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
Salvin says 10 years ago

hi i just heard latest buy back is 0.8 from my RM…anyone can confirm?

Reply
Amy says 10 years ago

Hi Rach,
The latest buy back price is from Citibank.

Cheers

Reply
blur says 10 years ago

any expert can advise? what will happen to JB8 when BOA is nationalised?

Reply
hopeful says 10 years ago

Hi to all,

This is what Alan greenspan said…

The former Fed chairman said temporary government ownership would ”allow the government to transfer toxic assets to a bad bank without the problem of how to price them.”

But he cautioned that holders of senior debt – bonds that would be paid off before other claims – might have to be protected even in the event of nationalisation.

”You would have to be very careful about imposing any loss on senior creditors of any bank taken under government control because it could impact the senior debt of all other banks,” he said. “This is a credit crisis and it is essential to preserve an anchor for the financing of the system. That anchor is the senior debt.”

http://www.ft.com/cms/s/0/e310cbf6-fd4e-11dd-a103-000077b07658.html?nclick_check=1

It looks like even if there is nationalisation, the US government will want to protect holders of senior debt…if not there will be another credit crisis…

Reply
Intheknow says 10 years ago

Hi Johnny,

Please don’t spread rumours. There is no confirmed information that BOA and Citi will be nationalised, unless your information source is superior to Bloomberg or Reuters. This is the lastest:

http://finance.yahoo.com/news/Govt-reportedly-mulls-taking-apf-14434394.html

Anyway, as mentioned in my above posts, even if BOA is nationalised (not restructured), Jubilee 8 notes should be fine as they are debt obligations that are not linked to the share price performance. As long as BOA/ML continue to pay its debt obligations (bonds), Jubilee 8 is fine (the underlying of Jubilee 8 is a unsecured note issued by Merrill).

Cheers,
Intheknow

Reply
    Johnny says 10 years ago

    Hi Intheknow,

    Tks for the lastest update on the situation regarding the nationalisation of BOA and Citi. It is a big relief to hear from you regarding the JB8 position even if they are nationalised.

    Tks alot.

    Regards,

    Reply
kilo says 10 years ago

Hi Intheknow,

Let assume tt BOA being nationalise, any affect on JB 8 ?

Reply
Rach says 10 years ago

Hi Amy,

The latest buy back price is from StanChart or Citibank?

Reply
Johnny says 10 years ago

Hi Intheknow.

Bad news! Just learnt Citi & Bank of America will be nationalised. Would this effect our JB Note 8? Is JB Note 8 consider Bond holder? and where do we stand in the current development? Await your advice.

Reply
Amy says 10 years ago

Hi all,
Just like to share the latest buy back price of JB 8.

12 February 2009 90.65 %

Reply
Lost-in-America says 10 years ago

Sorry the guarantee for BAC is US$118B excl foreign toxics. What i’m trying to say is their losses was already covered by the US government, they will lose US$10B at most according to the details. If i got it correct, it is a good long term bet and i betted. You must be able to sleep well despite the volatility though.

Reply
Lost-in-America says 10 years ago

I think BAC will not be nationalized. Citi may be, their shit is too big, more than US$300B. BAC have a back-stopper of US$105B protection together with the US$45B cash versus est. toxic assets of US$99B (data from CreditWatch), so there’s still a margin of US$6B. But this toxic value is true or not, i don’t know so don’t challenge me but check it out yourself. I bought it recently after doing my due diligence but i may be wrong also. Wall Streets has a lot of con man, you just don’t know who is telling the truth. I’m also not sure about jubilee. Treasury has a list of what they will guarantee and what they don’t. Check this out yourself. It’s anybody’s guess??? Ignorance is not a reason as many had learnt when LB collapse.

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Aaron says 10 years ago

You are in these shit is because of those bloody, greedy, selfish, etc investment bankers in Whore Street who think of nothing, but ever increaseing salaries and bonuses. They have a one way bet, win or lose, they take increasing salaries and bonuses, while the shareholderss, customers took all the losses. And they keep throwing out all sorts of misleading products to mislead the public, while at the same time increase their bonuses due to increase in sales

Reply
Jack says 10 years ago

Thanks Intheknow.
Sometimes I wonder ‘who’ sets the rules and controls the game. It’s just like taking back everything. Things just gets wiped out every few years – debts, valuation, etc.
The whole world is ‘wiser’ but history is going to repeat itself in another shape or form.
Let’s see what’s going to happen to our dear notes.
Rgds,

Reply
Jack says 10 years ago

Hi Intheknow,
Could you share with us why would equity holders get wiped out?. Doesn’t the equity still trade unless it is taken private and equity holders are not compensated?
(seems like the BAC share price is dropping by the day. good thing i read this else i was still thinking of buying a bit of bac shares)
Thanks.

Reply
    Intheknow says 10 years ago

    Hi Jack,

    Nationalisation means the government owns the bank. Equity holders are kicked out and no longer have a ‘share’ of the banks networth.

    It could also be the case of ‘almost’ nationalisation like AIG. Government owns majority of the company with existing equity holders getting severely diluted. This will cause the share to drop to prices like $1 or less, effectively being wiped out.

    But I think BAC and Citi are unlikely to get nationalised. There are too many sovereign and institutional investors involved. US government cannot risk offending them by wiping out their equity holdings.

    Cheers,
    Intheknow

    Reply
Intheknow says 10 years ago

Hi Salvin,

No. Bond holders will not get wiped out.

Equity holders will get wiped out though.

Cheers,
Intheknow

Reply
Salvin says 10 years ago

Hi i have a urgent question. If BAC gets nationalized…will bond holders like us get wiped out?

Reply
Apple says 10 years ago

Merrill Lynch quietly paid out at least one million dollars bonus each to about 700 top executive even when the investment house was bleeding with losses last year, a probe has revealed.

???

Reply
Jack says 10 years ago

Been a while since the last update on the redeemable value. Anybody knows the latest?

Reply
Amy says 10 years ago

Hi All,
Things are looking up for all of us.

07/11/2008 NAV 87 %

15/01/2009 NAV 88.60 %

22/01/2009 NAV 90%

I am keeping my fingers crossed. If the value increases by another 6%, I will redeem JB 8.

Cheers

Reply
Lost-in-America says 10 years ago

from what i know, us government guarantee certain class of assets (toxic) up to $110b, not everytihng. i’m not sure whether jubilee is consider as siv, foreign company, or not?

Reply
Bernard says 10 years ago

Can anyone share whether ML and BOA has concluded the deal ? Very worry if every times read remarks like IC.
cheers

Reply
Intheknow says 10 years ago

Hi Jesse,

Good point.

I think if either Citi or BOA is allowed by US government to fail (like Bear Stearns)… the world’s financial system is finished.

Cheers,
Intheknow

Reply
    IC says 10 years ago

    Hi

    Am just wondering whether the current saga between ML and BOA will have any adversed effect on JB8? What if BOA decides to dump ML?

    Any advice please?

    Reply
Jesse says 10 years ago

A nice website. With CDS, I think if one of the big guys such as Citi or BOA defaults, other banks will fail too. US$ will crash and it is end of the game anyway. So I am not worry about my holding:-)

Reply
November says 10 years ago

Hi Amy
Thanks for the info.
SCB’s RM did not reply my email since 16 Jan.
Not sure they are willing to help to arrange for a buyback…..
Happy and Healthy New Year.

Reply
Amy says 10 years ago

Hi All,
Just like to share this.

The latest buyback price for JB 8 is 88.60%. Things are getting better for us.

A very prosperous Chinese New Year to one and all.

Cheers

Reply
dynomin says 10 years ago

Thanks for this website, i spent 2 hours reading the whole tread. But it is really worth it as it is informative and especially the thoughts and views shared with regards to this ML Series 8.

I also bought from Citibank and the financial consultant also told me that this works like a fixed deposit and can earn high interest and principle is protected! I am still wondering why the MAS allows such confusing terms like principle / capital protected / guaranteed when there is no protection or guarantee whatsoever.

I am still scared about holding onto this for another 2 years……

First, i am scared that Citigroup may fail (since recently they announced that they are splitting into 2), (Citibank’s shares plunged to 16 year low to US$3.50). , and thanks to all the “masters” who shared their views here, although i now know that ML series 8 does not depends on the institutions that sold this product, but depends on Merrill Lynch and Bank of America.

