Jun 23 2008
Merrill Lynch Jubilee Series 8 Notes
You might probably have seen advertisements for the Merrill Lynch Jubilee Series 8 Notes recently.
(If you haven’t, you can download the product fact sheet at the link below:)
Merrill Lynch Jubilee Series 8 Notes Fact Sheet
The Jubilee Series 8 Notes promises 3.15% p.a. for a period of 2.5 years. It also offers “100% principal protection at maturity*“.
A 3 year government bond is currently giving only a yield of 1.86%, so this looks like a good deal.
But wait, we need to read the fine print first (Did you?).
It says:
The Notes are principal protected if held until the Maturity Date. However, redemption of the Notes at 100 percnt of the principal amount of the Notes is not guaranteed if the Note is disposed of prior to maturity, or the Note is redeemed early due to taxation or other reasons.
A lot of people will probably be thinking: “As long as I don’t sell it before maturity, I will get 100% of my principal back.”
Let’s read the finer print and disclaimer on the fact sheet.
The security for the Notes will comprise certain securities issued by Merrill Lynch and the swap arrangements relating to the Notes including the guarantee by Merill Lynch as the swap guarantor. In the event that Merrill Lynch is unable to make or procure payment of amounts due under the securities or the swap arrangements, Jubilee Global Finance Limited will be unable to make the corresponding payments due under the Notes and the recourse of investors is limited to the realisation of the securities and to the termination payment (if any) due to Jubilee Global Finance Limited under the swap arrangements.
Yes, the Notes are 100% principal protected if held to maturity.
But no, the decision as to whether to sell the Notes or not does not lie totally with you.
There are certain conditions whereby the notes can be redeemed by the issuer prior to maturity date. They are:
- There is an event of default under the Notes
- The securities backing up the notes are repaid early for any reason, for example because there is an event of default under the securities or for tax reasons
- The swap agreement is terminated early
- The Cayman Islands imposes taxes on the issuer or on payments under the Notes which the issuer is unable to avoid
When any of these events happens, there is a risk of significant loss of capital.
A look at the Jubilee Notes Pricing Statement shows the securities backing up the notes to be SGD-denominated notes issued by Merrill Lynch & Co., Inc under its US$110,000,000,000 Euro Medium Term Note Programme. As the Securities are unsecured, they represent long-term unsecured debt obligations of Merrill Lynch & Co., Inc.
Therefore, you are paid the extra yield by taking on the credit risk of Merrill Lynch. And the few other reasons listed above which might not be too exactly transparent. For example, what are the factors that will determine when the swap agreement be terminated? We don’t really know unless we take the trouble to read thoroughly the base prospectus and pricing statement.
The question is, are we being compensated sufficiently to take on all these risks?
You might want to read page 6-12 of the Jubilee Notes Pricing Statement to understand fully the risk factors involved in puchasing this product before deciding whether it is suitable for you. While it has been marketed aggressively as a “100% principal protected product upon maturity“, it certainly isn’t a principal protected product.
Click here to leave your comments.
[...] Update 26 June 2008 A fellow blogger has done a more in-depth analysis on this product. Read about it here. [...]
Hi Mudnik
Good analysis.
I hate the way financial institutions and agents push their products using unclear terms and promising orally of the great returns and safety when in fact these can potentially be as toxic as the collateralised debt obligations that were bandied around by the US banks prior the sub-prime fiasco.
Be well and prosper.
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Hi Panzer,
Yes, one does need to be very careful when buying any structured product.
For that, a reading of the base prospectus/pricing guide is a bare minimum.
How many people actually do that?
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Dear sir,
I recently bought the Merill Lynch series 8 notes and are very concerned to read about the just announced BoA acquisition of Merill Lynch.
The obvious question that comes to mind is what will happen to my purchased. Can anyone care to explain.
regards,
Stanley Leow
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Hi Stanley,
If BOA assumes the obligation, the notes will carry on as normal after the takeover. This is probably the case.
Of course, the original risk associated with the original product still remains intact.
You might want to confirm with your distributor.
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i bought the jubilee series 3 which Merrill Lynch is the arranger. unfortunately LB is one of the reference entities. plse advise me what will happen to my money?
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Henry,
Unfortunately, you could be looking at a significant loss on your capital.
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Hi Lion Investor
The financial turmoil has been harrowing for me & the Sunday Times article on High Notes 5 has added more to my anxiety.
I have bought the Jubilee Series 8 notes from a Bank. With BOA acquiring Merrill Lynch, what will the implications be?
The only assurance I can get from the Bank is … “the Notes will still continue, if any early termination, we will keep you informed”
What are my losses if I request for premature termination? I’m totally not an expert on investment.
Pls advise.
Mui
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lioninvestor Reply:
September 22nd, 2008 at 12:20 am
Hi Mui,
You can try requesting for the latest buyback price from the bank. For the Lehman minibond product, Lehman provided a pricing every Friday. Your Jubilee notes might have a similar arrangement but I’m not certain.
I believe the product should still continue to run.
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What shoild do now with Merrill Lynch Jubilee Series 8 Notes bought recently ?
