Martin Lee @ Sg
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Merrill Lynch Jubilee Series 8 Notes

You might probably have seen advertisements for the Merrill Lynch Jubilee Series 8 Notes recently.

(If you haven’t, you can download the product fact sheet at the link below:)

Merrill Lynch Jubilee Series 8 Notes Fact Sheet

The Jubilee Series 8 Notes promises 3.15% p.a. for a period of 2.5 years. It also offers “100% principal protection at maturity*“.

A 3 year government bond is currently giving only a yield of 1.86%, so this looks like a good deal.

But wait, we need to read the fine print first (Did you?).

It says:

The Notes are principal protected if held until the Maturity Date. However, redemption of the Notes at 100 percnt of the principal amount of the Notes is not guaranteed if the Note is disposed of prior to maturity, or the Note is redeemed early due to taxation or other reasons.

A lot of people will probably be thinking: “As long as I don’t sell it before maturity, I will get 100% of my principal back.

Let’s read the finer print and disclaimer on the fact sheet.

The security for the Notes will comprise certain securities issued by Merrill Lynch and the swap arrangements relating to the Notes including the guarantee by Merill Lynch as the swap guarantor. In the event that Merrill Lynch is unable to make or procure payment of amounts due under the securities or the swap arrangements, Jubilee Global Finance Limited will be unable to make the corresponding payments due under the Notes and the recourse of investors is limited to the realisation of the securities and to the termination payment (if any) due to Jubilee Global Finance Limited under the swap arrangements.

Yes, the Notes are 100% principal protected if held to maturity.

But no, the decision as to whether to sell the Notes or not does not lie totally with you.

There are certain conditions whereby the notes can be redeemed by the issuer prior to maturity date. They are:

  1. There is an event of default under the Notes
  2. The securities backing up the notes are repaid early for any reason, for example because there is an event of default under the securities or for tax reasons
  3. The swap agreement is terminated early
  4. The Cayman Islands imposes taxes on the issuer or on payments under the Notes which the issuer is unable to avoid

When any of these events happens, there is a risk of significant loss of capital.

A look at the Jubilee Notes Pricing Statement shows the securities backing up the notes to be SGD-denominated notes issued by Merrill Lynch & Co., Inc under its US$110,000,000,000 Euro Medium Term Note Programme. As the Securities are unsecured, they represent long-term unsecured debt obligations of Merrill Lynch & Co., Inc.

Therefore, you are paid the extra yield by taking on the credit risk of Merrill Lynch. And the few other reasons listed above which might not be too exactly transparent. For example, what are the factors that will determine when the swap agreement be terminated? We don’t really know unless we take the trouble to read thoroughly the base prospectus and pricing statement.

The question is, are we being compensated sufficiently to take on all these risks?

You might want to read page 6-12 of the Jubilee Notes Pricing Statement to understand fully the risk factors involved in puchasing this product before deciding whether it is suitable for you. While it has been marketed aggressively as a “100% principal protected product upon maturity“, it certainly isn’t a principal protected product.

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496 comments
Intheknow says 8 years ago

ABOUT $7875 + $50 bonus = $7925

Reply
gin says 8 years ago

Hi,
can anyone tell me wat is the TOTAL coupon payment for investment amount $100k?
i am checking this for my mum. The coupon payments were credited to her citibank savings account but she has thrown away the statements…i need to confirm the TOTAL amount as she wants to close her citibank acct.

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gin says 8 years ago

dear john,thank you for your reply.
was the principle sum and last coupon payment credited to your citibank savings account? or did citibank send you a cheque?

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gin says 8 years ago

dear catherine,
yes the citibanker also told my mum that funds will be in on 21/1/2011 and the citbanker will call her again. i’m wondering if the money will be credited to her savings account…
btw, can anyone confirm what is the total interest rec’d for investment amount of $100k ? it seemed my mum has not rec any letter from citibank since maturity date…

Reply
    Johnny Yeo says 8 years ago

    Dear Gin,

    You should have received your full payment i.e. principal including interest & bonus payment by now. I have received the principle sum of 100K plus S$50.00 for the 0.2% Bonus payment and interest of S$ 793.97 for the last quarter on 12 Jan 2011 from Citibank.

    Reply
      gin says 8 years ago

      dear john,thank you for your reply.
      was the principle sum and last coupon payment credited to your citibank savings account? or did citibank sent you a cheque?

      Reply
Intheknow says 8 years ago

this is a good product and is a safe product.

i think the lesson learnt is don’t panick unnecessarily.

Cheers,
Intheknow

Reply
Chris LIm says 8 years ago

Dearall

I wish to thank all participants of this website.I have my money back. The lesson learnt is be very careful when investing your money.

