Structured Products ( incl Minibonds, High & Pinnacle Notes)

[millionairemind]

Jia lat..

Nov 14, 2008
Pinnacle Notes series 9 and 10
Investors to lose principal
By Francis Chan

INVESTORS of Pinnacle Notes Series 9 and 10 on Friday received the crushing news that their investments will probably be wiped out.

The two notes are part of the Pinnacle Notes Series of credit-linked notes, issued by Pinnacle Performance and arranged by Morgan Stanley Asia.

It has emerged that the notes were linked to some of the biggest names to be battered by the global crisis, including US mortgage giants Freddie Mac and Fannie Mae and two banks in Iceland, which is virtually bankrupt as a nation.

According to notices posted on the New York bank's website on Friday, Standard & Poor's has cut the ratings of the underlying assets tied to Series 9 and 10 from AA to CCC-.

The drastic ratings downgrade was attributed to 'unprecedented events in the financial markets' which caused a writedown of the 'outstanding principal amount of the underlying assets' held by Pinnacle Performance as notes-issuer.

The underlying assets of the notes are synthetic collateralised debt obligations (CDO) securities, which backed the issuer for its obligations to noteholders and other secured creditors.

And because of the writedown, a mandatory redemption event has occured, meaning the assets of the notes would be sold, with investors getting only a 'pro-rata share' of the sales proceeds.

But the online notices hinted that noteholders are likely to not get any money back.

'Given the current market values of the underlying assets and the credit default swap transaction, we anticipate that investors will lose all of their original principal investment,' according to notices on the Morgan Stanley website.

An investor who called The Straits Times on Friday morning said: 'Terrible things have finally happened. Please help us! Get the MAS to intervene like how they did for Minibonds.'

Rumours of the plummeting value of the two notes have been circulating among investors here in recent weeks.

Industry sources and Pinnacle Notes investors said they were expecting an announcement by Morgan Stanley on Thursday that the two notes are now worthless.

The paranoia follows the fall of various structured products like Minibonds and DBS High Notes 5, linked to what used to be the fourth largest US investment bank, Lehman Brothers.

After Lehman filed for bankruptcy protection on Sept 15, investors in Singapore and Hong Kong cried foul after learning that their investments in complicated Lehman-linked products had fallen in value.

Lehman was again mentioned in the fallout of Pinnacle Notes Series 9 and 10.

A list of FAQs or 'frequently asked questions' prepared by Pinnacle Performance for distributors here explains that the principal writedown of the underlying assets, is due to credit events that have occured to reference entities related to it.

And those reference entities included Lehman, Fannie Mae and Freddie Mac, and Iceland's Kaupthing Bank and Landsbanki Islands.

Fannie Mae and Freddie Mac, which owned or guaranteed nearly 31 million US home mortgages were bailed out by the US government on Sept 6, while Kaupthing Bank and Landsbanki Islands were seized by Iceland's regulators last month.

Investors anxious to find out more about the fate of their investments in Pinnacle Notes Series 9 and 10 are advised to contact the sellers of the notes here.

Series 9 and 10 were sold at institutions and brokerages like DMG Securities, Hong Leong Finance, Kim Eng Securities, OCBC Securities and UOB Kay Hian October last year.

[kennynah]

when the emperor says "your own business...you risk it...you lose it" a few days ago ...of cos, the banks will dare to proceed with this move...

when the top beam is crooked....so will all the lower beams...there is this chinese adage

[winston]

by millionairemind on Mon Nov 17, 2008 4:50 pm

Jialat.... fees are going up soon...

Nov 17, 2008
$12m in troubled products
By Goh Chin Lian

TWO town councils - Holland-Bukit Panjang and Pasir Ris-Punggol - have about $12 million invested in troubled structured products.

These products include Lehman Minibonds, DBS High Notes 5, Merrill Lynch Jubilee Series 3 and Morgan Stanley Pinnacle Notes Series 9 and 10.

Senior Minister of State (National Development and Education) Grace Fu gave this update in Parliament on Monday, in response to a question from Nominated MP Eunice Olsen.

