Thanks to my helpful broker, I managed to obtain a list of the underlying securities for my Lehman Minibonds series 2. The list had 138 entities(!), with ratings from AAA to B and from countries all over the world.
The way the Lehman Minibonds were setup meant that I was also exposed to the credit risk of all these entities. If there are a few defaults among them, my principal might be affected. This realisation might turn out to be a shock to those investors who bought looking only at the reference entities.
Thankfully, they are mostly corporate entities and I didn’t see any traces of subprime loans inside them. Some of the companies in the list include:
Nevetheless, some of these companies were badly affected by the subprime crisis. Hopefully (hope can be a fatal word in investing), the number of credit defaults will be less than the number required to cause capital loss in the principal.
If you own Lehman Minibonds, you can try asking your distributor to provide you with the list.