Best regards,

Chris

Reply
Max says 8 years ago

Like I said earlier, I was pleasantly surprised when a year bonus interest was creditted. A day later when ANZ returned the principal, they debitted 3/4 of the bonus. So it is now back to 0.2% bonus for 3 months only which is what the fact sheet said.

ANZ made the mistake in the calculation.

Still I am glad the principal is back in my account. Don’t care for the $300 difference.

Thanks
Max

Reply
    lioninvestor says 8 years ago

    Dear Max,

    Think they might have seen your post here and realized their mistake. 😀

    Reply
Eric says 8 years ago

Hi Everyone

Thanks for the advise, will look forwards to these.
Btw, anybody have any suggestions on next investments?

Reply
Intheknow says 8 years ago

Hi Everybody,

Don’t worry about the slight delay in receiving the principal. The note has definitely matured without any problems.

Those with Standard Chartered have already received their principal + interest + bonus interest (0.2% p.a. for 3 months only).

Max, do check your bonus interest amount. It should only be Principal x 0.002 x 0.25 or about $5 per $10k you bought.

Citibank should be returning your money real soon.

Cheers,
Intheknow

Reply
    lioninvestor says 8 years ago

    $5 per $10k? So much for “bonus”!

    Reply
Max says 8 years ago

Oh forgot to add, 0.2% is only for a year and not 2.5 years, i think this is what the pricing statement says. In fact if you read the fact sheet it says 0.2% pa (for the final quarter only) payable at maturity. I was pleasantly surprised they gave out a year. Small bonus for the angst for the past 2.5 years 🙂

Thanks
Max

Reply
Max says 8 years ago

Hi all

I am also a holder of this, yesterday ANZ bank creditted teh interest + 0.2% bonus into my account. Still have not received the principal yet though, maybe wait for a few more days.

Thanks
Max

Reply
Eric says 8 years ago

Hi Intheknow and others

Thanks for the great advises and at least we have seen the light at the end of the tunnel now.

Now am waiting for the principal and last payment of the interest.

Btw, does anyone know whether we have qualified to receive the Bonus Coupon of 0.20% per annum(which is 0.50% for 2.5yrs) for the last quarterly interest period? Payable on
the Maturity Date if the three month Singapore Swap Offer Rate (SOR) fixes within the Range of 0.00% to 5.00%?

Thanks again and best wishes to all.

Regards

Eric

Reply
Catherine says 8 years ago

Dear in the know,

Thank you for your advise to hold on to the jubilee notes.
You mentioned that we should be able to get our fund in 1-2 working days. However, citibank told me that I will only get my fund by 21/1/11. They told me it is common practice for notes. Could you advise/comment on this issue or what I should do next to get my fund back asap or can I claim against Citi for any interest for the delay?

Reply
Kenneth says 8 years ago

Thanks for your advice all these while. I really hope to see the principal repayment being credited to my account in 1-2 business days but Citibank promise by 21th of this month. Any advice?

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Intheknow says 8 years ago

you need to wait a few days. don’t worry. everything is rosy with merrill lynch now.

u should have received your final interest payment already. Principal repayment should be within 1-2 business days from today.

congrats to everyone who endured all the anxiety and held till maturity.

Cheers,
Intheknow

Reply
    June says 8 years ago

    Many thanks to all your advice.

    I have been following your advice all these while and yes congrats to everyone who has endured esp to myself 🙂

    with best regards!

    Reply
sharon says 8 years ago

It is maturity time for the bond. But it has not be banked into my account. Please advice. Thanks.

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Apple says 9 years ago

hi
may I confirm the interest pay out (3.15 %) can move out of SCB account right ?
only the principal sum is not able to transfer out of the bank (SCB) account right ? got to hold till jan 2011 ? another 3 more mth to go?

Reply
Danie says 9 years ago

Anyone know anything abt her assurance gold plan from posb/aviva ? is it a good saving plan? seems that the amt put in has dwindled… any advice would be appreciated… thanks…

Reply
Apple says 9 years ago

any idea “when” JB 8 note wil be maturing ? coming Jan 2011 ?

Reply
    Kingfisher says 8 years ago

    Maturity Date for ML Jubilee Bond Series 8 (from Citibank) is 9 Jan 2011.

    I was given the understanding that principal (plus any coupons @3.15%pa) will be paid (subject to certain risks), when the bond is held till maturity.

    Reply
howisit says 9 years ago

no comment yet.

