Martin Lee @ Sg
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Minibond Receivers FAQ by PWC

The FAQ posted by PWC on the Lehman Minibond can be found here:

PWC Minibond FAQ

The FAQ can probably be much shorter as it has a lot of repeated sentences. Some of the key points covered are:

  • Explaining the structures of Minibond series 1-3 and 5-10 both at the Minibond level and the underlying levels.
  • Unable to give a timeframe for the unwinding of the notes; it is estimated to take two years or more due to complex legal issues.
  • Swap arrangements of the notes (both at Minibond levels and underlying levels) have been terminated to protect the noteholders. However, this could be challenged by lawyers acting for Lehman Brothers in the future.
  • As series 9 and 10 involve only normal corporate bonds as the underlying, their resolution will take a shorter time compared to the rest.
  • Restructuring is not an option for now due to legal complexities.

Other Minibond News

Hong Kong lawmakers to call officials on Minibond

Fiscal sector urged to study Minibond report (Hong Kong)

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2 comments
Intheknow says 10 years ago

i seriously doubt a happy ending for the investors.

Reply
Aaron says 10 years ago

Minibond Series 1- 10. For the credit default swap – “first to default” swap between Minibond Ltd and Lehman Brothers Special Financing (LBSF), the noteholders did not received the full interest from Minibond Ltd on 13 November 2008. This is due to the fact that LBSF did not remit the promised interest to Minibond Ltd as stipulated in the credit default swap agreement. So the default is committed by LBSF. Since LBSF is the party to default, then under commercial law LBSF should compensate Minibond Ltd. As there is no compensation, the CDS agreement becomes lapse and Minibond Ltd can walk away from this agreement. The receivers PricewaterhouseCoopers did the right and honourable thing – to terminate the agreement as Minibond Investors do not received any benefit from the CDS with LBSF. Very funny thing here, the lawyers acting for Lehman have the gal to challenge the termination notice, since it is LBSF who default in this first instance. Another question is why terminating the swaps come with a cost. Why is this cost? Legal fees to terminate the agreeement?

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