tag:blogger.com,1999:blog-11702093.post6710545436232103595..comments2024-03-28T22:56:40.743+08:00Comments on Tan Kin Lian's Blog: Is it wise to cash out on the structured product now?Tan Kin Lianhttp://www.blogger.com/profile/00617069056914635271noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-11702093.post-38729374509785443742008-10-06T18:12:00.000+08:002008-10-06T18:12:00.000+08:0012:12am,Refer to the sole posting in my blog. Hope...12:12am,<BR/><BR/>Refer to the sole posting in my blog. Hope it can help.<BR/><BR/>http://onnzhai.blogspot.comAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-11702093.post-58829513191090879472008-10-06T10:43:00.000+08:002008-10-06T10:43:00.000+08:00That's called "issuer risk". It is present in all ...That's called "issuer risk". It is present in all forms of bonds-like investments (even government bonds). The other credit events only affect your potential cash flows from the structure given that the issuer / arranger is still alive.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11702093.post-44744086986852990182008-10-06T00:12:00.000+08:002008-10-06T00:12:00.000+08:00Hi Mr TanI invested in Lehman Bros Minibond Series...Hi Mr Tan<BR/><BR/>I invested in Lehman Bros Minibond Series 2. There is no "credit event" on the 7 reference entities as yet but the Arranger Lehman Bros is now bankrupt, does this constitute a credit default making this issue at risk?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11702093.post-20454726391687396822008-10-05T10:24:00.000+08:002008-10-05T10:24:00.000+08:00Mr Tan KL,Thank you for your wise comments.I have ...Mr Tan KL,<BR/><BR/>Thank you for your wise comments.<BR/><BR/>I have Minibond 3. Personally, I am prepared to rough it out for the balance of the term, even foregoing the interest if that be the case. Only thing I ask is for my capital to be returned in full upon maturity.<BR/><BR/>Based on what you wrote, there should be white knights who would be willing to take over Minibond, and stay the course.<BR/><BR/>Is there a freely accessible public website that lists the current valuation of all these notes? Knowing such info may help investors in deciding whether to cash out now or stay rooted. I asked a RM this question. His reply was FIs have access to this info but it will take some time to provide it to the investor. Basically, they discourage such questions. The best estimate I got was from the lioninvestor blog. Tks.<BR/><BR/>- Lingamsymmetrixhttps://www.blogger.com/profile/03102005781308329328noreply@blogger.comtag:blogger.com,1999:blog-11702093.post-27531077243408574942008-10-05T09:46:00.000+08:002008-10-05T09:46:00.000+08:00From MiniBond pricing statement : [The “Credit Eve...From MiniBond pricing statement : <BR/>[The “Credit Event Redemption Amount” shall be determined by the Calculation Agent, in its sole<BR/>and absolute discretion, as an amount equal to the Liquidation Proceeds of the Calculation<BR/>Obligations with a principal or nominal amount equal to the Settlement Principal Amount.<BR/><BR/>For these purposes:<BR/>“Settlement Principal Amount” means the Initial Principal Amount of the Notes on the Issue<BR/>Date, (i) plus (in case the Swap Settlement Amount is payable by the Swap Counterparty to the<BR/>Issuer) or minus (in case the Swap Settlement Amount is payable by the Issuer to the Swap<BR/>Counterparty) a nominal amount of Calculation Obligations whose Liquidation Proceeds<BR/>determined on the Settlement Determination Date are equal to the absolute value of the Swap<BR/>Settlement Amount determined on the Credit Event Determination Date, (ii) plus (in case the<BR/>Market Value Difference (as defined below) is a negative amount) or minus (in case the Market<BR/>Value Difference is a positive amount) a nominal amount of Calculation Obligations whose<BR/>Liquidation Proceeds determined on the Settlement Determination Date are equal to the absolute<BR/>value of the difference (the “Market Value Difference”) between the principal amount of the<BR/>Underlying Securities on the Issue Date and the Liquidation Proceeds of the Underlying Securities<BR/>determined on the Credit Event Determination Date.]<BR/><BR/>With the credit crisis, the Credit Default Swap settlement is negative and the Market Value Difference negative (due to higher credit spreads). <BR/>But with such opaque calculations (done at “sole and absolute discretion” by the Calculation Agent, ie a bank) and in such illiquid markets, how can we be sure investors are not ripped-off?ymhttps://www.blogger.com/profile/07507282903179047830noreply@blogger.comtag:blogger.com,1999:blog-11702093.post-72996879803487958922008-10-05T09:00:00.000+08:002008-10-05T09:00:00.000+08:00MR. Tan,I read somewhere that if more than 20% of ...MR. Tan,<BR/>I read somewhere that if more than 20% of investors decide to liquidate the trustees will proceed. It will mean a fire sales under current conditions.<BR/>Can't remember whether I saw it in the minibond prospectus.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11702093.post-27147286020505347662008-10-05T07:21:00.000+08:002008-10-05T07:21:00.000+08:00Here is the notional credit derivatives exposure o...Here is the notional credit derivatives exposure of some US Banks:<BR/><BR/>JP Morgan $8 trillions<BR/>Bank of America $3 trillions<BR/>Citigroup $3 trillions<BR/>HSBC $1 trillions<BR/><BR/>We have not seen the corporate bankruptcies outside financial rising yet. When it happens, coupled with the coming problem in Alt-A and ARM mortgage (much larger segment than subprime), and Federal Reserve has almost loaned out its balance sheet, it will be a nightmare for US banks. What we have seen might be just the first quarter of the end game for US financial sector.Anonymousnoreply@blogger.com