Reply
SeriousInvestor says 9 years ago

Hi Jack,

One of the quarters will have slightly lower amount but in other quarters, you get slightly higher amount. If you sum up the entire year’s payout, you will notice that they all add up to exactly 3.15%. I did a check and confirmed correct amount for my past years’ payout.

Regards.

Reply
jack says 9 years ago

has anyone noticed that the latest payout for april was slightly less than earlier payouts? it worked out to around 3.1% instead of 3.15%…

Reply
Eric says 9 years ago

Hi Everyone

Sorry that I am a bit confused, the $0 coupon payout is it refer to the bonus coupon of 0.20% p.a. that we are getting at maturity?

Thought that the 3.15% p.a. fixed interets payout quarterly was sort of fixed except for some events of default, Cayman Islands imposing taxes…etc.

Please kindly enlighten me. Thanks.

Reply
    lioninvestor says 9 years ago

    Hi Eric,

    Sorry, bad mistake from me. The $0 quarterly was for Pinnacle series 8 and not Jubilee.

    Reply
      Eric says 9 years ago

      Hi Lioninvestor,

      No worries, appreciate your assistances and clarifications. Thanks.

      Reply
bernard says 9 years ago

Is it affects our payout ?

Reply
    lioninvestor says 9 years ago

    No.

    Reply
Henry says 9 years ago

Why Zero payment, something went wrong ?

Reply
    lioninvestor says 9 years ago

    Not really. The coupon payment is linked to the equity performance of some shares. They haven’t really done well and based on the calculation, it works out to be zero coupon.

    Reply
    lioninvestor says 9 years ago

    Sorry, bad mistake from me. The $0 quarterly was for Pinnacle series 8 and not Jubilee.

    Reply
john lee says 9 years ago

Hi everyone, how is it with Jubilee series 8 now? Is there any surprise? Thanks.

Reply
    lioninvestor says 9 years ago

    Hi John,

    There is a recent notice of a $0 quarterly coupon payout, calculated based on their formula.

    No other surprises for now.

    Reply
      lioninvestor says 9 years ago

      Sorry, bad mistake from me. The $0 quarterly was for Pinnacle series 8.

      Reply
Apple says 9 years ago

Oic, is paper loss is it. Thanks v much.

Reply
Intheknow says 9 years ago

latest market price of the note is 93.00

so you bought 20k of the note which is worth 18.6k now.

don’t worry, hold it for another 9 months, and you will get back 20k + interests if no default has occurred.

Reply
Apple says 9 years ago

Hi
i deposit 20k, now my bank balance is only 18,600.00.

any1 knows what happen ?

tks

Reply
samuel says 9 years ago

update… BoA sued for fraud over the merger. i’ve not been following up so have no head no tail over this issue. any pointers?

http://www.channelnewsasia.com/stories/afp_world_business/view/1035447/1/.html

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Intheknow says 9 years ago

you can’t find a better deal than this note in current market situation.

where to find 3.15% p.a. now???

i hope your friend’s mum didn’t regret ‘refunding’ her purchase. You probably get 0.7% p.a. by putting the same amount in bank fixed deposit now.

For J8, the Issuer and Guarantor is Jubilee. The underlying securities securing the note (and hence Principal Protection) is a bond issued by Merrill Lynch.

Indirectly, you are taking on the risk of Merrill Lynch. Do you think Merrill Lynch will collapse in next 1 year+?

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Nk says 9 years ago

my friend’s mum bought J8 from 2 banks.. when she was comparing the documents, she noticed that one of the bank has this document called the “know your investment risk”. in the document, it states that J8 is principal guaranteed, and the issuer is Merill Lynch. in the document from the other bank, it said principal protected and issuer is Jubilee. She went to her bankers to double check, and realized that it is principal protected and issuer is Jubilee. Thus she went back to the first bank to complain and was compensated with the full principal plus the interests that was paid. in addition, she even received some vouchers as compensation..

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CKH says 10 years ago

I didn’t received Mine either.

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clueless says 10 years ago

i wonder if anyone has received the latest payout? up to now still not credited in my account 🙁

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    Johnny says 10 years ago

    I have just rec’d my dividend on 19 Oct through Citi bank. You should receive your as well.

    regards,

    Johnny

    Reply
Intheknow says 10 years ago

this is the article:

http://www.nytimes.com/2009/10/04/business/global/04cayman.html?_r=1&ref=global

unlikely for cayman islands to shoot themselves in the foot by imposing taxes and forcing out the hedge funds and corporates!

even if taxes are imposed, it would probably be in 2-3 years time, way after Jubilee Series 8 matured in early 2011.

don’t worry!

Reply
    Eric says 10 years ago

    Hi Intheknow and All

    Thanks for your advises!
    Still holding on to my JB8 notes.
    Tmr, quarterly payout coming.

