MAS publishes timeline for Minibond resolution process

10 October 2008

MAS publishes timeline for Minibond resolution process
The Monetary Authority of Singapore (MAS) has published a timeline for the resolution process for investors who bought Lehman Minibonds. The trustee (HSBC Institutional Trust Services Singapore), which is in charge of overseeing the Minibond products, has informed the MAS that it has not received any firm offers from potential new swap counterparties to replace the now bankrupt Lehman Brothers in the Minibond progamme. The MAS has said that the trustee does not expect any firm offers and will commence the selling of the underlying securities in two weeks.

If in the event of a swap counterparty being found the replacement swap proposal would require at least 75% of the votes cast by the noteholders at an extraordinary general meeting. However if a firm agreement is not reached within two weeks the trustee will commence the enforcement process for Series 5 and 6 of the Minibonds, which will ultimately entail selling the underlying securities in an orderly fashion and using the proceeds to pay the noteholders after deducting any other liabilities which are payable.

The total issue size of the Minibond programme was SG$508 million, of which S$375 million was sold to about 8,000 retail investors through nine distributors. Meanwhile SG$23 million of the total SG$28 million of Merrill Lynch Jubilee Series 3, which referenced Lehman Brothers, were sold to about 350 investors through six stockbroking firms. Over 80% of the Minibond programme and Merrill Lynch Jubilee Series 3 noteholders invested up to SG$50,000, with 28% having bought SG$10,000 or less. In the case of DBS High Notes 5, which also referenced Lehman Brothers, over 1,400 investors bought SG$103 million worth of notes. More than half of them invested SG$50,000 or less.

As of 10 October 2008, the ten distributors of the Minibond programme, Merrill Lynch Jubilee Series 3, and the DBS High Notes 5 have received 680 formal complaints from investors.

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