Since Dec 1 last year, the amount that town councils can invest in non-government stocks, funds or securities has been capped at 35 per cent of the sinking fund.

Holland-Bukit Panjang invested about 6.7 per cent of its total funds available for investment in the structured products, and Pasir Ris-Punggol, about 2.6 per cent.

The sinking funds are used to pay for long-term or cyclical expenditure, such as replacing lifts, pumps and pipes, re-roofing, and repairing and redecorating blocks.

The funds are also used to pay for lift upgrading, so that residents pay a smaller percentage of the total lift upgrading cost.

The sinking fund is distinct from the operating fund, which is used for short term expenditures.

Ms Fu said town councils need to invest their funds prudently so that the accumulated funds are not eroded by inflation.

The investment guidelines - which her ministry has no plans to change - seek to achieve an optimal balance between reasonable returns and financial prudence, she added.

She noted that investments in stocks, funds or securities must be on the advice of a qualified person, such as an investment adviser holding a licence under the Securities and Futures Act, and an approved bank or a merchant bank approved as a financial institution under the Monetary Authority of Singapore Act.

The 16 town councils manage more than $1 billion in sinking funds.

[kennynah]

singapore only lah.....

[millionairemind]

Thanks, Hank
Nov 20th 2008 | HONG KONG
From The Economist print edition

Asian pensioners are the latest victims of Lehman’s bankruptcy


WHEN Hank Paulson, America’s treasury secretary, let Lehman Brothers fail in September, he surely did not consider the damage the investment bank’s collapse would inflict on elderly savers a continent away. In Hong Kong, Singapore and Taiwan, thousands of people have taken to the streets to protest against the implosion of a series of retail securities which resulted from the bankruptcy.

The backlash beginsBanks and regulators were taken off guard and are only now totting up the damage. Singaporean authorities estimate that 11,000 residents held duff securities with a face value in excess of S$530m ($347m). In Hong Kong, 43,700 residents held HK$20.1 billion-worth ($2.6 billion). In Taiwan, 51,000 people had tainted holdings of NT$40 billion ($1.2 billion). Some Taiwanese are expected to stage a mass protest on November 29th.

Although many different securities were affected, they shared a common trait: fiendish complexity. One firm would arrange the structure and handle dividend payments. This was often Lehman, which was why they were commonly called “Lehman minibonds” (even though they were not bonds and were never simply Lehman obligations). Below the arranger were half a dozen or so “reference” banks which held collateralised-debt obligations and sometimes equity, issued by as many as 100-150 institutions.

From 2006 onwards, banks and brokers sold these now troubled securities to individuals desperate to earn more than the 1% or less on guaranteed deposits. Buyers were betting on modest returns, typically 5-6%, low enough perhaps for them not to have been too suspicious about the instruments’ complexity.

Lehman’s bankruptcy filing undermined its ability to pass along dividends even when the underlying structures were sound, which triggered the first defaults. Securities arranged by Merrill Lynch and DBS Bank in Singapore then collapsed because Lehman credit was an ingredient in their composition.

Inevitably, lawsuits will be filed. Because most securities were sold with lengthy prospectuses that made clear the lack of principal protection, the cases are likely to rest on the premise that the investments were unsuitable for the customers, or not understood by the salespeople.

Rather than waiting for messy court battles, Singapore has taken the novel step of asking firms to reimburse “vulnerable customers”, meaning those who are old or illiterate or who lost a lot. Authorities plan to investigate and say they will take into account how generously institutions treat their customers in the aftermath.

Behind the scenes, Singaporean authorities are also attempting to find a way to reconfigure the securities to capture the value of the underlying collateral. This kind of twin-track approach may hold appeal for governments around the region. Wealthy investors across Asia are sitting on vast losses from lots of other odd financial products created during the boom. The authorities would hate them to take to the streets, too.

[kennynah]

the mentality in investment has and should always be

"invest, if you, understand the risks involved, have the ability to accept losses, and the knowledge to profit"...... otherwise "you die, your problem".... sad but factual truth...

[HengHeng]

Why blame others for your own misfortune. Not like when you earn money u will give hank paulson some.