Secondly, Obama has been wanting to try to use the remaining 350b to help the US economy more in job creation and natural gas development and I’m afraid he may not want to pump in more $$ into the financial sector, especially when Bank of America has also said that the loss that they are facing now are mostly from Merrill Lynch. Bank of America’s shares has plunged to 18 year low to US$7.00. Obama’s team of advisors are now working on a “final bailout for bailout”. And that the financial institutions has again proved to fail the people with the lack of transparency on how the money are being used.

All these negative news seem worrying.

I have been burnt terribly from the plunge of the stock prices from these 2 banks (from 2-digit per share price to now “a-burger -cost-more” price) and really cannot afford to lose any further $$ from ML 8.

Any advice, please help ?

dynomin

Reply
November says 10 years ago

Quarter 2 interest for Jubilee series 8 is out.

Reply
November says 10 years ago

i received quarter 2 interest for Jubilee series 8.

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Intheknow says 10 years ago

Hi All,

Whether or not BOA wanted to withdraw or object to the deal, THE DEAL IS A DONE DEAL.

Watch out for the formal announcement. I am 90% sure that BOA will guarantee all liabilities of ML.

Cheers,
Intheknow

Reply
    confused says 10 years ago

    Hi Intheknow,

    Thanks for all your help here.

    Do you know when the “formal announcement” will be out?

    Is it true that the after it is out, we will know 100% whether BOA will guarantee all liabilities of ML?

    Thanks again and happy a nice day.

    Reply
    CKH says 10 years ago

    Hi Intheknow
    in what conditons BOA will not honor the liability?
    thanks

    Reply
query says 10 years ago

anyone know if merrill lynch is paying out the second coupon for the jubilee series 8 that was due on january 9? i just checked my account and found no payout yet…

Reply
    Bull says 10 years ago

    had received mine……

    Reply
    CKH says 10 years ago

    received mine, you shall get it.

    Reply
CKH says 10 years ago

In The know
any comments on the
Latest news of BOA :
http://news.hereisthecity.com/news/business_news/8645.cntns

Reply
CKH says 10 years ago

WASHINGTON (AFP) – – Bank of America will receive 20 billion dollars in fresh capital and a 118-billion-dollar asset guarantee program to help shore it up after acquiring Merrill Lynch, the US Treasury Department announced early Friday

http://sg.news.yahoo.com/afp/20090116/tts-finance-economy-us-banking-bofa-972e412.html

Reply
Very Sian says 10 years ago

BOA will not fail or the world will be in deep shit again. But ML may. Even if the merger goes through, I think BOA will likely break it up and sell it away. But this may happen slowly and over time. There are also cultural conflicts between the national bank and the investment, their mindset and businesses are different. There are just too many toxics in ML for a national bank to carry and the ML name stinks in Wall Streets. BOA had seal the deal in a hasty manner and hence may back out of it. Anything is possible if the negotiation with Treasuary falls through. Why should a strong, profitable and national icon bank be made to absorb the crook’s losses from greed, makes no sense right? BOA shareholders objected this merger.

Reply
Heretohelp says 10 years ago

Latest news of BOA :
http://news.hereisthecity.com/news/business_news/8645.cntns

Reply
Intheknow says 10 years ago

Hi All,

Latest buyback price for Pinnacle 15/16 is about 75%.

If you are a worried investor and want to get out of Pinnacle 15/16, please email:

[email protected]

and we can discuss further.

Thanks,
Intheknow

Reply
    CKH says 10 years ago

    Hi Intheknow

    My RM from RBS told me despite the merger is completed. Tne
    currently the credit risk of RBS existing ML issued notes and bonds remains with Merrill Lynch & Co., not directly to Bank of America.
    Merrill Lynch & Co. is a 100% wholly-owned subsidiary of Bank of America.

    Reply
Sticky says 10 years ago

Hi Intheknow,
Trying to help my very worried sister who bought into Pinnacle 16 notes. All her RM said was as long as MS stands, her money is safe. Her RM never mentioned anything about underlying securities, CDOs and what not.

I am asking you because you are offering to buy back some JB notes, Citrine notes, etc. but NOT Pinnacle notes. You must have some doubts about PN. Or I might be wrong… Please share if its worth to hold on or to redeem PN now.

Thanks!

Reply
    Intheknow says 10 years ago

    Hi Sticky,

    Your sister’s RM is right about Pinnacle 15/16. As long as Morgan Stanley does not default, Pinnacle 15/16 investors will not lose their principal.

    However, I feel that there is a relatively high chance that Morgan Stanley might fail within the next 2 years, hence I am not willing to take on the risk of buying Pinnacle 15/16.

    Good luck to your sister and all other Pinnacle 15/16 investors.

    Cheers.
    Intheknow

    Reply
Intheknow says 10 years ago

Hi CO,

I think the RM confused Jubilee Series 8 with Citrine Golden Cushion (also issued by Merrill).

Citrine Golden Cushion is also taking on the risk of ML/BOA (principal only affected if ML/BOA defaults).

However, the fixed interest component is only applicable for the first 2 years. The final 6 months’ interest payment is dependent on the performance of a basket of 4 Singapore listed shares. In my opinion, the final interest payment is likely to be 0, thus my conclusion that Citrine Golden Cushion is a lousier product than Jubilee Series 8.

Cheers,
Intheknow

Reply
CO says 10 years ago

I only found out about this from my relative today, she had bought it during the offer period (not today)

sorry for the typo.

Reply
    Intheknow says 10 years ago

    Hi CO,

    Your relative could be talking about another Series of Jubilee notes which have performance pegged to a basket of Singapore Blue Chips.

    Jubilee Series 8 is taking on the credit risk of ML/BOA (secured by a senior note issued by Merrill) and will pay a fixed coupon of 3.15% p.a. as long as no default has occured. There is a small bonus coupon of 0.2% p.a. payable in the last interest period of the SIBOR/SOR (one of them) is within a pre-set range.

    Obviously, the RM you spoke to has communicated the wrong information. Jubilee Series 8 is totally not linked to any Singapore listed shares.

    Cheers,
    Intheknow

    Reply
CO says 10 years ago

Hi all,

this is weird, i called up the sales person or rm (God knows who he is) personally this afternoon and asked him about the securities which backed this Merrill Lynch Jubilee Series 8. He told me they are Blue Chip firms listed on the SGX ?!?!?!?!?

i just found out today a relative of mine had purchased this TODAY and decided to call him!!

clearly, none of the above postings ever mentioned anything about blue chips? (correct me if i am wrong!?!?)

i read ALL the above postings, and i realised the asset backed is the Euro Medium Term Note Program, and clearly stated on page 20 in the Pricing Statement dated 6 June 2008.

anyone to correct me if i am wrong?

Reply
    lioninvestor says 10 years ago

    Well, ask that person to tell you what blue chips they are!

    Reply
Intheknow says 10 years ago

Hi All,

Anyone holding on to Macquarie Yield Plus or Merrill Lynch Citrine Golden Cushion and want to sell them?

So far, I have only received sales queries on Merrill Lynch Jubilee Series 8 and I would like to diversify by splitting my funds across all 3 types.

Do keep your enquiries coming. Thanks!

Cheers,
Intheknow

Reply
Rach says 10 years ago

Hi intheknow,

since you are offering to buy back those notes, are you betting that these notes will hold till maturity? It’s quite a big risk that you are taking. Is it worth the risk?

Reply
    Intheknow says 10 years ago

    Hi Rach,

    Yes, I am betting that BOA/ML will not default until the maturity of the notes. Of course I may not be right, but I have a diversified portfolio so even if these go bad, I still have other stuff to balance out.

    Since I have some spare cash on hand, and rather than plough it all into equities, I won’t mind buying some of these structured notes to complement my portfolio.

    Do email me at:

    [email protected]

    if you are keen to early redeem your Jubilee Series 8 notes. I will be offering a price definitely above the latest buyback price of 84%.

    It’s a win-win situation for both parties. Panicky sellers who would have sold at 84% to banks for piece of mind get more from me while I get to purchase the notes at a discount to their original price of 100%.

