HK SFC & MAS warn investors on Minibond redemption

The Hong Kong Securities and Futures Commission (SFC), in a statement issued at the end of Asian trading today, told investors owning Lehman Minibond paper that they could receive substantially less than their initial investment and that the separately kept collateral and the swap agreements that back the notes are subject to security in favour of the trustee, who is required to act in the best interests of the investors.

In Singapore, the Monetary Authority (MAS) released a similar statement and has been conversing with the trustee, HSBC Institutional Trust Services (Singapore).

The redemption of the notes depends on a number of factors including the nature and value of the collateral (the prevailing market value), the amount due under termination of the swap arrangements and the costs, fees and expenses of selling the collateral in the market. Investors have been advised to rely on their distributors to take