New swap counter party to replace Lehman Brothers

Many people asked me if a new swap counter party is found to replace Lehman Brothers, will they get their principal back on maturity (i.e. the full sum invested in the minibond)?

The answer is "I don't know". The investor still has to face the following risks during the remaining term:

> default of the 6 reference entity
> default of the underlying assets
> default of the new swap counter-party

For example, Morgan Stanley is the swap counter party for Pinnacle Notes 9 and 10. They are still intact. The reference entities under these notes have not defaulted. However, 5 of the underlying assets of these notes have defaulted. These notes now have zero value.

The fate of these pinnacle notes show that the minibond still have many risks down the road, even if a new swap counterparty is found.