    I have already received a number of queries and the moment I get the all-clear from my bank, I will be buying from the lowest priced seller(s) up to the quantity that I want. Thus, do hurry if you want to take advantage of this offer. I only have limited funds to buy Jubilee Series 8 notes.

    Cheers,
    Intheknow

    Reply
Sim says 10 years ago

Hi intheknow,

Thanks for the valuable advises you’ve given in this website. Can you share your view with regards to STI stock price in sg? how low do you think it will hit and is this a good time to invest if we intend to hold the stock for mid time line like 2-3 years? Also, what industries and / or stock do you think is a good bargain for investment?

Thanks for your time..

Reply
hklim says 10 years ago

hi,

any ideas what is the latest buy back for merrill lynch jubille 8?

Reply
Intheknow says 10 years ago

Hi Bull,

I am still checking with my bankers if the transfer is possible.

Do drop an email to [email protected] so we can discuss further. My offer will be higher than the bank’s buy back rate.

Cheers,
Intheknow

Reply
Intheknow says 10 years ago

Hi All,

I have received a number of email enquiries already. Keep them coming!

To be clear, I am only interested in:

1. Merrill Lynch Jubilee Series 8
2. Merrill Lynch Citrine Golden Cushion (NOT ALL WEATHER BOOSTER)
3. Macquarie Yield Plus (any series)

As mentioned, I only have a fixed amount of money to buy over interested sellers’ notes.

Thanks,
Intheknow

Reply
    Bull says 10 years ago

    Hi Intheknow,

    I have the Jubilee Series 8, are you sure is transferable? and what is your offer.

    Regards,

    Bull

    Reply
Intheknow says 10 years ago

Hi All,

Note that my offier is going to be a LIMITED offer.

I don’t have unlimited funds to purchase the notes.

So do decide quickly if you are uncomfortable holding on to these notes and were going to early redeem them with the banks.

I will definitely give you a better price than the banks.

Cheers,
Intheknow

Reply
Intheknow says 10 years ago

Hi All,

I AM OFFERING TO BUY JUBILEE SERIES 8, CITRINE NOTES, OR MACQUARIE YIELD PLUS NOTES (sorry I am not interested in Pinnacle 15/16 notes).

You must have the notes held in Standard Chartered or HSBC currently (since I only have accounts with them).

For more details, please contact:

[email protected]

I am currently checking with my bankers in both Standard Chartered and HSBC to confirm that this can be done. It will be a formal and official transaction where exchange of money and structured note is done simultaneously.

Please contact the above email address stating the amount that you wish to sell and we can discuss further.

I can guarantee that I will offer you a higher price than the current buy-back rate.

Thanks,
Intheknow

Reply
November says 10 years ago

Hi Intheknow

The main risk now is the US real econmy. US just started to get into serious recession….

November

Reply
    Intheknow says 10 years ago

    Hi November,

    Well, we are not talking about the share price of ML or BOA here. That’s shaky in my opinion as you correctly mentioned US economy is in the pits.

    But as long as ML or BOA does not default, your Jubilee Series 8 note is safe.

    Cheers,
    Intheknow

    Reply
Amy says 10 years ago

Hi All

The buy back price, quoted by Citibank

05 December 84%
Yesterday,11 December- still 84 %

Reply
November says 10 years ago

Hi Intheknow

Thanks for your reply.

SCB Personsal Financial Consultant just called and update me on the following :

For the past few notes, it has been called off after 2nd quarter.

Jublilee 8 – 2nd quarter interest is on the way. If issuer not calling back J8, we will have 2 more years to go.

Since the BOA n ML has merged successfully, the note should be safe.

=)

Reply
    Intheknow says 10 years ago

    Hi November,

    I don’t believe ML has the right to early call back Jubilee 8. There is no Issuer Call option built it.

    Anyway, why would the investor want the note to be called back early?

    ML is paying 3.15% p.a. interest when the current fixed deposit rate for SGD is like 1.5%? Investors are getting double the interest!

    Cheers,
    Intheknow

    Reply
November says 11 years ago

current buy back rate now from SCB is 84%.
i have checked, partial minimum redemption of $5k is available.
Tough decision

Reply
    Intheknow says 10 years ago

    Hi November,

    What so tough to decide?

    If you think the BIGGEST bank in US will default, then please go redeem your Jubilee 8.

    If you think the BIGGEST bank in US will definitely be rescued by US government, then please hold your note for another 2 years.

    Cheers,
    Intheknow

    Reply
FW says 11 years ago

The current buyback rate for ML jubilee Series 8 Notes is still an unknown. i have called up standard chart and checked but to no avail. Appreciate if there is anyone who is aware could furnish the current redemption rate. Much much thks

Reply
lowbang says 11 years ago

Hi Intheknow

Thanks for the professional advises.
I believed that many of us have benefited from your great advises and also this great website!

I have been retrenched, having lost my job real soon, in this month. I appreciated the great knowledge you have posted here.

At least now I can sleep slightly better knowing the JB8 eggs I have left are much more safer now.

Please continue to keep those great advises coming in.

Regards

lowbang

Reply
Intheknow says 11 years ago

Hi All,

Now that the BOA and ML merger is confirmed, it means that Jubilee Series 8 is SAFER!

It will take BOA + ML BOTH to default before Jubilee Series 8 holders take a hit on their principal.

Come on.. think.. is that possible? BOA + ML as a combined entity is the BIGGEST bank in USA now. Would the US government let the biggest bank in USA default?

Those who took my advice and held… i am sure you are feeling happy now.

Cheers,
Intheknow

Reply
    Hopeful says 11 years ago

    Intheknow, Lioninvestor and all,

    Indeed! Thanks once again for all your advice and help…

    I must say that this blog is much wiser than the bank RM or the so called “professional”.

    I learn so much more from here than talking to the bank or anywhere else. I am grateful. I believe many has also benefitted from this blog.

    Let many people know about this blog so that we can all learn more and prosper in our financial journey.

    Truly, the power of collective wisdom is amazing…(one gives an idea, another check, another search…)

    JB8 is my very defensive portfolio. I think we can start looking on the offensive. I am looking at Blue-chip Singapore stocks…Comments anyone?

    Cheers

    Reply
      confused says 11 years ago

      Indeed, I think the information I learned here is much more (and clearer) than whatever I got from all my RMs. This ironical — my RMs are being paid for their service…

      Thanks for all people here who provided helpful information.

      Reply
        lioninvestor says 11 years ago

        Hi hopeful, confused, intheknow and all,

        Thanks for all the feedback.

        When I created this site, my intention was to have a platform where I can share certain useful ideas in a one-to-many manner, which I find to be much more effective than one-to-one.

        I certainly didn’t expect the big mess to erupt in Sep 08, and I’m glad the site became useful as a place for people to conveniently exchange ideas. For that to happen, everyone had to play a part, and I’m thankful for all the people coming by regularly to share what they know. I certainly wasn’t able to keep up with all the comments.

        The minibond issue sort of side-tracked me from my regular type of articles, and I do hope to resume “normal service” soon to enable more people to benefit from the content.

        Lastly, I do hope we can refrain from “RM bashing”. I’m sure there are some good ones around, so let us try not to over-generalize. The bad ones might not even survive this downturn.

        Reply
    sam says 11 years ago

    it’s a sigh of relief definitely, but still can’t rule out that residual bit of fear as we still have 2yrs ahead… not very long but in times like this, 2yrs is like 20yrs lol… what lies ahead really is nobody will know. just have to keep our fingers crossed and continue to monitor… many thanks to all!

    btw, anyone knows the current buy back rate now? both citi and scb…

    Reply
sam says 11 years ago

the deal is done!

http://www.bloomberg.com/apps/news?pid=20601109&sid=aYQWOB9Mgako&refer=home

now gotta see how’s the sentiments and rates…

Reply
chua says 11 years ago

Hi,

Anybody know about the JB 8 unwind rate today?

I have call up and check, the rm told me is not out yet.

Reply
JQ says 11 years ago

Hi all,

Guess no need to chase my RM on insurance anymore yes? She very slow, told me ystrday all her private banking collegaues on leave, so cannot check 4 me. Mayb cos I pull out funds fm Citi, so can’t be bordered with service anymore. Btw, can anyone tell me if JP Morgan 5Y Bond Linked Note on CapitaLand is safe? Last mth, RM told me went down to 80%. Very sick n tired of all these product but cannot get out. Looks like not so a merry Xmas 4 me but hope a better new year but I want 2 wish Merry xmas n a Happy NY 2 all. If not 4 u guys giving us all the important info, dun know how, situation 4 us will be worse. So tku very much and God bless you all.