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dear Lioninvestor,
For you information, I have been told by my bank that the buyback price is only available after the 1st 3 months i.e. first week of Oct 08.
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lioninvestor Reply:
September 23rd, 2008 at 1:30 am
I see. Then I suppose you will have to wait until then to know…
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Dear Lion Investor
From what little I have seen of your blogs and intro page, I think yours is a pretty cool website. I ‘googled’ “jubilee series 8 notes prospectus” and hit your article.
I consider myself a fairly savvy investor who focuses on value and wealth accumulation for the long term. When someone I know was approached by a Citibanker to invest in this product, I was consulted on whether it was a good idea to invest in the MLJS8 Notes. The Citibanker had given the impression that the product was guaranteed (she might have even used the word “guaranteed” – I am not certain).
So I had a quick read of the factsheet and prospectus, and thought it was a pretty safe product because it said “capital protected” and was backed by Merrill Lynch, a pretty respectable and solid global financial institution. So the person in question invested in it. Little did I realise (until now) the vast difference between a cast-iron guarantee and what was termed “capital protection”. Had BOA not bought over ML, I am quite certain a vast portion of the person investment would have been lost by now. And of course, there has been no sight nor sound of the Citibanker since the sub-prime contagion started.
This is just a little cautionary tale of all things which appear too good to be true in the investment markets. As always, caveat emptor. There’s no free lunch out there.
As for your website, Lion Investor, I like what you are doing. Keep it up. And thanks.
Warm regards.
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lioninvestor Reply:
October 3rd, 2008 at 12:25 am
Hi John,
Thanks for the encouragement.
Glad you liked reading what I wrote.
With regards to the buyback price, your friend should be able to get it via Citibank.
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Oh, and if anyone finds out what the buy-back price is, please let me know. Thanks.
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I’ve was advised by my “Relationship Manager” in Standard Chartered Bank that they have received calls from anxious investors asking for outcome of this MLJS8 notes too and that SCB is looking into it.
She also promised that she will check & revert on the buy-back price early week of Oct 08.
To date, I am still waiting for their advice … hope SCB live up to their word! Let see …
Any idea who & how I can escalate & pursue this matter further? At what extend can MAS help?
Anyone care to share? Tks
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stephensim Reply:
October 19th, 2008 at 11:15 pm
I am sure the RM told you that the “principal is protected” when you sign the contract. He did not tell you those 4 conditions mentioned and when any of these eventshappens, there is a risk of big loss of capital.
This is very unprofessional of a reputable bank. How can they subject your investment to such high risk when the return is only 3%. Many retalier would think that since it is only 3% return, it should be similar to a fxed deposit.
The bank is using this kind of unfair tactics to lure customer.
You should lodge a complaint with all the authorities and get the bank to cancell the contract and get back your principle before it is too late.
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amnon Reply:
November 2nd, 2008 at 1:22 am
In March 2008 I purchase Capital Protected Note base on a Standard chartered brochure which my he presented me during the meeting which gave the illusion that the CPN is actually a product of Standard Chartered.
On Mid September My private advisor called me at 20:00 and informed me that my funds in the CPN are suspended due to Lehman collapse. As I did not fully understand the connection, he further explains that somewhere down in the brochure it stated that the issuer of the note is Lehman Brother.
This scam should not go quietly! I’m thinking to start legal procedures against standard charter for fraud and deception.
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Alex Reply:
November 26th, 2008 at 1:34 pm
Hi Mui,
i am in the same situation as u … how did SCB handled yr case??
for me. my mum bought the JS8Notes. but the R/S manager did not highlight the risk involved and played ard wiht the words “Gurantee” and “Protected”
we hv logdged a case with SCB but our case was withdrawn.. cause they have found “evidence” tat the R/S manager DID NOT mislead my mum. a chinese educated lady in her 50s. I wonder how they find the “evidence”
on my hand we hv called the R/S manager prior to this. Does major banks have recording functions on their R/S managers desk??
how shld we purse the case???
anyone advise??
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Dear Lion Investor
ST’s headline on Structured Investments has indicated that investors may lose all their money invested in Merrill Lynch Jubilee Series 3 LinkEarner Notes.
What’s the difference between this and MLJS8?
Also when MLJS8 was launched, Temasek Holdings has had stake and recently has upped their stake in ML. Does this enhance our position financially?
Your financial advice pls ….. Thanks heap!
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lioninvestor Reply:
October 4th, 2008 at 12:02 am
Mui,
The Jubilee Series 3 had Lehman Brothers as one of the reference entities.
Since Lehman Brothers has gone bust, it triggered a default event. Investors of Series 3 are likely to get back zero or close to zero.
The Series 8 is a different thing altogether and has little to do with Lehman Brothers.
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Hi,
I just went down to citibank to enquire about the buyback rate for the Jubilee Series 8 notes. It’s about 80% and this rate differs each day. Any advice if I should hold on to the notes or should i just sell it off asap?
Thanks.
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I am one of those worried investors of MLJS8. I have also been advised by RM in Standard Chartered to wait till the 9th of Oct.
Please keep me updated on news concerning MLJS8. Thanks Lion Investor
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Odyssey Reply:
October 24th, 2008 at 8:02 pm
Today, 24/10/08, the RM of SCB informed me the quote for Series 8 note is at 85.