    Reply
Chris says 10 years ago

Hi all

A report on International Herald Tribune dated 5th October 2009 on possible imposition of taxes by Cayman Islands

Reply
Amenah Ali says 10 years ago

Hi In The Know,

Thank you very much.

Reply
Intheknow says 10 years ago

Hi Ali,

It would be helpful if you gave me the link for that article.

But it sounds like it applies to OFFSHORE ACCOUNTS that individuals/corporates use to store their wealth.

Doesn’t sound like it will apply to Jubilee which is a special entity incorporated to issue Jubilee 8.

Anyway, Jubilee 8 will only have problems if CAYMAN islands decide to impose taxes. Nothing to do with US government imposing taxes.

Anyway Jubilee 8 only has 15 months remaining. Any tax changes usually takes 1-2 years to take effect.

Don’t worry, be happy!

Cheers,
Intheknow

Reply
Amenah Ali says 10 years ago

Hi In The Know,

A colleague at work shared this headline with me:”US govt extends tax exemption deadline for offshore accounts.”

(1) Does this headline refer to individual offshore accounts only?

(2) Will it have any negative impact on Jubilee 8? I know that JB 8 is set up on Cayman islands.

Could you elaborate, please.

Thank You.

Desperate

Reply
Intheknow says 10 years ago

hi helpless,

about 91.5 now.

Reply
Helpless says 10 years ago

Hey people,
Does anybody know what is the latest NAV for JB 8 ? Tried calling RM, no response, no sms. Thanks in advance..
Best Rgs
SP

Reply
Intheknow says 10 years ago

Hi All,

My indicative offer is still open.

If anyone wants to sell me their Jubilee Series 8 notes held in Standard Chartered Bank, please email:

[email protected]

and we can discuss further.

If the current price of Jubilee Series 8 notes is 85.75%, I can probably pay you about 90% to 93% (this is a non-binding offer which will be subject to further negotiation).

Cheers,
Intheknow

Reply
Beh Song says 10 years ago

Hi Boon

If you mean the current price of JB Series 8, it should be about 85.75%.

Reply
Boon says 10 years ago

Hi there,

Does anybody know what is the latest NAV for JB 8 ?

Thanks for sharing…

Reply
Intheknow says 10 years ago

i think it’s apparent to all that the sale of BAC at end March was a BIG MISTAKE..

’nuff said.

Reply
CKH says 10 years ago

In the know
any advise
Cheers

Reply
Beh Song says 10 years ago

With Temasek selling all its stake in BoA, how does it affect us as holders of Jublibee Notes? Is this a pre-empt sign that Temasek thinks that BoA will fall? Comments from all is welcomed.

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Intheknow says 10 years ago

Hi All,

This is the full link:

http://sg.news.yahoo.com/ap/20090504/twl-us-obama-taxes-ef375f8.html

From what I read, it appears that US will impose ADDITIONAL taxes on foreign operations.

It should not have any impact on Jubilee 8 since the trigger event is if Cayman Islands themselves impose taxes, not US.

Cheers,
Intheknow

Reply
Intheknow says 10 years ago

Hi Amy,

1. Maturity date is 9th Jan 2011. So unless the change takes effect before 2011, there is minimal impact.

2. It appears that if Obama succeeds to get Cayman Islands to impose tax (Cayman Islands has to agree, US alone can’t force Cayman Islands to imposes taxes), then ML has the right to early terminate the notes.

3. I would interpret your article as saying Obama is trying (US is trying) to impose a tax on US companies running operations in tax havens. So perhaps it would be more of an additional tax being imposed on “foreign operations” rather than Cayman Islands itself taxing the companies incorporated in Cayman Islands (this is the trigger event for early redemption).

Any tax experts out there can comment?

Regards,
Intheknow

Reply
Amy says 10 years ago

Hi In The Know,
I retrieved this from Google. I did not copy the whole extract. For what I gather, US President Obama proposed to make some changes which would eventually lead to Cayman Islands imposing taxes on multinationals and financial companies who have been running their businesses and operations there.
However , the report did say, these proposals would only take effect in 2011.

Could you please give your take on this? What impact will this have on JB 8?

“WASHINGTON—President Obama on Monday called for curbing offshore tax havens and corporate tax breaks to collect billions of dollars more from multinational companies and wealthy individuals, a move that appeals to growing populist anger among taxpayers but that is likely to open an epic battle with some major powers in American commerce.
With the proposals he outlined at the White House, the president sought to make good on his often repeated campaign promise to end tax breaks “for companies that ship jobs overseas.”
The proposals would especially hit pharmaceutical, technology, financial and consumer goods companies — among them Goldman Sachs, Microsoft, Pfizer and Procter & Gamble — that have major overseas operations or subsidiaries in tax havens like the Cayman Islands. ”
Thank you very much.