Reply
Amy says 11 years ago

Hi IntheKnow
You’re quite right. JB 8 has a very simple structure; and most importantly it does not have all those underlying securities like Pinnacle Notes and Minibonds.
You have reassured us once again that it is to our advantage to hold on to JB 8.
And I do agree that even if ML is back on a ‘standalone’ basis, the Fed govt will come to its rescue , just like it saved Citigroup.

Cheers and Merry Christmas

Reply
Intheknow says 11 years ago

Hi All,

I still have the same advice for people holding on to Jubilee 8.

Understand what you have invested in. Do you have faith in ML/BOA and do you think they will collapse?

If you think ML/BOA will collapse, then by all means go and early redeem your note.

If you don’t think they will be allowed to fail, then hold on to your note. You are not exposed to any funny underlying securities like Minibond, High Notes, or Pinnacle Notes. Don’t let the blowup of these unrelated products scare you. You will get back 100% of your investment upon maturity.

Cheers,
Intheknow

Reply
    Hopeful says 11 years ago

    Hi Intheknow,
    thanks again for your time and advice.

    Hi All,
    You may want to look at this video at CNBC (Gasparino’s report).
    http://www.cnbc.com/id/28020076

    Summary of Gasparino’s report…
    1. The merger is going to go through (from what he is hearing…)
    2. The US government will make it go through (the merger).

    I think the key here is the US government will want the deal to be done…

    Reply
      Intheknow says 11 years ago

      Hi Hopeful,

      Glad you appreciate it.

      Anyway, my 2 cents is even if the merger does not go through, and ML is alone and weak, US government will not let ML fail.

      It will be saved like Citibank. Even if ML is saved by wiping out the equity holders, holder of Jubilee 8 WILL NOT be affected!

      Cheers,
      Intheknow

      Reply
        CKH says 11 years ago

        Thanks and appreciate your professional advise in this blog on MLJ8. would like to this opportunity to wish you and all in this blog a Merry Christmas and Happy New Year.
        Cheers

        Reply
Amy says 11 years ago

Hi All,

Just want to share this with everyone.

Results of a Google Search today

Temasek Holdings raises stakes in Merrill Lynch

New York (Reuters) Singapore Temasek Holdings has increased its stake in Merrill Lynch and Co Inc to 13.7% from 9.4%, according to US regulatory filing.

Reply
Amy says 11 years ago

Hi everyone,
Regarding the insurance, I’d really like to read the actual document and get legal advice if necessary before I commit myself. It is a good idea though. But we have to be mindful of 2 things; first the insurer may go bust and second the BOA and Merrill merger will be a good thing for us , all things considered , and that the net value of JB 8 may actually rise.
I would like to wait until Dec 5 and then decide.

Reply
JQ says 11 years ago

Hi All

Sorry for the delay in rspn. I check with Citi’s RM and just got answer this morning. She told me that there is no such thing as insurance for this here, probably only available in US. Not sure if she is verse in this aspect or maybe she can’t be bordered to find out more.

I think I will hold out until rates moves about 90% but I won’t hold until maturity. After BOA takes over hope rates will improved.

At current suitation, we r looking at 84%, not so bad. Most other investment are betw 0-50%. I cannot imagine things could get any worst, but also not sure, now with terrorist also jumpin in to create havoc, sigh……….

Reply
    Intheknow says 11 years ago

    Hi JQ,

    Is she your Citigold or Private Bank advisor?

    Citigold won’t offer CDS products.

    If she is your Private Bank advisor, you can fire her. CDS is definitely available to Private Bank clients, although there is usually a minimum purchase amount of USD1mm to ‘launch’.

    Cheers,
    Intheknow

    Reply
      JQ says 11 years ago

      She is citigold RM, sori thought its the same, didn’t know its not the same. I check agn today. She told me that she will try to find out the names of some of insurance company dealing with this type of ins. n revert asap. Will email agn when i hv details fm her.

      Reply
jess says 11 years ago

Hi Sam

Me too. Have to decide by 2.30pm.

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    sam says 11 years ago

    so what’s ur decision? we’ve decided to hiong the 5th dec voting! it’s now or never! haha… a bit exaggerate la… but then 84% really too much… just really have to keep our fingers crossed for a positive outcome from the voting, then at least hope for a higher percentage.

    our current stand is still to withdraw, but hoping for a higher rate, cos 2 years of nail biting is a bit too much to take amidst the current crisis and the quite obvious fact that we have not seen the worse yet, so the objective now is to minimise losses. and this voting imho could be a deciding factor between do or die. if things go well, i’m hoping for it to at least go nearer 90%, or at least higher than 85%. if voting falls through and no merger, then will be really suck thumb. =(

    Reply
      jess says 11 years ago

      I did not sell either. Just wait n see. Hopefully the merger goes well.

      May I know wat is 5 Dec voting?

      Btw, How much is ur purchased ?

      Reply
sam says 11 years ago

current rate for SCB: 84%

haiz… duno should take out or not…

Reply
Ivy says 11 years ago

Bank of America Receives Federal Reserve Approval of Merrill Lynch Purchase

CHARLOTTE, N.C., Nov. 26 /PRNewswire/ — Bank of America Corporation today received approval from the Board of Governors of the Federal Reserve System of the company’s purchase of Merrill Lynch & Co., Inc. Bank of America aims to close the transaction by the end of the year pending shareholder and other regulatory approvals.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050720/CLW086LOGO-b )

Merrill Lynch is expected to enhance Bank of America’s current strengths by creating a company with the leading position in wealth management as well as in global debt underwriting, global equities and global merger and acquisition advice. Once the purchase is complete, Bank of America will have the largest wealth management business in the world with nearly 20,000 financial advisors and approximately $2.5 trillion in client assets.

“Combining the leading global wealth management, capital markets and advisory firm with largest consumer and corporate bank in the U.S. creates the world’s premier financial services company with unrivalled breadth and global reach,” said Bank of America Chairman and Chief Executive Officer Kenneth D. Lewis. “This presents a compelling opportunity for our customers and shareholders.”

Additional Information

In connection with the proposed merger, Bank of America has filed with the Securities and Exchange Commission (the “SEC”), along with other relevant documents, a Definitive Registration Statement on Form S-4 that includes a joint proxy statement of Bank of America and Merrill Lynch that also constitutes a prospectus of Bank of America. Bank of America and Merrill Lynch have mailed the joint proxy statement/prospectus to their respective stockholders. Bank of America and Merrill Lynch urge investors and security holders to read the joint proxy statement/prospectus regarding the proposed merger because it contains important information. You may obtain copies of the joint proxy statement/prospectus and other relevant documents filed or to be filed by Bank of America and Merrill Lynch with the SEC regarding this transaction, free of charge, at the SEC’s website (http://www.sec.gov/). You may also obtain these documents, free of charge, from Bank of America’s website (http://www.bankofamerica.com/) under the tab “About Bank of America” and then under the heading “Investor Relations” and then under the item “SEC Filings”. You may also obtain these documents, free of charge, from Merrill Lynch’s investor relations website (http://www.ir.ml.com/) under the heading “SEC Filings”.

Proxy Solicitation

Bank of America, Merrill Lynch, and their respective directors, executive officers and other employees may be engaged in a solicitation of proxies from the security holders of Bank of America or Merrill Lynch in connection with the proposed merger. At the commencement of a proxy solicitation, Bank of America, Merrill Lynch and their respective directors, executive officers and other employees may be deemed to be participants in such solicitation. You can also find information about Bank of America’s executive officers and directors in its definitive proxy statement filed with the SEC on March 19, 2008. Additional information about the interests of potential participants is included in the joint proxy statement/prospectus referred to above. You can find information about Merrill Lynch’s executive officers and directors in its definitive proxy statement filed with the SEC on March 14, 2008. You can obtain free copies of these documents from Bank of America and Merrill Lynch using the information above.