I had instructed my RM of SCB to liquidate the Merrill Lynch
Series 8 note at 15% loss of my capital. At least I now have peace
of mind.
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Dear Lion Investor
“Mui,
The Jubilee Series 3 had Lehman Brothers as one of the reference entities.
Since Lehman Brothers has gone bust, it triggered a default event. Investors of Series 3 are likely to get back zero or close to zero.
The Series 8 is a different thing altogether and has little to do with Lehman Brothers.”
A quote from your earlier response.
I also bought Jubilee Series 8 notes, according to your earlier reply, Series 8 is different from Series 3 which has a reference to Lehman Brothers as one of the entities.
May I know, how series 8 notes work and what conditions/entities it depends on? As you have mentioned that it is a different thing altogether compared to series 3.
Thanks for your advises, I and as well as many investors here would like to know whether are we crossing a land mine field now.
If yes, we need to know whether we should retreat with some losses now or forge forward bravely as we might be able to clear the land mine field cautiously.
Thanks again for this great website!
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lioninvestor Reply:
October 6th, 2008 at 1:08 am
Lowbang,
to quote what I wrote earlier:
“The security for the Notes will comprise certain securities issued by Merrill Lynch and the swap arrangements relating to the Notes including the guarantee by Merill Lynch as the swap guarantor.
A look at the Jubilee Notes Pricing Statement shows the securities backing up the notes to be SGD-denominated notes issued by Merrill Lynch & Co., Inc under its US$110,000,000,000 Euro Medium Term Note Programme.”
Only ML knows what they are! Given current conditions, it is likely you can get them to reveal what they are.
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stanley leow Reply:
October 6th, 2008 at 8:42 am
Dear Lioninvestor,
thank you for the advice. I believe we should in a concerted manner request the ML reveal what this US$110 billion Euro medium term note programme is all about.
anyone care to comment.
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Dear Lion Investor
Thanks for the great advises.
Appreciate it!
If any of the members know what securities it is backing do let us know here. Cheers!
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Hi Lioninvestor,
I have been advised by my RM to hold on to the Series 8 notes. Any advise? Is it better to redempt the notes now, suffering a smaller loss than suffering a greater loss if the situation gets worse?
Thanks.
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lioninvestor Reply:
October 9th, 2008 at 12:29 am
Alexis,
I think the question to ask is, what exactly is “the securities issued by Merrill Lynch & Co backing up the notes”?
You might want to get your RM to elaborate on what are the possible risk factors or events that would affect the principle of your notes should you continue to keep it.
He might not have the answer offhand, but you should make him work to find out for you.
And whatever he tells you, have it documented.
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Note the few interesting response to individuals on MLJS8
1) Response from a SCB RM to my query >>
“I have attached the letter on BoA – ML which states that Merrill Lynch’s capital and liquidity positions remain sound.
As for the redemption price of the Jubilee Notes Series 8, we do not have the pricing yet. I will keep you update once I have the pricing.”
2) SCB RM reply to Ksusi >>
“I have also been advised by RM in Standard Chartered to wait till the 9th of Oct.”
3) Citibank’s reply to Alexis’s >>
“I just went down to citibank to enquire about the buyback rate for the Jubilee Series 8 notes. It’s about 80% and this rate differs each day.”
Anyone got the gospel truth? Plssss share & update …
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lioninvestor Reply:
October 9th, 2008 at 12:31 am
I think it could be due to the time difference when the responses were received.
They seem pretty consistent to me.
That pricing will only be available in the first week of Oct.
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Just got a indicative from SC on ML 8 notes. Today’s indicative is 85%. Thats bad! but of cos better than those that have bursted. they also say that coupon pyment are expected on 16th Oct.
Lion, this notes is entirely on the “existence” of ML, which seems ok for the time being becos there is a “white knight”(BOA). U think we do go unwind it? what will be the implication if everyone unwind? will it affect the note and eventually make it go burst?
Blur blur
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yes, what is the impact on the pricing of the notes when everyone redeems it.
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Dear lion invester,
I’m a layman on the street with little knowledge about investment. Unfortunately, i bought the Jubilee series 8 when i went to a bank to put in fixed deposit.
After what happened to Merrill Lynch, I search the web for more infor and found your article on the subject. The truth is i’m being told by the bank that this is a high yield and low risk instrument.
Anyway, i’ve checked with the bank today, they says the unwind percentage is 15%. I’ve put in quite an amount of money. If i choose to withdraw, i’ll lose quite a fair bit.
Base on the current situation, can you please advice what is the wise move?
Thank you very much.
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lioninvestor Reply:
October 13th, 2008 at 12:55 am
Lilian,
as I mentioned in a few other comments, the main risk you face is that of Merrill Lynch going bust before your notes mature.
Can you live with that risk?
It might also be possible to do a partial sale. Check with your distributor.
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LiLian Reply:
October 13th, 2008 at 10:09 pm
Hi Lioninvestor,
Am i right to say that base on the current scenario, looks like ML is in a better position than before acquisition by BoA. Does the fact that Temasak putting in more $$ and BoA merger warrant the stability of ML? or rather, after what happened to Leman, the govn wouldnt risk to let any big financial institution to collapse again..? That is the BIG question, what’s your comments?