Reply
Intheknow says 10 years ago

Hi Worried,

don’t worry. no default event on Merrill Lynch has occurred.

citibank also has no liquidation event.

only possibility is operational error/delay which is easily resolved.

Cheers and TGIF,
Intheknow

Reply
CKH says 10 years ago

I have received the interest from RBS
cheers

Reply
worried says 10 years ago

still haven’t received any payout from citibank…this is bad…

Reply
    Johnny says 10 years ago

    Hi Worried,

    You should check your account in Citibank again since I rec’d my interest pay-out from Citibank on 16 Apr 09.

    Regards,

    Johnny

    Reply
Smile says 10 years ago

Hi

i received the interest today from SCB.

=)

Reply
Intheknow says 10 years ago

9th april 09 followed by 9th july 09.

expect to get the interest credited within 5 working days (depending on which bank is holding your note).

Reply
    FirstTimer says 10 years ago

    till now, have still not received under Citibank.
    Is citibank always late ???

    Reply
FirstTimer says 10 years ago

Dear ALL
any ideas when is next interest payout
Thanks

Reply
    stanleyleow says 10 years ago

    just received my interest of 3.1% credited to my stanchart account

    Reply
Intheknow says 10 years ago

Hi All,

I am reopening my invitation to treat for the purchase of Jubilee Series 8 notes from you all. I am only interested in Jubilee Series 8 notes and they must be held in Standard Chartered currently.

For more details, please contact:

[email protected]

Please state the amount that you wish to sell and we can discuss further. My offer price will be higher than the bank’s current buy-back price.

Cheers,
Intheknow

Reply
Curious says 10 years ago

Hi IntheKnow and Friends,
I have Citrine All Weather Booster Notes held in Citi. I understand interest is due to be paid on 31 March 09. Why is my savings account is still not been credited with the quarterly interest yet? It is already 7 March, quite late. Secondly, the first round of interest was due on 31 December 2008. Why was interest credited only 5 days later on 5 Jan 2009? Does a delay mean that anything is going wrong? Thank you.

Reply
Intheknow says 10 years ago

Hi Jack,

I believe the issue size for Jubilee Series 8 is SGD500million and only sold in Singapore.

Cheers,
Intheknow

Reply
Jack says 10 years ago

Out of curiosity, does anybody know

1. What is the approx total size of JB 8 in dollars?
2. How many countries sell JB 8? (only Singapore and Hong Kong?)

Reply
Intheknow says 10 years ago

Hi All,

1. One reason for the decline in NAV could be due to a rush of people wanting to redeem their note. In order to discourage people from redeeming, the issuer could have intentionally reduced their buy back price even though there is no material negative news.

2. Cayman Islands and all tax haven countries have all along been on the grey list of OECD. I don’t see how this will impact Jubilee Series 8. Jubilee Series 8 may be affected if Cayman Islands decides to start imposing taxes on the special purpose vehicles incorporated in Cayman, but this does not have much relation with OECD’s grey list which has more to do with a need for greater tax information release to authorities.

Cheers,
Intheknow

Reply
Amy says 10 years ago

Hi In The Know,
Could you possibly give a reason for this slide in the NAV of Jubilee 8?

26 March 86.25 %
3 April 86 %
You did mention in one of your posts about the spread-that there could be discrepancy in NAV of JB 8 depending on the bank. Is it possible that Citibank purposely reduce the value of JB 8 because the next coupon is payable in the first week of April? Could the bank do this?

Aside, to those of you who managed to redeem JB 8 at 91% , you were fortunate. Now I have to go thro’ the cycle of waiting the value to rise. And, I am seriously considering getting out when the value reaches 92 %.

Reply
Amy says 10 years ago

Hi In The Know,
Could you possibly give a reason for this slide in the NAV of Jubilee 8?

26 March 86.25 %
3 April 86 %
You did mention in one of your posts about the spread-that there could be discrepancy in NAV of JB 8 depending on the bank. Is it possible that Citibank purposely reduce the value of JB 8 because the next coupon is payable in the first week of April?

Aside, to those of you who managed to redeem JB 8 at 91% , you were fortunate. Now I have to go thro’ the cycle of waiting the value to rise. And, I am seriously considering getting out when the value reaches 92 %.

