Credit linked securities were highly risky, even in good times

Mr. Tan,
Many of the investors here bought the the Mini Bonds before the sub-prime crisis surfaced in the 2H of 2007. At that time, the bonds didn't look high risk, did it?

Given its rating at that time, people knew there was a small chance the issuer would default. Even banks and other companies could fail at any time--there is a small chance. But in good times, people were willing to take the risk.

There are many banks and insurance companies currently having the same rating as Lehman had before it failed. Would you call them "high risk" too?

REPLY
You appear to be speaking for the financial institution that sold the products.

The credit linked securities are high risk. It is not just the risk of Lehman Brothers. The risk is muliplied at least 10 times due to the way that the product is structured. Even in good times, this product should never be approved and should never be sold.

Read this explanation:
http://tankinlian.blogspot.com/2008/10/possibel-wrong-doings-in-structured.html

I have written about it more one year ago, when times are good, to ask investors to avoid this type of product. (At that time, I was not aware about the extent of the risk - due to its complicated structure and lack of tranparency. I am now horrified to learn about the extent of the risk.