I spoke with my RM this morning, he says the unwind % will only be known on every friday. Prior to that (last week) he says he will be able to let me know the update everyday. Also should i decide to sell the notes any time of the week, i should base on that friday’s unwind percentage. So meaning if anything happen to ML on monday, i should wait 5 more days till friday to find out the bid price and sell. By then, isnt it too late for anything? Anyone bought this notes knows if this is the fact? would appreciate and some one bought JB note 8 help check with your RM, i’m in some doubt of what my RM says….
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lioninvestor Reply:
October 13th, 2008 at 10:28 pm
The Friday pricing is quite a norm. At least that was how it worked with Minibond.
Note that the buyer of the Notes from you is ML itself, so if they do go bust, there isn’t any way for you to sell it back already.
With the US government pledging to buy stakes in the banks, things does look more positive than before.
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actually my question is how do we decide whether we should redeem it. ML is already bought over by BoA but are the chances now still high that BoA will default on this Note? Sigh, this is so complicated.
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ALI < AMENAH Reply:
October 14th, 2008 at 11:00 am
Hi dilemma,
I received news from my RM at Citibank that the value of the Notes has risen to 86.5% and the redemption price is the same. She also told me the risk of Merril Lynch going bankrupt and that means , these Notes have no value. I am waiting for things to get better and then I will redeem these Notes. I hope this helps.
At my end , I live in constant worry because I invested a great deal.
Amenah
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Dear Lioninvestor,
I invested my lifesavings in ML Jubilee Series 8. Could you tell me if BoA ’s purchase of MR means I can hold on to these Notes because my RM told me that the Shareholders may or may not agree to this. And, this buyback price I read about, how often can I email my RM to find out the Indicative Value? Right now , it is out 80.5% or is it more now? I am not very good at investment . I bought the Notes at the recommendation of my RM.
Could anyone help?
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lioninvestor Reply:
October 11th, 2008 at 10:34 am
Hi Ali Amenah,
The main risk in this product that will affect your return of principal is that of Merrill Lynch going under. It is certainly hard to say whether this or not will happen. The US government has come up with a few measures to support the banks.
There should be an indicative price at least weekly.
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I was just told that the redemption price for this note is 0.87. Just in case anyone out there wants to know…now the question is, will BOA still continue with their decision to take over ML when the official announcement is made Jan 09, esp given the current turbulent mkt?
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Kenneth Reply:
October 9th, 2008 at 8:45 pm
I believe BOA will take over ML as Temasak is a major share holder of both.
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My mum and I were already burnt by Minibond Series 2. We thought we could redeem our Jubilee 8 today but was told we would lose about 13 %.
That is quite a big amount and my mum is so distraught again because if she loses this money she has nothing left as most of her savings was in Minibond 2.
I am not sure how to advise her. To redeem or just wait a bit longer and see how.
Am so distraught myself. Meant to send my letter of complaint to bank after redemption for fear of bad service. Now I don’t know what to do because I cannot leave the letter of complaint too late as well for minibonds.
Any advice would be greatly appreciated.
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Kenneth Reply:
October 9th, 2008 at 8:38 pm
So it means it is not principal protected but depending on the value of the notes upon maturity, right?
Really bad dreams. On the bright side, losing 13% is better than losing 100% like me. My Series 3 still have to wait till 02 Dec and plus another 15 days before HSBC goes through the WaYoung.
Today’s Business times report HK govt investigating 9 banks for mis-selling.
See you at Hong Lim Square on Saturday. My heart is numb now. Better continue to find ways to recoup my lost then comparing the two govt actions…..
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my RM told me lots of his clients are holding on to the Jubilee Notes series 8. Most of them still believe in the fundamentals of ML, and do not think it’ll go down under. Let’s see if there are any more surprises tonight…
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braindead Reply:
October 10th, 2008 at 9:37 am
What do you mean by “fundamentals of ML”? I thought ML has been sold to BoA? So now its a question of what will BoA do, or am I wrong?
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I am one of the MLJB 8 investor via RBS_ABN AMRO, my RM advise me that the indicative bid price for 87% ro be redeem before 3pm on 10th Oct.
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is there anyone out there who can shed some light on how was the daily prices determined? is it similar to share prices on supply and demand? what factors drive the prices up and what drive the prices down?
anyone?
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lioninvestor Reply:
October 10th, 2008 at 11:26 am
HI Lynda,
The price is given by ML. There’s no secondary market for it and it’s the price they are willing to pay to buy it back from you.
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I was told by standard chartered bank that the price will be out today.
Let’s keep each other updated about the redeem price.
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do bear in mind that this is altogether different product from minibonds and other 1st to default credit linked notes. This is a much more sensible product in the sense that you are making a small bet (the 20bps bonus coupon) on whether S$ interest rate will not fall out of a given range.