Reply
SeriousInvestor says 10 years ago

Hi Intheknow,

Cayman Islands together with Singapore, Hongkong and others have been “grey” listed by OECD recently. Could you comment on how this may or maynot affect JB8 being defaulted.

Thank you.

Reply
stanley says 10 years ago

any further updates on ML series 8?

Reply
    Robine says 10 years ago

    Hi,
    The NAV of JB is 86.25% as at Mar26….(from Citibank).

    Reply
blur says 10 years ago

i have enough of sleepless nights and worries, u will never know when is another bad news coming…
anyway i’m happy i can get back most of my $$… treat it as a lesson learnt.
no more bonds,minibonds, notes for me…..

Reply
Intheknow says 10 years ago

why redeem when the market is turning…..

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blur says 10 years ago

Just an update, i’ve just received 91% of my principle sum 🙂

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bee says 10 years ago

Have been checking this site for comments and opinions of MLJB8. I finally decided to redeem 2 Fridays ago at 91 % I got back my money today. I am very relieved and have no more worries, though a little upset that I lost some money. I don’t think I want to go through the stress until it matures. It’s NOT worth it. Thank you LionInvestor for this site. All the best!

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blur says 10 years ago

hi collin
i redeem at 91%, i confirmed this price with my RM.
she called back the next day to tell me this price is locked. I will get my money back in 3-5 days time.
My RM just revert today, i will get it by Friday.

Reply
collin says 10 years ago

Hey Blur and in-the-know,

does it mean if i choose to redeem my Jubilee 8 notes early i will not be able to know the exact price i’m redeeming at?

if its 91.25% as quoted by Citi, does it mean i get back 91.25% of whatever i put in at the start, like 91.25% of say $100,000 = $91,250?

anyone knows how much is RBS/ABN quoting now?

Blur: how much did you redeem your notes at? if it’s convenient to share.

cheers,
Collin

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jane says 10 years ago

hi

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blur says 10 years ago

Hi Lioninvestor,
Everytime when i watched news, i got so sad & worried. can’t remember the number of sleepless nights that i had.
Great relief for me.

Thanks Lioninvestor for this wonderful site! 🙂

Reply
blur says 10 years ago

Just let go of my Jubilee 8 today, have been thinking very hard for the past few weeks. No more worries for me! 🙂

Reply
    lioninvestor says 10 years ago

    Hi Blur,

    Well, at least you can sleep in peace now no matter what happens.

    Reply
Amy says 10 years ago

Hi All,
Just like to share the latest NAV of Jubilee 8.
12 March 2009 91.25% ( quoted by Citibank)

Cheers

Reply
Jack says 10 years ago

Interesting article in Channel News Asia regarding Bank of America which I read on the iPhone.

Key points:

Lewis told executives the bank “would generate nearly 50 billion dollars in profit this year”.

Lewis said that “the last thing we need to do is start nationalizing banks.”
“By nationlization, I mean a full-scale takeover of an institution by the government in which common shareholders, and possibly debt holders as well, would be wiped out. This, in my view, would be a nightmare.”

BAC shares have been climbing very fast lately. Hopefully, things get stable and don’t swing wildly, regardless of which direction.

Reply
Lyne says 10 years ago

Hi In-the-know,

I’m holder of Jubilee Notes Series 8 and other structured products.
In gloomy times like this, it’s really nerves breaking to keep listening to bad news.
Citibank seems to be a black hole with billions of dollars being thrown into it.
If Citi really goes bankrupt, what will happen to all the notes, structured products and unit trusts bought from but not issued by Citi ? And how about Citi time deposit ?

Really appreciate In-the-Know and others for their selfless time and effort in giving amateur investors like us good and solid advice…

Thank you.

Best Regards,
Lyne

Reply
    Intheknow says 10 years ago

    Hi Lyne,

    If your note is merely HELD in Citi and not issued by Citi, there is no problem. You will still get it back. Citi is just your custodian and their bankruptcy will not affect your note. There is only a possibility that some fees may be levied should Citi be forced to transfer your holdings to another bank e.g. HSBC or StanChart, but nothing major.

    Even better, if you are talking about Citi Singapore, it is a separate subsidiary (not branch) of Citi with its own share capital and assets.

    Time deposits in Singapore approved deposit taking institutions are guaranteed 100% by singapore government till end 2010.

    Cheers,
    Intheknow

    Reply
Amy says 10 years ago

Hi InTheKnow,
Thank you for your advice. You are right. I checked with my RM again and this is her answer, lifted from her email:
“You will not be able to know the price before you sell. It is purely an indicative price. Hence, due to this reason we usually do not encourage customers to sell before maturity.
Upon maturity of the note on 9 Jan 2011, you can take back your principal amount. From now till before 9 Jan 2011, you have to bear the risk of getting lesser than what you put in if you choose to early withdraw.