Forward-Looking Statements

Bank of America may make forward-looking statements, including statements about the financial conditions, results of operations and earnings outlook of Bank of America Corporation. The forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results or earnings to differ materially from such forward-looking statements include, among others, the following: 1) projected business increases following process changes and other investments are lower than expected; 2) competitive pressure among financial services companies increases significantly; 3) general economic conditions are less favorable than expected; 4) political conditions including the threat of future terrorist activity and related actions by the United States abroad may adversely affect the company’s businesses and economic conditions as a whole; 5) changes in the interest rate environment and market liquidity reduce interest margins, impact funding sources and effect the ability to originate and distribute financial products in the primary and secondary markets; 6) changes in foreign exchange rates increases exposure; 7) changes in market rates and prices may adversely impact the value of financial products; 8) legislation or regulatory environments, requirements or changes adversely affect the businesses in which the company is engaged; 9) changes in accounting standards, rules or interpretations, 10) litigation liabilities, including costs, expenses, settlements and judgments, may adversely affect the company or its businesses; 11) mergers and acquisitions and their integration into the company; and 12) decisions to downsize, sell or close units or otherwise change the business mix of any of the company. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Bank of America does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements are made. For further information regarding Bank of America Corporation, please read the Bank of America reports filed with the SEC and available at http://www.sec.gov/.

Bank of America

Bank of America is one of the world’s largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The company provides unmatched convenience in the United States, serving more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, more than 18,000 ATMs and award-winning online banking with more than 25 million active users. Bank of America offers industry leading support to more than 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients in more than 150 countries and has relationships with 99 percent of the U.S. Fortune 500 companies and 83 percent of the Fortune Global 500. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.

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CKH says 11 years ago

I think below is a good news for MLJ8 investors .

WASHINGTON (AFP) – – The Federal Reserve on Wednesday gave formal approval to Bank of America’s acquisition of Merrill Lynch, the Wall Street icon battered by the housing and credit crisis.

http://sg.news.yahoo.com/afp/20081127/tts-us-finance-banking-takeover-merrill-972e412.html

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    Hopeful says 11 years ago

    Hi All,

    This is another good new…

    Nov. 24 (Bloomberg) — Bank of America Corp. won support for its takeover of Merrill Lynch & Co. from Glass Lewis & Co. and RiskMetrics Group Inc., firms that advise institutional stockholders on how to vote their shares.

    http://www.bloomberg.com/apps/news?pid=20601103&sid=a.gzOjnAwEWw&refer=us

    Reply
kevin says 11 years ago

Hi lioninvestor and all,

Is Jubilee 8 an ELN?

Hi Hopeful,

Remember SingTel buy over Optus deal, an arbitage took place and SingTel shares pirce was dropped to a level to equate Optus shares price by short selling some 4 or 5 years ago.

Reply
    lioninvestor says 11 years ago

    No. It’s not linked to the share price performance of any company.

    Reply
Hopeful says 11 years ago

Hi All

Some BOA retail investors also pointed out:

The 50B deal (all shares) have shrank to half its size. That means BOA is buying ML for only 25B. Also with the 10B TARP money in ML, BOA pays 25B for ML and get 10B.

As for the loss (due to toxic asset) that ML may possibly incurr after the merger, it is possible that the loss can be writeoff as tax paid. That means BOA will not need to pay tax for many years to come. This is the preferential benefits for BOA to conclude the merger. You can see similiar situation in Bear Stern-JPM deal and Wochavia-WFC deal.

However, these are market talk only.
Personally, it sounds correct but I think there are still things (in ML or BOA) that are uncertain. Of course, there are investors who do not want the merger to be concluded.

Sentiments based on share price (ML-BOA)
ML share price close 26/11 : US$12.21
BOA share price close 26/11: US$ 15.43

1 share of ML = 0.8595 of BOA share
So ML share should be worth 0.8595 X 15.43 = US$13.26
Difference = ((13.26 – 12.21) / 12.21) X 100 = 8.65 %
Since there is only 7 trading days left to Dec 5, this difference hopefully will become smaller. If so, market is anticipating the merger will be likely to be concluded.
The highest diff is on 20/11 = 21.47%
The lowest diff is on 13/11 = 6.5%

At the end of the day, I guess we all have to make decision based on what we know and please do not regret on the decision you have made.

Cheers
PS: I still hope to see more responses for the CDS idea.

Reply
Hopeful says 11 years ago

Hi All,

There are two goods news for the BOA_ML merger.

WASHINGTON (AFP) – – The Federal Reserve on Wednesday gave formal approval to Bank of America’s acquisition of Merrill Lynch, the Wall Street icon battered by the housing and credit crisis.

http://sg.news.yahoo.com/afp/20081127/tts-us-finance-banking-takeover-merrill-972e412.html

Nov. 24 (Bloomberg) — Bank of America Corp. won support for its takeover of Merrill Lynch & Co. from Glass Lewis & Co. and RiskMetrics Group Inc., firms that advise institutional stockholders on how to vote their shares.

http://www.bloomberg.com/apps/news?pid=20601103&sid=a.gzOjnAwEWw&refer=us

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jess says 11 years ago

Hopeful, JQ,KC & all

May be we can meet at HongLim Park this coming Saturday to discuss ?

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Chua says 11 years ago

Hi Hopeful,

The insurance looks attractive, capital guaranteed. How many percent of the amount invested is cover by the insurance, 100%?

Assume those stat board purchase billions of investment, also bought the insurance.

So, if ML default, will the insurance company also default?

Reply
    Hopeful says 11 years ago

    Hi Chua,

    For your questions, this is what lioninvestor said in the earlier post:

    “Also, the insurance payout won’t be 100% of the sum insured, but based on the recovery rate of ML bonds.

    Say, ML bonds return 20% after default, the insurer will payout the remaining 80%.

    As Jubilee 8 noteholders won’t get back 20% (unlike pure ML bond holders) after deducting all the related costs, there will still be a slight loss with the insurance.

    Generally, buying CDS does sound like a reasonable idea. But as pointed out by intheknow, just bear in mind there there is insurer risk.”

    Yes! The insurer can also default.

    Reply
Alex says 11 years ago

Pls Advice

my mum bought the JS8N from SCB. The R/S manager playerd with the words “principal protected” and Principal guranntee” when promoting the product.

we have lodged a case with SCB but our case was deem unsuccessful as they have found “evidence” tat the R/S manager DID NOT mislead my mum a chinese educated 50s lady. i wonder how they find the “evidence”?

how shld i purse the case?? or how are u guys who have the JS8N decided to do ?

Reply
    lioninvestor says 11 years ago

    Hi Alex,

    Jubilee 8 is different from some of the other risky credit-linked products which are structured with synthetic CDOs.

    Unless they told you something which was false, it is very hard to complain about mis-selling.

    Reply
Intheknow says 11 years ago

Hi All,

Just checked Bloomberg.

A 5 year CDS on ML will cost 2.72% PER YEAR.

Not too sure who is the issuer of this CDS though.

Cheers,
Intheknow

Reply
    Hopeful says 11 years ago

    Hi Intheknow and All,

    Insured amount of USD 1 million = SGD 1.5 million.

    I am sure the amount invested in JB 8 is a lot more than SGD 1.5 million.

    Let’s see what is required to pull this off…

    1. Need to gather interested enough JB 8 investors with a total investment of more than SGD 1.5 million (I think it does not whether you bought JB 8 from Citi or SCB)
    2. Need to seek out an investor who has excess to private banking
    3. Need to find a financial strong entity that sells the CDS.
    4. Anything else…

    I have limited knowledge in financial. I maybe looking at this in an overly-simplistic manner. I still like to ask…
    Can we use CDS to hedge our investments in JB8? If not? Why? What are the concerns?

    Reply
      JQ says 11 years ago

      Hi, M also a Jubliee 8 investor. I hv a private banker with Citi. Will try contact to ask abt insurance but dun know if she will help. As mentioned we must have 1.5 mil to go but i did not invest so much.

      Reply
        Intheknow says 11 years ago

        Hi All,

        Just note that by purchasing CDS on Jubilee 8, you are effectively giving up the interest of 3.15% p.a. since the running cost of the CDS is about 2.7% p.a.