Whether to redeem now or later is a difficult one. The big question here is whether ML will indeed be taken over by BoA. I would say both of these institutions are considered by the Fed as “too big to failed”. The guy running ML now is an extremely clever and ambitious man. He is after the top job as CEO of the combined entity. My view is that he will pull all the strings to make it happen. There are 2 more encouraging signs 1) BoA owns a stake in China Construction Bank. They could make a profit of 7bn if they sell; 2) The Fed 700bn rescue package will come into effect pretty soon.
The Euro medium term note – in layman terms, a piece of paper says “I owe you” issued by ML. I don’t believe you are directly exposed to CDOs here.
I would however still urge you to join your brothers and sisters in Hong Lim tomorrow.
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lioninvestor Reply:
October 10th, 2008 at 11:38 am
Hi Del Boy,
Are you able to check what the underlying securities are? Or is it like what you said just an IOU from ML?
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Del Boy Reply:
October 10th, 2008 at 12:32 pm
no isin number. cannot do a check on bloomberg. I would say this is a “IOU”. p20-p21 explains very well.
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lioninvestor Reply:
October 10th, 2008 at 1:01 pm
Thanks.
Del Boy,
I sent you an email yesterday. Did you receive it?
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Phew! My mum and I have just redeemed our ML Jubilee 8! It’s a loss of 13% which is quite substantial for an elderly with no further income.
However, it’s the price to pay to sleep in peace. With all the bad news from everywhere and especially from the US – see the state of DOW Jones – there is no peace of mind.
Even if BoA and ML are safe, the redemption price may drop further later.
It’s a gamble and there is no right or wrong answer.
Just sharing my rationale for redemption with all my fellow Jubilee 8 “sufferers”
Now I can concentrate on Minibonds Series 2 process.
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Jasmin Reply:
October 10th, 2008 at 1:18 pm
Bad Dream,
At least you have confirmed your loss was 13%. My loss in minibond series 2 is unknown!
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Bad Dream Reply:
October 10th, 2008 at 3:13 pm
Hi Jasmin
I also have Minibond Series 2 and my mum has a hugh life saving in it.
Let’s work together to seek justice and get our money back. C u at Hong Lim.
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Jasmin Reply:
October 10th, 2008 at 3:23 pm
Bad Dream,
Have you send your letter to Maybank? I managed to get it out and faxed to Maybank Tower.
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Bad Dream Reply:
October 10th, 2008 at 5:49 pm
My mum and I bought from ABN. After the Jubilee redemption, today, I sent out 6 registered letters from myself and my mum regarding being misled into buying minibond 2.
I followed Lioninvestor and Mr Tan’s procedure.
Letter to CEO of ABN
Copy of letter to MAS (Mr Goh Chok Tong)
Copy of letter to Fidrec
We will also be bringing our copies of our letters our MPs
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InvLoss Reply:
October 10th, 2008 at 1:41 pm
I too redeem today. Might also lose interest that was declared on 9 Oct, payable on 16 Oct. Not fair as redemption may take 2-3 wks.
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Hi,
Something interesting on product risk mismatch with investor.
“ANZ bank has paid out more than $200,000 to an elderly woman whose life savings are tied up in a credit crunch-affected ING fund.”
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10535307
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Hi,
Regarding the redemption of Jubilee 8 , how do I find out the bid offer? Do I email my RM ? If I want to redeem my notes, must it be done at a specific time? like before 3.00 p.m.?
Please help?
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lioninvestor Reply:
October 11th, 2008 at 11:06 am
Hi Desperate,
For redemption, you can get the prices through your RM (who will get it from Merrill Lynch).
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Here an official note from President of Pacific Rim – Merrill Lynch. (Sorry I couldnt attach the doc from here) Enjoy the sunshine …
Dear Sir/Madam
By now you have heard that on September 15, 2008, Merrill Lynch and Bank of America
announced the acquisition of Merrill Lynch by Bank of America. Upon closing, this deal will create
one of the world’s largest and most diversified financial services firms.
We believe the combination of our firm with Bank of America will significantly benefit you as a
client.
The deal is scheduled to close in the first quarter of 2009 or earlier subject to shareholder
approval, customary closing conditions and regulatory approvals.
For our clients:
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Dear LionInvestor
Thanks for the great advises from your websites!
Is has been great to hear lots of views from fellow investors.
I am still staying put here with my MLJ8 notes, nobody really know what will happens in the future.
I fully agreed that there is no right or wrong here. Whether to redeem or not it’s all a personal risk preferences.
I think for those who have redeemed, you are definitely blessed with many good night sleeps and peace of mind.
For those who still have the stakes in the MLJ8 notes please do keep constant updates and contacts within this great website!
Hope that we will see the light at the end of the tunnel!
All the best to everyone!
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Alexis Reply:
October 12th, 2008 at 10:26 pm
Hi,
Yes, I agree with lowbang. Let’s keep contant updates within this great website! I guess I will be still be keeping my Jubilee Series 8 notes for the time being and play by ear. I guess the upcoming months will be very crucial. We have to really monitor closely.
Cheers
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Hi,
I just checked with my RM. She told me that it’s not adviseable to redeem the ML Jubilee Series 8 notes now. She mentioned that it’s indeed a good news that BOA bought over ML as ML’s credit rating has increased. She mentioned that with the current situation, there is not a need to sell the notes. She also mentioned that the longer we hold on to the notes, the higher the value it will be even we were to redempt it even before the maturity. Anyone can advise and share your views on this.
