of time what can I do to help her get her hard earned money. Does anyone know?
ReplyMiniBonds
Why called it “Minibonds”, when what Lehman Brothers selling is not a bond at all. It should be titled more appropiately accordingly to the underlying securities. The term “minibonds” gives the impression that these are sovereign bonds and or companies’ bonds that is being sold in small lots of S$5,000/= upwards. Why MAS and the distributors allowed it to be called minibonds
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I have very little free time after family and work. But, this minibond saga is truly injustice to investors. The brochures are misleading – credit event to any of the reference entities and LB is not one of them.
We need collective action like petition etc. Please let me know if any available and I will put my name in. Personally, I am planning to lodge a complaint. Contacted Maybank and they said would give me an update tomorrow.
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Elsie,
You may leave your contact details at this page:
http://www.petitiononline.com/CLSINVES/petition.html
ReplyMunch,
The UOB Capital Protected Fund – Series 3 (SGD) has a 11.8% exposure to Lehman.
It’s a hit but you should be getting the majority of your money back.
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Gotten a call from UOB Asset Mgmt today informing me that my investment in United Capital Protected Funds- Series 3 (SG) would Not have 100% protection comes Oct 08 when it expires due to the exposure to Lehman. Leave me puzzled as the 20 basket of funds does not include Lehman. Cited “..Capital protected fund and not a guaranteed fund as the capital protection for Units held
until the Maturity Date and the payouts for Units held until the respective payout dates are provided by collateralised debt obligations (“CDOs”), credit-linked notes (“CLNs”), debt
securities, deposits and options, and not by a guarantee. No guarantee is given, express or implied, that investors will get the fixed or bonus payouts on the payout dates or the return of
their capital invested on the Maturity Date.” They can’t tell me what would be the expected $ lost when it expires. Thought UOB would manage these funds well. My parent’s hard earned savings are in the same fund. UOB cited on 15Sept ‘The bank’s total exposure to Lehman is very small and insignificant” Consumer like us are taking the hit ! What can I do ?
Jay,
Yes, it’s not comprised of just the reference entities. There’s a bunch of underlying securities which form the assets of minibonds.
Again, the structure will be clearer here:
http://www.martinlee.sg/minibonds-update/
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The problem with Minibonds is that the structure is not really composed of the bonds of the underlying banks. It is actually a bunch of Credit Default Swaps (derivatives). Lehman is paying your interest to protect them from default of the underlying banks. They are not passing on to you the interest of the underlying bonds. Your real counter party here is Lehman Brothers. When Lehman goes bust, no one will pay anymore.
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to add on, for those brother and sisters holding big cash with the bank or have brought alot of products – don’t ever think you will be treated first class, as saying go ‘no one too big to fall, and to bank no one is too big for them as well’.
Replyanyway i dun trust whatever shit my distributor tell me anymore. In fact when sub prime started and also during this year, in jan/mar/june – i keep asking them is lehman ok and if lehman go bust what is my ultimate exposure but they never entertain my questions – they tell me nothing to worry. how can they being in the banking industry claim ignorance and they do not do risk managment for their ‘prefered banking customer’ in good time is all about pushing products to customer but in bad time you should advise customer on which product that you are holding will expose you (even we will not hold them liable – but is a service rendered).
only on wednesday morning i.e 10/sept when i read from msn that korea bank pull out of the talk with lehman – immediately i ask her how can i liquidate and pls check with your in house expert what happened if lehman go bust – she tell me have to wait till friday as lehman only issue pricing on friday. but come friday evening she tell me lehman dun issue pricing today and cannot sell back to them. plus series 1 is deposit in CDP – I can only sell thru uob, ocbc, phlip securities (how proffessional right ?? ) since wednesday i already tell them i want to sell – only friday afternoon they tell me on this procdure how do u expect me to open an account instantly. it is all academic now, but just to share with all bro/sis here how proffessional these people can be. i wrote a complain letter to the bank but they do not reply at all.
Replymy distributor tell me – MB is a vehicle set up by lehman – so now lehman is bust – automatically MB also bust…(how true i dun know, but seem logical)…my knowledge on all this legality issue is as good as none.
ReplyHi Mars,
This could be something they are considering. They will need time to sort out all the legal and financial issues, and of course the due diligence on whether it is feasible.
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In view of Lehman’s woes consider the following:
Exclude all Lehman entities from the picture. If Minibond Ltd (“MB”) is the legal owner of the underlying securities, why can’t MB (working together with HSBC) arrange for the coupon payments to be made directly to HSBC who can assume the role of paying agent, and who can then pay the quarterly ‘minibond’ amounts over to the note-holders? Of course, HSBC would be entitled to their fee which they can deduct from the coupon payments they collect before paying the net amount over to the note-holders. May sound naive but could be workable.
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