        Regards,
        Intheknow

        Reply
        kc says 11 years ago

        Hi JQ,

        If we pool together, we should have more than 1.5mil. Maybe all who are interested to purchase CDS for Jubilee 8 can send you the amount invested , bank, contact info etc and we can buy the CDS collectively. I for one, and perhaps many others will be very happy to forgo the 3.15% if the principal can be “guarenteed”. It’s certainly much better then redemption at 84%(?) now.

        Reply
        Hopeful says 11 years ago

        Hi JQ, KC and ALL,

        Yes! Let’s pool together. That is 3 of us. Anyone else interested? Please reply in. If we have sufficient numbers (20 – 30), we may meet up to discuss further.

        Please do not just adopt the wait and see attitude.
        Buying CDS is not anything illegal especially we have vested interest in ML.
        It is not like buying fire insurance on your neighbour house and hope that when your neighbour house burn down, you collect the insurance money. It is buying insurance on your own house (in this case your own investment JB 8)

        Or if you do not like the CDS idea, please also share your concern. If you do not understand the CDS idea, please ask. I believe Intheknow and lioninvestor will be very glad to answer you as they have faithfully done so all these while…I am grateful for their sharing and the sharing of many others here!

        Collective wisdom…
        Collective action…

        Reply
Sim says 11 years ago

Hi Hopeful,

I heard this from my RM before too. But he says the insurance is not available for us as it’s only available for the FI to purchase (in this case, ML) . Also, i heard they dont insure small amount (even if we all decide to combine our investment). It only insure ten of millions if not billions of funds.

May i know where did u get the $212 figure from? is there a website i can access to the figures? i heard from my RM, he says the insurances figure is very much higher around september period, when Lehmen Brothers go bust. The insure premium actually goes down after the news of BoA buying over ML. Which means the risk of ML goes default is lower at that point.

This couple of days that’s some negative news in the web about the merger of BoA and ML. Hopefully as what intheknow mentioned, ML is too big to fall even if the merger dont comes through.

I’m really thankful of this website for providing a platform for ML 8 investors and contributors to share infors and knowledge. And like Hopeful, perhaps we should be more proactive and try to gather some sources in helping ourselves through this difficult time instead of relying on the unreliable — the FIs to act for our interest!

Reply
    Intheknow says 11 years ago

    Hi All,

    Yes, CDS is an insurance that you can buy.

    2% for 5 year protection on ML sounds a bit too low.

    Just take note that you are exposed to the entity that sells you the CDS. For example, if you bought insurance from say Citibank, and Citibank goes kaput, your insurance is gone.

    Also, there is usually a minimum size of USD1mm for CDS which is open to private banking clients.

    Reply
      Hopeful says 11 years ago

      Hi Sim and Intheknow,

      The CDS Prices is not from a website but extracted from an article I read in yahoo finance. I cant seem to locate the web address of the article.
      In the article (dated Nov 4), it listed the following CDS prices for the following banks. The info is reliable (at least some credibility) as it is written by finance reporter.

      Citi 194bps
      BAC 126bps
      MER 212bps
      JPM 112bps
      GS 305bps
      MS 402bps
      WFC 95bps

      Intheknow, do you mean the minimum premium is USD 1 million?

      Thanks

      Reply
        Intheknow says 11 years ago

        The minimum amount to insure is USD1mm, thus the minimum premium paid for 1 year’s protection is USD27k.

        Reply
Amy says 11 years ago

I got this from Google Alert on Merrill Lynch. I hope this is just a rumour. Anyway , I will google again on 6th December to find out the outcome of the merger vote.
And The New York Times reports that some Bank of America shareholders are seeking professional help as they bid to try and put a stop to the bank’s intended merger with Merrill Lynch. Many apparently feel that current economy realities at the very least mean that the terms of the deal need to be revisited. Others feel that the deal will simply be a drag on earnings, and that the last thing BofA needs now is more investment bankers.
Got this from a blog(USA)
On September 15th, Bank of America announced that it would buy Merrill Lynch for $50 billion (Terms: BAC would exchange .8595 shares for each share of MER) the price WAS at 1.8 times stated book value. But all this was back when BAC was trading at $32.50 a share (that would make the deal for MER at $27.93 per share). However – since the deal was announced BAC is now trading $12 a share – making MER at $10.31 a share. But Merrill is now trading at $8.30 share (a significant discount to both deal terms $2 a share and the capital terms of $50 billion). The spread alone $2, based on the deal terms, is bringing the question to the table – “Deal or No Deal”.
I am sure everyone on both sides of the fence is wondering what is going on – things in the economy are changing fast and what looked like a deal in September may not be a deal in December. Keep your eye on this story – things could change fast.

Reply
    Intheknow says 11 years ago

    Hi All,

    My 2 cents on the merger.

    I feel that even if the takeover of ML by BOA is cancelled or does not complete for any reason, ML is ‘too large to fail’.

    It will be like Citi and will be rescued by the US government.

    Thus, unless you are a shareholder of Merrill and are exposed to the share price movement, there is no need to panic.

    Even if Merrill share price drops to USD1, as long as Merrill does not default, you will not lose your principal under Jubilee Series 8.

    Cheers,
    Intheknow

    Reply
      Hopeful says 11 years ago

      Hi Intheknow,

      I agree that in the worst case, ML or BOA will be deem as “too large to fail”. However, there is also a possibility that banks are fully nationalized by the US goverment. In this senario, the equity shareholder will be wiped out. Does a full nationalization of the bank consider a credit event for the bank?

      If ML or BOA (after merger) is fully nationalized, will we lose our principal under Jubilee Series 8?

      Reply
      Hopeful says 11 years ago

      Hi Intheknow and All,

      Lioninvestor posted in this blog ” Introduction to Credit Default Swaps”.
      In this post, it is mentioned that CDS is a kind of “insurance” that can be bought to insure against a corporate going bankrupt.

      As I understand, there is a CDS for all banks in US. The CDS (default Risk) price for ML is $212 to insure $10000 for 5 years. This is the price for early nov 2008. It may be higher today…

      Let me try to intrepret this…
      If I paid $212 for this insurance and if ML default, I am entitled to collect $10000.
      If ML does not default, the amount I will lose is only the premium I paid (ie $212).

      Now, in relation to Jubilee 8…
      If I am worried that ML may goes bankrupt, can I go to buy this “insurance”? Instead of going to unwind JB 8, can we buy this “insurance”?

      Let see some calculations…
      Let say I have invested $10000 in JB8.

      If I unwind this week, based on indicative price of 83%, I will lose $1700.

      If I do not unwind and I buy “insurance”, cost is only $212. It is $212 for 5 years so this is all I paid as premium and I am covered/protected.

      After the purchase of this “insurance”, there are 2 possible situations.

      1. Nothing happens to ML in the 5 years. I lose $212. JB 8 is intact, the interest earn based on 2 years will be 3.15%*10000*2 = $630. There will be net gain and principal is returned.

      2. If ML defaults, JB 8 becomes zero in value but I will get back $10000 base on the insurance and the cost is only $212.

      Does my intrepretation make sense? What am I missing out? Please share and comment generously as I hope that we all can get out of this with our capital intact. If you have friends working in banks, please ask them about this. I am also asking my banker friends if this is possible. This idea came out through some conversation/sharing and lioninvestor post.

      The question is also that can we buy this “insurance”? It does not seem that it can be bought over the counter at Financial institution. But collectively as a group, this may be possible.

      Reply
        lioninvestor says 11 years ago

        Hopeful,

        I believe the quoted premiums are payable yearly.

        So you need to pay $212 x 2 if you want the protection for the full 2 years.

        Reply
        lioninvestor says 11 years ago

        Also, the insurance payout won’t be 100% of the sum insured, but based on the recovery rate of ML bonds.

        Say, ML bonds return 20% after default, the insurer will payout the remaining 80%.

        As Jubilee 8 noteholders won’t get back 20% (unlike pure ML bond holders) after deducting all the related costs, there will still be a slight loss with the insurance.

        Generally, buying CDS does sound like a reasonable idea. But as pointed out by intheknow, just bear in mind there there is insurer risk.

        Reply
Sim says 11 years ago

Hi sam, u bought JB8 from Stanchart? me too. I note that their indicative rate is always lower than citibank base on what Amy (on 21 Nov 2008 at 2:40 pm) share here. I got the indicative price last friday at 83% too. I wonder why there is such a differences in pricing given the fact that its the same fund? Anyone knows the reason?

