Martin Lee @ Sg
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Minibond Series 9 and 10 Coupon Payout

HSBC Institution Trust released a letter announcing partial interest payments to Minibond Series 9 and 10 investors. This payment will be passed on to noteholders from the coupon payments of the underlying securities of Minibond 9 and 10, which are corporate bonds issued by Wachovia Corporation.

Minibond Series 9 noteholders will receive an amount based on an interest rate of 3.6383917% p.a. This works out to be $90.91(3 months period) for every $10,000 invested.

Minibond Series 10 noteholders will receive an amount based on an interest rate of 3.3234799% p.a. This works out to be $83.09 for every $10,000 invested.

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17 comments
jc says 10 years ago

Hi

Could any kind soul advise if Minibond series 3 is similar to Series 9/10 as mentioned in CNA paper dated 2 Dec 2008? I have attached it below:-

SINGAPORE: Lehman Minibond holders will not be getting a swift resolution for their investments,
according to an update by note trustee, HSBC Institutional Trust Services, and receiver,
PricewaterhouseCoopers (PwC).
That is because the unwinding process is expected to take years due to legal issues.
Lehman Minibond holders were told in mid-November that they would know by the end of the month
what their options were – which could either be a restructuring of the notes or liquidation.
But PwC said that for Minibond Series 5 to 8, this can only happen after “orderly, step-by-step
unwinding of the Minibond note structures, including the various swaps in the structures”, and this
involves a process that might see prolonged litigation.
Lawyers acting for bankruptcy proceedings for Lehman Brothers in the United States have reserved
the right to challenge all aspects of the unwinding process.
HSBC and PwC said they could not give any valuations right now, but they promise to safeguard the
interests of note-holders. As the unwinding process is likely to take considerable time, the
restructuring proposals previously received are no longer an option now.
The process for Minibond Series 9 and 10 is expected to be less complicated and slightly faster as
the underlying securities for these series are corporate bonds and have no swaps.
Even though Minibond Series 1, 2 and 3 have not defaulted yet, they are expected to go into default
soon and holders would face the same process as those who bought Series 9 and 10.
The Monetary Authority of Singapore (MAS) said it has asked the trustee and receivers to resolve
legal issues as quickly as possible and to take all necessary steps within their powers to safeguard
note-holders’ interests.
MAS said the legal issues will not affect the complaint process that was set out earlier, and it would
continue to keep note-holders updated on developments.
– CNA/so

Reply
    lioninvestor says 10 years ago

    That is incorect. Series 1-3 are in the same class as 5-8.

    Reply
Jasmin says 10 years ago

Coupon payout for series 2 is also due recently (late Nov). No news and no letter. Nothing at all.

Reply
    Kevin says 10 years ago

    U can find your answer in:

    http://www.hsbc.com.sg/1/2/miscellaneous/minibond-notes-frequently-asked-questions
    Frequently Asked Questions
    Minibond Notes
    Version 10C – 3 December 08

    Minibond Limited has not presently defaulted on payment under series 2 and 3 although it has been indicated to us that, in light of the bankruptcy proceedings in the United States in relation to Lehman Brothers Special Financing Inc. (the swap counterparty) and Lehman Brothers Holdings Inc. (as swap guarantor), it is unlikely to receive any more funds under the swap transactions entered into by it in respect of each series of notes and accordingly, an event of default is very likely to occur in respect of each series of notes as interest payments fall due. Further the underlying securities for series 2 and 3 are Lehman arranged synthetic portfolio notes and it is anticipated that these are likely to default on coupon payments so there are unlikely to be any funds available to Minibond Limited from which a partial interest payment could be made.

    It is emphasised that an event of default and any resulting enforcement action under one series of notes does not automatically trigger a default or the right to take enforcement action under any other series. Accordingly any enforcement action by the notes trustee will be possible in respect of those series which have yet to experience a payment default only if a payment default occurs under them which continue for 15 days or more or some other event of default occurs in relation to them.

    Do prepare for the worst!

    Reply
ryan says 10 years ago

Hi Lioninvestor,

It is mentioned that a motion is being filed by Lehman Brothers to appeal to the US court to enable them to sell their derivatives contracts that they have entered b4 their bankrupty without seeking counterparty approval. This has not been approved yet.

However, the story in HK and Sgp regarding to the response to this seems to be different. HK banks said that they are facing a ‘big legal hurdle’ in trying to buy back the minibonds from the investor at current face value due to this motion being filed. However, HSBC Sgp from their website and posted letter to investors said it is ‘highly unikely’ the motion will affect sgp investor’s voting rights and claims to the remaining value of the note, as US law and Sgp law is different.

Could you please enlighten?Thks in advance.

Ryan

Reply
Kevin says 10 years ago

Lastest information of LB Minibond Notes:

http://www.hsbc.com.sg/1/2/miscellaneous/minibond-notes-frequently-asked-questions

Reply
Ryan says 10 years ago

Hi,

Can you advise that would it be viable and easier for series 9 to be able to find a counterswap party who then restructed the note and gives a less interest rate? Given the current bond market, if the security is being sold we will definetly get much less..

The problem is we have no idea which bonds had wachovia invested into? Is there anyway we can find out?

Ryan

Reply
    Aaron says 10 years ago

    Minibond Series 9, the money is invested in the corporate bonds of Bank Wachovia.

    Reply
    lioninvestor says 10 years ago

    Hi Ryan,

    It really depends on whether there is anything to be made by the new swap counterparty.

    This is possible if he can collect a higher premiums by selling the CDS protection on the reference entity, compared to the 4-5% which he pays to the minibond holder.

    They are plain vanilla Wachovia bonds. ie IOU issued by Wachovia.

    Reply
uncleyue says 10 years ago

what about Minibond Series 2; the interest payout is due on November 29?

Reply
    lioninvestor says 10 years ago

    Not expecting any interest payout since Lehman won’t have the money to pay.

    Reply
      uncleyue says 10 years ago

      Then how? Are we waiting for this series to default. Can redeem now, at what price?

      Reply
        lioninvestor says 10 years ago

        Unfortunately, no redemption can be done at this moment.

        Reply
Tony says 10 years ago

Time, effort and expectations all gone down the drain!
Imagine an investment $10,000/- is as good as gone!
INVEST in Peanuts and get MONKEYS!
The song “Hey hey with the Monkees and the Monkees get you around “………….kena burnt!!!

Reply
Melvin Ng says 10 years ago

For time being, is mini bond 9 and 10 are considers safe?

Reply
    lioninvestor says 10 years ago

    Hi Melvin, until we are told otherwise, the risks associated with the original product still remains intact.

    As to how safe is that, it is debatable.

    Reply
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