Thanks.
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HI Guys,
I also invested a substantial amount of my parent’s savings into ML’s Jubilee Series 8 bonds, my RM in Citibank also said the same thing, that BOA buying over ML is a good thing. So the most impt thing is, should i redeem it now? Or ? I am abit confused. As long as ML do not file for Chapter 11 or bankrupt, we should be safe am i right to say that?
Thank You
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As a retiree, wonder how my 100k in minibond 9series is worth now?
Aiyah I’m gabbarah
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hi, i have bought the jubilee series note 8 and i m anxiously required to know the fate of the products. can someone updates me.
thanks
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We are already in a technical recession.
Can anyone share some light if I should redeem my Jubilee Series 8 given the current situation?
Im really lost now having invested quite a big sum and fearing it becoming like another Jubilee series 3.
PLs kindly advise Thanks
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lioninvestor Reply:
October 12th, 2008 at 5:51 pm
The main risk to holders of Jubilee 8 is that of Merrill Lynch going bankrupt.
If you think they will fail before the notes mature, then you should get out of the notes.
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To all Jubilee 8 investors
If this can temporarily ease your mind & gives you few hours of blissful sleep, you may ask from your RM an official letter from the President of Pacific Rim – Merrill Lynch which is issued to the Banks.
The acquisition deal of ML by BOA is expected to complete by 1st Quarter 2009 or earlier.
For now … let’s keep our fingers, toes & legs crossed. Pray that all will go well!
I have invested quite a substantial sum & all I’m hoping is 100% capital sum plus early notes termination … instead of playing Russian Roulette with us.
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Hi,
Yes, I guess we are taking a gamble now and we have to play by ear. Situation seems to look alright now. I guess we just have to wait. I have been advised by my RM that they will advise us to sell away the notes if they think there should be a need.
She mentioned that BOA will defiinitely save Merrill Lynch now that they have bought over them if anything happens.
Anyone can advise and share your views…
Thanks.
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I applaud this website for its very informative content!
Since the start of financial turmoil … there have been lots of noise. Those impacted didn’t know who to talk to, what to do, where to get info … many were like lost in sahara desert, left high & dry!!!
Yes, let’s do whatever possible, hold each other hands while riding thru this roller coaster … hopefully it will be all smiles at end of the journey.
Do keep everyone posted on hearing even the slightest pin-drop. Am sure, somehow it may makes ones day or save a life?!
LionInvestor … KEEP IT UP!
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How do we find out what Jubilee Series 8 Notes are invested in? Does protection means unless Merrill Lynch goes burst we will get the money back? Doesn’t Merrill Lynch website gives info of the Notes detail?
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lioninvestor Reply:
October 13th, 2008 at 8:58 am
They are invested in securities issued by ML.
As long as ML doesn’t go bust or the notes are not redeemed early (whether by you or by the issuer), you should be fine.
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compass Reply:
October 13th, 2008 at 9:36 am
when its redeemed early by the issuer, what will determine the price?
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Hi Lion Investor,
Is it advisable to redeem the Jubilee 8 notes now?
based on the current situation,what is the chances of getting the capital back at the maturity?
Thanks
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lioninvestor Reply:
October 13th, 2008 at 10:39 pm
Things appear to be brighter with the efforts of the gov.
But things are moving very fast, so you will have to keep up with the proceedings.
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Those holding on to Jubilee Series 8….
PLEASE DO NOT PANIC.
Jubilee Series 8 is TOTALLY different from Jubilee Series 3, Lehman Minibonds, or DBS High Notes 5.
Jubilee Series 8 is akin to you placing a fixed deposit (except technically you are considered as a senior unsecured creditor rather than depositor) with Merrill Lynch. It is totally not linked to the share price of Merrill Lynch.
You will only suffer a loss in principal for Jubilee Series 8 if Merrill Lynch goes bust.
Since Merrill Lynch is going to be taken over by Bank of America which will take over all assets and liabilities of Merrill Lynch, Jubilee Series 8 is actually SAFER now than before.
PLEASE DO NOT PANIC AND EARLY REDEEM YOUR JUBILEE SERIES 8 AT A LOSS.
TOTALLY NOT A WISE MOVE.
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ALI < AMENAH Reply:
October 14th, 2008 at 2:56 pm
Hi InThe Know,
Thank you for your infor. It helps and I will wait and not redeem my Notes until the value increases.
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Dear Lion Investor
On hindsight, this is as good as a financial scam. Investors like us end up like suckers. As you highlighted in you publication above:
“The Notes are principal protected if held until the Maturity Date. However, redemption of the Notes at 100 percnt of the principal amount of the Notes is not guaranteed if the Note is disposed of prior to maturity, or the Note is redeemed early due to taxation or other reasons.”
We have no control on early Note redemption by issuer for whatsoever ‘other reasons’ and thus likely face significant loss of capital in such event.
After viewing Mr Tan at YouTube at Hong Lim roundup speech, it sets me thinking hard. Can’t we then unite & proactively write to MAS to seek protection or assurance to ensure such actions are justified, instead of waiting for the worse to happen?
