Tuesday, September 30, 2008

FAQ on Minibonds

Lehman Brothers Asia Ltd, as arranger of minibonds, posted this two weeks ago in HK
http://www.sfc.hk/sfc/doc/EN/general/general/lehman/faq_pacific_20080917.pdf
Note sfc is the HK Securities and Futures Commission.
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1 comment:

Anonymous said...

Information updated as of 29 September 2008

Lehman Brothers Minibond Series Notes – Questions and Answers


Q1: Lehman Brothers is not listed as a reference entity in the Minibond Series. How does its bankruptcy lead to an early redemption of the Notes?

A1: As stated in the Base Prospectuses and Pricing Statement of the Minibond Series, Lehman Brothers Holdings Inc. is the Swap Guarantor for the Notes, Lehman Brothers Special Financing Inc. is the Swap Counterparty.

The failure of both Lehman Brothers Special Financing Inc. and Lehman Brothers Holdings Inc. to honour the swap agreement with the Issuer (Minibond Limited) may possibly result in the termination of all swap arrangements.

This termination will lead to the unwinding of the Notes and early redemption.


Q2: Will there be any coupons payable by Minibond Limited following the filing for Bankruptcy Protection by Lehman Brothers Holdings Inc.?

A2: We are unable to provide details on this issue as we have yet to receive an official response from Minibond Limited and HSBC Institutional Trust Services (Singapore) Limited with regards to any possible future defaults to the payment of coupons.

However, the coupons for Minibond Series 5 and 6, which were due on the 22nd September 2008, were not paid. HSBC Institutional Trust Services (Singapore) Limited, as the Trustee, has contacted Minibond Limited and is in the midst of addressing this issue.


Q3: Will we be able to recover our principal sum invested in the Minibond Series Notes?

A3: Due to the Bankruptcy filing of Lehman Brothers Holdings Inc., the swap arrangement between Lehman Brothers Special Financing Inc. as the Swap Counterparty and Minibond Limited as the Issuer of the notes may be terminated.

This may impact on the obligations of Minibond Limited to the Noteholders in paying out the respective coupons, and may result in the early redemption of the Notes.

In the event of an early redemption, the amount recoverable is dependent on the sale of the underlying securities of the Notes at market value.

It is possible that the redemption amount may be significantly less than your principal amount.


Q4: How much of our principal sum can we recover?

A4: The amount recoverable is dependent on current economic conditions and factors affecting the sale of the underlying securities for the Notes. The trustee, HSBC Institutional Trust Services (Singapore) Limited, will oversee this sale of the Notes.

Q5: When will we know the status of our Notes with regards to early redemption payouts?

A5: We have contacted the trustee, HSBC Institutional Trust Services (Singapore) Limited, regarding this issue but unfortunately, we are unable to obtain a definitive answer. Noteholders are asked to wait for the official response from either Minibond Limited or HSBC Institutional Trust Services (Singapore) Limited.

Q6: What is the hierarchy of the payout? Will retail Noteholders be paid last?

A6: Currently, we do not have an official response from Minibond Limited or HSBC Institutional Trust Services (Singapore) Limited on the procedures and hierarchy of payouts to Noteholders should there be an early redemption.

Q7: Who will notify us of further information?

A7: Further information, when it becomes available, will be disseminated by Minibond Limited and HSBC Institutional Trust Services (Singapore) Limited to all individual Noteholders via mail.

For further information you may go to:
HSBC Institutional Trust Services FAQ on Lehman Brothers Minibond Series Notes

October 02, 2008 7:48 PM

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