UOB has made a buyback offer to the 4000 customers who purchased Pru Yield 15 or Yield 20 through them.
Investors will be able to redeem back their principal less any interest they have already received if they opt for UOB’s offer by 6 Nov 2009.
This works out to be $0.88 for Pru Yield 15 and US$0.82 for Pru Yield 20.
These 2 funds were mostly sold as capital protected products but had seen their price drop to as low as $0.375 in March 2009 at the height of the credit crisis. The price has since rebounded to $0.815 and US$0.842 respectively.
Investors who do not opt for the buyback offer will have to wait until June 2010 to get a full repayment of their capital. They will have tol continue to bear default risk of the Yield 15 and 20 product.
As of 16th June 2009, there were 14 defaults out of a total of 100 entities making up the notes. The notes can take around 9 more defaults before the capital is adversely affected.
Actually, the buyback offer for the Yield 20 is a purely token one as the price of the notes is currently trading at above the buyback offer price.
Note that the buyback offer only applies to UOB customers who bought the Yield 15 or 20 through them.