Most of us I believe are snooped by the Bank on misrepresenting this structured product as no-risk. I certainly do not want to end like those High Notes or Mini-bond ‘victims”!
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Dear Intheknow
Tks for the advice.
It certainly will console us further or calm our souls if you can reveal your profile. Are you from one those distributor Banks, Merrill Lynch, BOA or MAS?
Even if BOA takes over ML, there are still other underlying conditions for early redemption of which payout will be at lower value. Correct me if I’m wrong.
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I have by the assigned RM’s words, recently invested quite a
substantial sum & all I’m hoping is 100% capital sum plus early
notes termination too … instead of playing Russian Roulette.
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Hi All,
I am in the banking and finance sector. I have much experience in the structured products business.
Contrary to what most people think, structured products are not ALL evil. As long as you know what you are going into and you FULLY UNDERSTAND the risk, there is no issue.
In a bull market, structured products have enabled both investors and investment banks to make big money, and no one complains. However, in current turbulent times, it is just unfortunate that the unlikely tail event has occurred and caused holders of structured products such as Jubilee Series 3 to lose their principal.
Anyway, back to the point.
BEFORE BOA TAKES OVER ML, the note can be early redeemed at a potential loss to the investor if:
1. ML defaults
2. Cayman Islands starts taxing the currently tax-exempt issuing entity.
AFTER BOA TAKES OVER ML, the note can be early redeemed at a potential loss to the investor if:
1. ML defaults (but BOA will take over all assets and liabilities of ML, hence BOA is like a second guarantor)
2. Cayman Islands starts taxing the currently tax-exempt issuing entity.
Thus, my conclusion is the note is now SAFER after the takeover of ML by BOA. The takeover, if it completes successfully, is BETTER for holders of Jubilee Series 8.
Do note that ML did not fail. It was sold at ‘full price’ to BOA.
Of course, I must also add a disclaimer that I cannot predict how the market crisis will evolve and if the worst is over. I am only trying to make a point that Jubilee Series 8 is totally different from the Lehman-linked notes.
There is of course still the possibility of both BOA and ML going bust anytime, as with all companies. So, if you are not prepared for this possibility, you should cash out your notes at a loss now.
Just remember, there is never a product with no risk. Even pure fixed deposits held with banks in Singapore are only guaranteed for up to SGD20k. Anything above that may be lost should the bank go bust as well.
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CKH Reply:
October 14th, 2008 at 11:21 am
Thanks for the advise .
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Hi Intheknow,
Thank you for your valuable information.
I have also bought Jubilee 8 and the amount is quite substantial to me. Over the last 2 weeks, it was indeed hellish for myself and jubilee 8 investors. However, there is definitely some comfort…
Below are my personal opinions and findings…
1. BOA seems determined to acquire ML. BOA and ML directors all approved the deal. I believe BOA directors are major shareholders of the company. As such, when they approved the deal, it can be quite certain that the deal will go through.
2. Barclays Global Investors is BOA largest shareholder (3.97%)
Temasek is ML largest shareholder (14 %). Temasek is also a substantial shareholder in Barclays. If ML fails, Temasek will stand to loss US$5-6 B. I am sure Temasek will do whatever it can to ensure ML stay afloat or complete the deal. That will mean to influence Barclays (as shareholder of BOA) to accept the deal.
3. CEO of BOA seems to be so certain about the deal that he has already assigned a post for CEO ML. BOA also raised U$10 B successfully last week in preparation for the acquisition. One may note that it is not Temasek that invest the US$10 B. Another Investor did…It demonstrated confident in BOA and its upcoming acquistion despite the turmoil.
4. If there is any sign that the deal may fall, US government will definitely intervene (look at Morgan stanley and Japan bank). Also, Will Temasek do nothing at all?? When BOA is selling shares to raise 10 B last week, it is particularly noted that Temasek is aware of the shares sale.
5. As of today (14 Sept), US$25 B is pumped into BOA and ML combined! This is another endorsement by the US government that the deal will be done. BOA got more money and the US government becomes a major shareholder in BOA. That means more say!!! US government will definitely want the deal to be done!
Lastly, once the deal is completed, I believe that BOA will assume all responsibilities (debt / asset) of ML (including Jubilee 8). That means that unless BOA goes bankrupt, Jubilee 8 should be safe. Will BOA goes bankrupt in the next 3 years??? My personal opinion is if BOA can go bankrupt then the whole world will probably have only less than 10 banks left. Most people on Earth will probably lose lot of personal wealth irregardless where you put your money.
Another thing…
This is the third time I bought into Jubilee notes. (Sadly, only until recently I know what I am buying). The last two jubilee notes were redempt early. The first notes was redempt after 2 quarters. The second notes was redempt after 1 quarter (Feb 2008). As such, there maybe early redempted on Jubilee 8. Why?