When you choose to redeem the note before maturity, we will give you the redemption form to sign, with the indicative value and the trading date. We can make a copy of the transaction form if you need something in black and white, however you will still have to bear the risk of the price movement because the price will only be out after you sell. For example, if you sell today, I will only have the price for 26 Feb 2009 which is 91%, however, you will only know the price for 5 March 09 on 6 March 09, hence, it will be unknown to you what is the price you sell at.”

I will just get the redemption from from her this Saturday and read it carefully. May need your advice regarding some terms in that form.

As for the other JB 8 owners, I hereby retract my early entry about the price being locked in. In the Know is right-the price is only indicative. You may end up getting much much less. Hence , I will hold on a bit longer.

Reply
    Robine says 10 years ago

    Hi Amy,
    I thought I read somewhere in this site whereby a guy suggested putting a remark on the redemption form to specifically instruct the bank to only redeem at or above the NAV he wants. Not sure if it is feasible with the bank this way.

    Think lets monitor the price for few months to see the movement. The final value shouldnt be far off from the estimated price (unless the market tumbles). Just my opinion…

    Reply
      Intheknow says 10 years ago

      Hi All,

      I work in a bank and I come into frequent contact with structured products, hence I am In-the-know.

      You CANNOT put a limit sell price on the redemption form. It doesn’t work that way. If you put in a redemption order, you are subject to the mercy of the issuer’s buyback price, whatever it may be. Of course, the issuing bank has to give a reasonable price, not something like 10% when it was 90% one week ago. But it is usually different from the indicative price you were made aware of. Hence some form of gamble there. (It could be higher!)

      Any queries, just post and I will try to address.

      Cheers,
      Intheknow

      Reply
Amy says 10 years ago

Hi All ,
As of 26 February, the NAV of JB has increased to 91%. ( courtesy of Citibank )
I’ve also asked my RM how redemption works. If you redeem JB today, you’ll get your money based on this week’s pricing. In other words, the amount you receive is locked in, based on Friday’s price. It will also take between 3 and 5 days before you can get your money.

I hope this infor helps.

Cheers

Reply
    Intheknow says 10 years ago

    Hi Amy,

    Would advise you to get that advice from your RM in black and white (amount received is locked in, based on Friday’s price).

    That’s not how banks usually work for redemptions, especially structured products.

    Cheers,
    Intheknow

    Reply
jiahui says 10 years ago

Hi all

Thanks for your precious feedback. I think you all r more helpful than my relationship manager. I asked him to update me on the price, no reply. sms him, no reply. sigh……

I might just go ahead n let go notes this Friday so i can sleep in peace. then I work n save what I lose. an expensive lesson for me. Next time, I wont gullibly think all products sold by banks are safe. Not entirely the fault of others. Ive got myself to balme for being too trusting n not doing my homework.

I pray this financial situation will bottom out soon. those poor ones with many mouths to feed are having a hard time.

Thanks
jiahui

Reply
Jack says 10 years ago

Thanks Henry and Lioninvestor for the links and feedback and IntheKnow for your views. I think I have the necessary info (or lack of) to make an informed/uninformed decision.

Reply
Intheknow says 10 years ago

Hi All,

1. Remember that Jubilee notes are not linked to BOA or ML share price.

2. Remember that Jubilee notes are NOT GUARANTEED by US government or anyone but ML for now. It might be guaranteed by BOA if BOA choose to do so.

3. The guarantee by Treasury is only to insure BOA against toxic assets on BOA’s balance sheets. It does not guarantee any of BOA’s obligations. It also has nothing to do with Jubilee notes.

4. Jubilee is fine as long as ML does not default on any of its obligations.

5. As far as I know, the published buy-back price is indicative and will apply to people who applied to redeem BEFORE the price is announced. It’s like mutual funds, if the NAV is $90 today, and you put a redemption order today, you will NOT get $90, you will get the price either 1 or 2 days later. Applying that to Jubilee, if you see the published NAV of $92 on 6th March 09 and you put in a redemption order on 6th March 09, you will get the redemption price AS AT 13th March 09.