LOL well but it is typical human mentality which i'm always guilty of. LOL

[millionairemind]

Dec 5, 2008
Hong Kong minibonds saga
Sue institutions in the US

HONG KONG - HONG Kong investors who were allegedly mis-sold minibonds in the collapsed bank Lehman Brothers have been invited to mount an international lawsuit against the institutions involved, a lawmaker here said on Friday.

James To, a lawmaker from the Democratic Party here, which is acting for most of a group of some 40,000 mini-bond holders in the city, said US lawyers presented them a proposal for a legal action in a US court.

'The lawyers have presented us a very detailed proposal. Their proposed action will be to sue some of the US institutions involved in the handling of the mini-bonds for a breach of duty according to American law,' Mr To told AFP.

More than 40,000 Hong Kong investors, including many retirees, put a total of HK$15.7 billion (S$3.05 billion) into mini-bonds and other complex financial products backed by Lehman Brothers.

Mr To refused to divulge the background of the lawyers or details of the institutions listed on the proposal. But he said that the lawyers had made sure that those were the institutions whose assets remained intact following the bankruptcy of the investment giant Lehman Brothers in Sept.

The lawmaker said the lawyers had also approached affected investors in other places, including Singapore.

'These lawyers are very aggressive. They have identified the Lehman saga as an excellent business opportunity for them,' he said.

His party is now consulting US legal experts for their views on the proposed action. He said the party would only discuss the matter with the investors if they could be sure that the lawsuit would not place the investors under further financial burden.

The Wall Street icon filed for bankruptcy in Sept as it buckled under the weight of the collapse in US subprime, or high risk, mortgages.

The investors mounted protests against the banks, the Hong Kong government and the city's financial regulators, urging a full refund. -- AFP

[kennynah]

Opening of the pandora's box... I'm keenly awaiting for a govt to be hauled to court to set a precedence for this gahmen to also get sued

[millionairemind]

Seems that we are always one step behind HK..

MAS seeks advice from senior counsel
[2008] 05 Dec_ST


Title: MAS seeks advice from senior counsel
Source: Straits Times
Author: Francis Chan

Legal News Archive
THE Monetary Authority of Singapore (MAS) has enlisted senior counsel Davinder Singh to advise it on the latest legal issues faced by the ill-fated Minibonds structured notes.

The central bank said last night that it had called on Mr Singh, the chief executive of Drew & Napier, 'to advise MAS on the implications of the legal issues raised by the lawyers acting in the Chapter 11 proceedings for Lehman Brothers'.

This follows Tuesday's warning by the Minibonds trustee - HSBC Institutional Trust Services Singapore - that the unwinding of the notes may be challenged by lawyers involved in bankruptcy proceedings over Lehman in the United States.

Minibonds series 1 and 5 to 10 of the notes have defaulted and will be unwound by three appointed receivers of the defaulted notes from PricewaterhouseCoopers (PwC) Singapore.

On Tuesday, the receivers said investors might have to wait at least two years or more for any resolution, given the legal complexities introduced by the notice from Lehman's lawyers.

MAS last month also called on Deloitte & Touche Corporate Finance to advise the central bank on the

Minibonds fiasco. Deloitte & Touche's services have also now been extended.

While the MAS has Mr Singh and the resources of Deloitte & Touche, the receivers from PwC are separately being advised by their own legal counsel.

Last night, the MAS also reiterated the trustee and receivers' warning that it may not be possible for any resolution to be reached within a short span of time.

'Nevertheless, MAS expects the trustee and receivers to pursue all appropriate avenues to protect noteholders' interests,' it added.

About 8,000 retail investors sank $375 million in Minibonds - only to see Lehman collapse on Sept 15.

Three other independent parties have been roped in by the MAS to ensure that the plight of these investors is not ignored amid potential cross-border legal battles.

On Oct 2, Mr Gerard Ee, Mr Hwang Soo Jin and Mr Law Song Keng were appointed by distributors of structured products such as Minibonds, Merrill Lynch Jubilee Series 3 LinkEarner Notes and DBS High Notes 5 to oversee their complaints handling processes.

All three said they were working closely with the financial institutions to ensure fair and prompt resolution of complaints by investors.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.


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