A friend that i know who bought from SCB too, gave the go ahead to unwind but the RM didnt do it eventually cos the indicative price and the final unwind price is a few percent lower!

My RM told me even if i want to unwind now, i have to wait for the friday indicative price. Meaning, i cant sell any other day till friday. Not sure if it’s true.. Hope more pple who bought JB8 from SCB share their experience here..

Reply
    sam says 11 years ago

    yup… my wife was on leave so she went to settle… and was told that gotta wait till friday for the bidding too. so at the moment nothing can be done.

    hmm… i thought somewhere in the middle of this thread was mentioned that the buy back rate is issued by ML, so shouldn’t it be the same across all retailers?

    Reply
      Sim says 11 years ago

      Precisely the point, anyone can enlighten us with regards to this?

      Reply
        Intheknow says 11 years ago

        Hi All,

        Buy back rate is quoted by the Issuer ML. It will be the same rate given to all its distributors e.g. Stan Chart, Citibank … etc..

        However, the distributor may levy a commision/charge/spread on this rate at their discretion.

        It’s just like FX rates. Different banks quote different rates even though it’s the same currency you are buying/selling right?

        Cheers,
        Intheknow

        Reply
sam says 11 years ago

holy smoke!! stan chart’s indicative rate is now 83%!! flip x 10…

Reply
sam says 11 years ago

ohya btw, where would be the safest possible place to park money now? savings account? FD?

we already have figures in citibank, scb, ocbc and dbs. my layman gut feel tells me that dbs is the place, since i believe the govt definitely won’t let it fail. any catch?

Reply
    chong says 11 years ago

    POSB My Savings account
    1.6% if you are treasures
    but you have to put in at least 1.5K monthly

    anyone knows any higher rates for plain vanilla savings account interests?

    Reply
      lioninvestor says 11 years ago

      Bank of East Asia (singapore branch) offers 2%pa for 3-month FD and 2.125% pa for 6-month FD. Min 50k.

      This is one of the more competitive rates around.

      Reply
        May says 11 years ago

        sounds good. Lioninvestor, what is your take on the Australian dollars FD accounts? The interest (tho’ has dropped alot) is still higher than any of the local FD rates here but the AUD has gone down so much.

        Reply
        sam says 11 years ago

        does bank of east asia fall under the “protection” from MAS for full amount deposits guarantee till 2010? the higher rates… any catch? the rest of the banks can’t even smell 1% for their FD… haizz.. now too high also become sceptical liao…

        Reply
        lioninvestor says 11 years ago

        Sam,

        Yes, the deposits under the BEA Sg branch will fall under the purview of the Singapore government’s guarantee.

        May,

        the currency movement is always one of the risks of investing in foreign currency FD. Short term wise, it is hard to predict how the currency might move.

        Any money that you want to place in AUD should be money you can park there for the long term.

        Reply
sam says 11 years ago

after a long discussion with my wife, we have decided to redeem all our JB 8 tomorrow. we’ll effectively lose a car, but in exchange of a more peaceful sleep and not having to keep monitoring this for the next 2 years. too much stress for comfort. just treat it as lesson learnt and move on…

Reply
    compass says 11 years ago

    Hi Sam, I have also decided to do the same. And like you, its has been one big painful lesson.

    Reply
      sam says 11 years ago

      haha… nvm la… there are too many things we can’t control in life. money is 生外物 after all, can’t expect too much in life…

      cheers to better sleep! =D

      Reply
Hopeful says 11 years ago

Hi Intheknow,

If US government takes a big equity stake in Citi (like in the case of AIG), will it be considered as an credit event for Citi?

BTW, do you know where we can see the CDS prices (Default risk) for major banks? The amount of money required to insure $10000 for 5 years.

Reply
jess says 11 years ago

Hi all

Any one knows what time is the rally at Hong Lim Park on 29 Nov 08.

Reply
Intheknow says 11 years ago

Personally I think if Citibank is allowed to fail, like Lehman, the whole world’s financial system will fail.

US government will definitely find a solution for Citibank, and they will not dare to kill the equity holders, because there are just too many sovereign funds invested in the ordinary shares of Citibank.

Reply
JL says 11 years ago

Hi
Thanks for your response but who do I go to if Citibank is gone for redemptions, etc.

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JL says 11 years ago

Hi Intheknow, Citigroup looks really vulnerable with its latest loss of its share value. Any idea what can happen to our Jubilee series 8 notes sold by them if Citigroup becomes another victim of the economic crisis?

Reply
    lioninvestor says 11 years ago

    Hi JL,

    Citigroup has no direct impact on Jubilee 8.

    Unless Merrill Lynch is bought down by their exposure to Citi.

    Reply
Amy says 11 years ago

Hi Sam,

Sharing with with you NAV of JB 8 ( courtesy of Citibank )
7 Nov 87 %
14 Nov 86%
20 Nov 86 %
Once I find out whether shareholders from both BOA and Merrill vote in favour of the merger , I will post the news. They have to vote on Dec 5th.

Cheers
Amy

Reply
    sam says 11 years ago

    thanks amy!

    actually i was thinking… in view of the current downturn, is it still viable for BoA to take over ML? wouldn’t it be better to save and sustain themselves first?

    Reply
      PPL says 11 years ago

      Yeah, I’m also worried about the BoA merger, whether or not it would still be viable.

      Reply
sam says 11 years ago

hi, anyone knows what’s the new rate for jubilee 8 for this week? dun feel very positive… maybe drop back to 85%? or worse…

Reply
Intheknow says 11 years ago

Hi LC,

That seems to be a insurance product issued by UOB. Can’t really comment on that as I am not an insurance expert.

Cheers,
Intheknow

Reply
LC says 11 years ago

Hi Intheknow,

Tks for all your valuable advised posted in this website.
Can you pls advise me on UOB Life Maxi Annuity paying out 2.5% annually but can only withdraw the principle only from 366 days.
I have invested in this “Fixed Deposit” in end Dec 2007. Is this safe because nobody can advise me what is this product about?
Appreciate your assistance!

Reply
    lioninvestor says 11 years ago

    Hi LC,

    The product is safe but you have to realise that an annuity plan is different from a fixed deposit and is meant for a different purpose.

    Write to me and I can discuss your particular case offline.

    Reply
jess says 11 years ago

Hi, Intheknow

Could you advise me on Prudential’s Pru 3Plus fund which started in August this year? is it going to have the same outcome as Pinnacle Notes 9? I was told by my FI that this rather safe as it is managed by Prudential Fund Manager, is it true that it’s really safe? As of now, there is already 2 credit events on the DSO securities.

Could you help me with this?

Reply
    Intheknow says 11 years ago

    Hi Jess,

    You can refer to the thread on Pru 3 Plus fund.

    http://www.martinlee.sg/pru-3plus-pricing-error/

    I never liked managed funds, worse when it’s a CDO-linked managed fund.

    Whoever is your FI or Relationship manager has given you wrong information. The outcome of Pru 3 Plus does not depend on who the fund manager is. It depends on the performance of the underlying, which in this case is a bunch of CDOs, out of which 2 has defaulted. It’s just like DBS High Notes. The issuer, DBS, is perfectly sound and healthy. But the underlyings in DBS High Note 5 died and thus the note died along with it.

    The structured of Pru 3 Plus is thus very similar to Pinnacle Series 9. If more than X number of underlyings default such that the ‘principal protection threshold is breached’, you will lose your principal.

    Regards,
    Intheknow

    Reply
Intheknow says 11 years ago

Hi xtrail73,

1. Structured products (usually senior unsecured credits) can never be as same as fixed deposits. Fixed depositors are on par with depositors like savings and currents accounts, and they will get their money back before senior unsecured creditors.

2. Non-performing assets for a bank usually refers to loans that have defaulted, for example, loans made to an individual who has not been able to repay.

3. ML may have lost money over several quarters. This would come from their shareholders’ equity or accumulated profits.

4. Banker has correctly pointed out that the money collected from Jubilee Series 8 investors are NOT in Cayman islands. The money has already been ‘paid’ to ML in exchange for a senior unsecured note/bond issued by ML.