Cheers,
Intheknow

Reply
Henry says 10 years ago

There were many different news the last 3 weeks in the US and naitonalization was and is still the hottest topic in America. But be careful, many gurus gave their views and want nationalization. Greenspan is just one of those idiots. They continue to spread rumours to drive the stock prices down. I was of the view of no nationalization before Obama and Benerke made the annoucement. Again i’m no guru, i have a few reasons to think so. You can read Seeking Alpha web site if you want to know more of this topic, i had contribute my comments there several times the last few weeks.
Some of those rumours spreaders had been being accused of having personal interest in hedge funds and some were short sellers. These 2 categories of people will benefit if the bank stocks drop to $1. Desipte so many wayang, Benerke and Obama were not moved and announced no nationalization mid this week. But the rumours go on. And the gamblers continue to gamble in the casino. That’s Wall Streets.
Ultimately, and most importantly, it’s the decision of 3 persons: Obama, Benerke and Geithner, the rest are “noise”. So don’t read too much into it. It’s a confusing situation, hence I only look for facts, policy and plan.
There are people who said preferred shares are safe but i didn’t agreed last month, see what happen to GIC, haha. Now some people say bond holders are safe. Really? Americans are very innovative, otherwise there will be no such things as Minibond. The complex mathematical formulas was invented by some MIT people to reduce their risks and transfer it to the ignorant by us. Anything can be converted and then swap here, swap there until it becomes nothing. It’s not our say. Do we think GIC likes to convert, i don’t think so. Did GIC have a choice, i don’t think so.
So if one cannot afford to lose some money, it’s better to stay out completely.

Reply
Jack says 10 years ago

Hi Henry,
Thanks for the insight.
I’ve no luck in digging out more resource. I’ve looked at the whitehouse website as well as US treasury.

Could you help provide a link or links to “The US$115B guarantee by Treasury to BOA (& ML) does not include “Foreign Assets” and several other categories of things. You can find this info on the Treasury or White House website site.”

Thanks.

Reply
    lioninvestor says 10 years ago

    Hi Jack,

    I’m posting this on behalf on henry as he accidentally sent it to my email:

    “Try this. I subscribe to daily updates including yeild reports, so they email to me automatically. You may also want to sign up, it’s free, S’porean like this, haha.

    http://www.treas.gov

    Again, i’m not saying it will happen, i’m not God or In the Know. I was shocked when i first read those 2 words, i read it a few times but there are some ambiguities as usual, How you want to interpret it, it’s your choice, i won’t debate about it. Good luck. US government has not been very clear in their bank resuce bank.

    That’s why the bank stocks plunge, recover a bit, then plunge again. There is a lot of fear in the market. I’m trying to guess the direction of Citi and BAC price tomorrow, should i buy or sell? Again, it’s individual interpretation.”

    Reply
Henry says 10 years ago

Jia hui, that’s not what i went thru. I checked the price on Friday moening with my broking house and drop them an email to authroise and the price was based on that Friday’s price and i got the full amount. That was last month and a different note though. But i understand from my broker that’s the way it is, regardless of which note you sell. Friday authorise, sell at Friday’s valuation and get the money 3 working days later.
At 90%, the upside is only 10%, so might as well take the loss and sleep peacefully. The situation in the US is evloving in quite a scary manner, ML was obviously a bad decision for BOA, i’m not sure what will happen next. There are rumours that if US wants to nationalize BOA, Ken Lewis will return ML to the Treasury and the Fed because he was arm-twisted to abosrb ML when Ken found out that ML was in deep shit and want to back out of the deal but the US government refused. So now US government die die also must back up BOA from nationalization.

Since you are so anxious, plse let me share a piece of info with you. The US$115B guarantee by Treasury to BOA (& ML) does not include “Foreign Assets” and several other categories of things. You can find this info on the Treasury or White House website site. I don’t claim to be “In-the-Know”, so you got to decide for yourself whether these notes are include in the guarantee, that’s the risks. Many people are not aware of this. From what i know Jubilee was incorporate outside the US.

Why i know so much is because i go to US quite often for work purpose. You can verify my words by doing a search, again i don’t claim to be “In-the-Know”, just that i have been keeping very close watch on the situation in the US and through my colleagues there because of my job and my investment in BOA. Nobody can be sure, even Warren Buffet said that yesterday. So a 10% loss is a good bet. But plse decide for yourself and don’t hold me responsible, i’m done and through with these garbage.

God bless you.

Reply
jiahui says 10 years ago

Hi all

with the current buyback price for JB at 90.85%, I think of letting go of my notes. But my relationship manager said that if I give the green light to make the necessary paperwork this week , the price will be based on next’s weeks price which is not announced yet. ie if the price drops next wek, theres no turning back.

Any one out there has sold your notes? whats the procedure like. or anyone else has any advice on my decision. Should I sell or hold. I very scared leh.

Jia hui

Reply
Amy says 10 years ago

Hi All,

Latest update from Citibank.

The buyback price for JB 8 is 90.85%.

There is a silver lining for us.

Cheers

Reply
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