5. Banker is also reiterating what I have mentioned a number of times in my posts above. It doesn’t matter if ML has posted losses or keeps losing money. As long as ML doesn’t DEFAULT on its liabilities (e.g. loans, bonds), investors will continue to receive their 100% principal at maturity + promised interest of 3.15% p.a..

6. Don’t be scared just because you heard of Pinnacle notes or High notes becoming worthless. Know what you are invested into. Even within Pinnacle series, the last few series are still fine. They are very similar to Jubilee Series 8 and the investor will only lose money if Morgan Stanley defaults.

Reply
    PPL says 11 years ago

    Hi IntheKnow,

    What if the shareholders of BOA vote against the buying of ML? Would this cause ML to collapse?

    Regards,
    PPL

    Reply
      Intheknow says 11 years ago

      Hi PPL,

      If the BOA takeover of ML fails, it is only certain that ML’s financial position will be weaker than if the takeover succeeds.

      However, I do not have sufficient information to determine if the failure of the takeover will weaken ML sufficiently to cause it to collapse.

      My immediate reaction is that ML should be able to survive on its own, given that it had been given capital infusion of USD10billion under the USD700billion bailout package.

      Cheers,
      Intheknow

      Reply
        PPL says 11 years ago

        Hi Intheknow, thanks for your reply.

        Reply
xtrail73 says 11 years ago

Hi

Does anyone know where the physical money is? Where does Cayman Islands come in? Is the money with ML or is it parked in Cayman Islands?

If the money is in Cayman Islands, is there a possibility that Cayman Islands will end up like Iceland? I read from the web that Cayman Islands is a major international financial centre. How does the current financial crisis affect the country? Can it be defaulted? If that happens, do we lose the money?

I believe the money is with ML, as she needs to somehow use the money to generate the interest to pay to investor. If the money is really with ML, would they have already loss the money? They have reported several quarterly losses. What money did they lose.
Anyone knows whether our investment is classified as non-performing assets? What is the definition of non-performing assets?
I read from this forum some product is as safe as FD. In Singapore, some structure deposit can be as safe as FD. But it is not protected / guarantee. So in the case of the Notes, is it really as safe as FD?

Reply
    Banker says 11 years ago

    The money is not with cayman islands. The money is invested in ML Euro-Medium Term Notes as stated in the pricing statement i.e its with ML. So the main risk investors faces is if ML defaults, rather than Cayman. Even if ML made losses, as long as it has not default (eg like Lehman), investors will receive principal at maturity from ML on MLJ8

    Reply
kc says 11 years ago

Intheknow,

Just saw this on Merrill Lynch. What is the implication on MLJS8,
if any ? Thanks.

========================================

Merrill Lynch may sell 4 billion USD worth of non-performing assets
Merrill Lynch may have plans to sell about 4 billion USD worth of non-performing bonds including mortgages, CDOs and other structured products, The Wall Street Journal quoted from sources.

As the CDO market has dried up about a year ago, such assets are now hard to gauge their value.

In July this year, ML originally planned to sell 30.6 billion USD worth of CDO for 6.7 billion USD to privately operated Lone Star which let a lot of peole think that ML has gotten rid of most of its non-performing assets.

The global economic downturn let a lot of investors face the danger of depreciation of their assets value. Under such circumstances, ML joined the banks, hedge funds and other big investors in looking for buyers to buy up their hard to sell assets.

Investors need to reduce the loan amount which is being used for investments, the reason being more and more of such non-performing assets going on the market for sale. In the last 3 weeks, the amount waiting to sell in the Euro and US market have exceeded 12 billion USD.

Sources said that ML is trying to sell its non-performing assets by the end of the year. ML has send out documents to various possible buyers stating that it may sell part of its bonds starting from this week.
Posted by Micky Bluer at 1:14:00 PM

Reply
    Intheknow says 11 years ago

    no impact at all in my opinion.

    Reply
Intheknow says 11 years ago

For Macquarie Yield Plus, please read:

http://www.martinlee.sg/macquarie-mq-yield-plus-notes/

Don’t worry. It’s safer than Jubilee Series 8 in my opinion.

Reply
    blues says 11 years ago

    Thanks to Lioninvestor and Intheknow for sharing your analysis. You have helped me to understand the products much better.

    Reply
    blues says 11 years ago

    Thanks to Lioninvestor and Intheknow for sharing your analysis. You have helped me to understand the product much better than my RM.

    Reply
blues says 11 years ago

Hi Intheknow,

I bought the Macquarie MQ Yield+ Series 2 last year. Is it similar to the Jubilee Series 8? The RM told me that it is like a FD. I do not have the link but how do i upload the prospectus?

Reply
Intheknow says 11 years ago

Hi All,

For those interested in my reply to CKH’s query on HSBC Double No Touch notes, please see:

http://www.martinlee.sg/merrill-lynch-jubilee-series-8-notes/#comment-4266

Basically, this note is as safe as Jubilee Series 8. You can only lose your principal if HSBC defaults. However, the interest component for the product is not guaranteed as it’s dependent on all 6 reference underlyings keeping within 70-130% of their initial price.

Regards,
Intheknow

Reply
Amy says 11 years ago

Good news

Today’s pricing ( Citibank )

87 %

Reply
Amy says 11 years ago

Hi everyone,
Just want to share with you the NAV of Jubilee 8 as quoted by Citibank.
5 October 80.5%
14 October 86.5%
27 Ocotber 85%
30 Ocotober 86%
6 November 86%
I checked with my RM. There are no charges for redemption of these Notes.

Reply
Amy says 11 years ago

Hi ‘IntheKnow’,
I hope you’re right.Anyway, your comments have not only reassured yours truly but also other like investors.

Reply
Amy says 11 years ago

Hi everyone,
I just want to share this bit of news:
“Shareholders of Bank of America Corp. and Merrill Lynch & Co. Inc. will vote Dec. 5 on Bank of America’s proposed acquisition of the New York-based company.
Charlotte, N.C.-based Bank of America agreed Sept. 15 to buy Merrill Lynch for about $50 billion.
The deal is slated to close in the first quarter.”
I hope these shareholders will vote “yes”.

Reply
    Intheknow says 11 years ago

    actually i think whether the acquisition completes successfully or not, it is unlikely for ML to default.

    Morgan Stanley is in much poorer shape and it’s still surviving.

    Reply
      CKH says 11 years ago

      In the know thx for the information, i was almost wanted to unwind but after all your advises, i decide to hold on and they have paid the 1st first interest coupon.

      Reply
Tay says 11 years ago

Hi,

I recently received my quarter dividend interest paid-out on Merill Lynch 3 year structure notes products from UOB. I am not too sure whether my investment series had anything to do with the mentioned product series ‘8’ or ‘3’.

I had make several visits to the bank and was repeatedly quoted the same statement ‘ things are under control” after the acquisition by BOA despite i wanted to cash out my investment after the 1st visit to the bank when it was priced at 0.95 +/- at that time. To tell the truth, I am a very ‘fixed deposit’ person and before i signed up for this investment and i obviously seek clarification on the product risk-level. I was clearly told by the the senior banker, the products is capital protected and the risk level of this product “is as good as to the local bank can go bust.” and obviously, i felt secured to go for it.

However, with this shocking news each day we facing, i certainly have my fear and i am beginning to lose faith with what my bank is telling me now.

Can anyone advised me what i should do for now and next ?

Thanks & Rgds
Tay

Reply
    Intheknow says 11 years ago

    Hi Tay,

    Before I can advise you further, you need to tell me/us what ML product you are invested into. This is because different products have different risks.

    Look at your termsheet/prospectus. What is the title?

    Merrill Lynch 3 year xx xx xx

    But going by the looks of it, if the buyback price was 0.95 when the BOA acquisition was announced, I doubt it’s a dangerous product like Jubilee Series 3. It should be more like Jubilee Series 8 or “Merrill lynch SGD 3-Year Principal Protected Fixed Income Notes” which I had explained to PPL in one of my above posts. (Do a Ctrl + F search for it)

    If yours is the ““Merrill lynch SGD 3-Year Principal Protected Fixed Income Notes”, it is as safe as Jubilee Series 8. And it is indeed very ‘fixed deposit’ like.

    Cheers,
    Intheknow

    Reply
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