1. ML needs money. US FED offers lending (almost unlimited) at much lower rate than 3.15%. AIG just borrowed another US$38 B form FED last week. So why would ML want to pay 3.15% interest when it can borrow from FED at 1.5%? If recession sets in, the rates will goes lower…
2. There is also complication with the contract (jubilee 8). The issuer is ML. If it is changed to BOA, then creditworthiness of BOA becomes an issue for the notes. As an investor of jubilee 8, I did not sign to the creditworthiness of BOA. So that will make the entire contract void.
Having said all these points, I want to stress again these are all my personal opinions and findings. As much as I hope that I am correct, I can be entirely wrong . I just hope whatever decision that we all have to make, it must be made after knowing most if not all available information.
I am hanging on to the notes.
Please comment or advice on any points I have made.
Hopeful
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Alexis Reply:
October 15th, 2008 at 8:03 am
Hi Hopeful,
When you mentioned that your notes were redempt early, did you manage to get back your principal?
Thanks.
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Alexis Reply:
October 15th, 2008 at 8:09 am
Hi Hopeful,
You mentioned that the past 2 series notes were redempt early…May I know what happens when it’s being redempt early?Would you be able to get back the principal?
Thanks.
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Hopeful Reply:
October 15th, 2008 at 10:24 am
Hi Alexis,
When the notes is being redempted early, you get back Full principal plus the interest.
Thanks.
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Intheknow Reply:
October 15th, 2008 at 10:28 am
Hi Hopeful,
Your comments and findings reflect the conclusions of a person who is willing to put in the effort to research more on BOA and ML. Good effort!
Could you elaborate more on the early redemptions on the past 2 series of Jubilee notes?
Were they situations whereby ML was contractually bound to early redeem the Jubilee notes at 100% based on market movement?
I know of structured products whereby they promise early redemption at 100% should Underlying A, B, and C move about X% on any valuation date.
If so, the early redemption of the 2 previous Jubilee Series is not a good indicator for Jubilee Series 8.
Jubilee Series 8 does not allow for the early redemption by ML UNLESS a ‘BAD’ event such as default has happened. From my understanding, ML has no right to early redeem the 3.15% notes just because it is able to have access to cheaper funding. This would be known as an Issuer Call Option and there isn’t one built into Jubilee Series 8.
So in summary, what I am trying to say for Jubilee Series 8:
1. Early redemption can only take place should a ‘bad’ event occur. If it does happen, it is likely that you will not get back 100% of your principal. ‘Bad’ events would be mainly ML or BOA defaulting or Cayman Islands starts imposing taxes.
2. ML or BOA cannot early redeem the notes at their discretion if no ‘bad’ event has occurred. Reasons such as a cheaper funding cost from Fed or other sources will NOT allow ML or BOA to early redeem their notes even if they are willing to pay 100%.
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Hopeful Reply:
October 15th, 2008 at 12:32 pm
Hi Intheknow,
As for the early redemption of the notes, I believe ML has the right to do so for whatever reason. This is specified in the prospectus.
In the prospectus on page 4,
Redemption due to taxation and other reasons:
In the event of:
(a) an Event of default under the notes
(b) the securities being repaid early for any reason for example because there is a an event of default under the securities or for tax reasons.
(c) the Swap Agreement being terminated early or
(d)the Caymens island imposing tax on the issuer or on payment under the notes which the issuer is unable to avoid.
Look at event (b). That means ML can redempt the notes earlier for whatever reason.
I have looked through Jubilee 8 prospectus again and I do not see
” Underlying A, B, and C move about X% on any valuation date.”
It is the same for Jubilee 8 and the two previous jubilee notes. I can testified that the two previous jubilee notes were redempted earlier. I have the Redemption letter from Standard Chartered Bank and I received the full principal plus interest on the last 2 jubilee notes. No doubt about that as it is a fact.
You may also note that there is No investors with Jubilee 6 or Jubilee 7 in the market now. It has been redempt earlier.
Back to Jubilee 8, will it be redempted earlier? This is my hope as well as everyone else. I am not trying to convince everyone here to hold on to Jubilee 8. You must make your own decision.
Another thing…
I realize that in the second week of Sept (between 8/9/2008 -12/9/2008), Strait times had advertisements on Jubilee 9. Then when Lehman collapsed on 15/9/2008, there is no more advertisement on Jubilee 9. I suspect that Jubilee 9 is terminated because of the saga that follows. If anyone has a prospectus on Jubilee 9, please share. It will be good to know any difference between Jubilee 8 and Jubilee 9.
Thanks
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Amy Reply:
October 15th, 2008 at 10:21 am
Hi Hopeful,
Thank you for sharing some facts and opinions. I am hopeful that things will get better.
About the early redemption of the 2 series Notes you mentioned, did you manage to recoup some of your principal? Is the loss very substantial?
Despite the 2 redemptions, you still purchased Jubilee 8 Series. Very courageous of you.
I myself bought these Notes at the recommendation of my RM. She assures that as long as I hold on to them for 2.5 years , I should be alright.
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Intheknow Reply:
October 15th, 2008 at 4:39 pm
I took a look at Jubilee Series 5 and this product has an Issuer Call Option built in. Page 4 of the prospectus states that ML at its discretion can early redeem the notes at 100% + interest accrued.
I still maintain my view that Jubilee Series 8 does not have an Issuer Call Option built in. ML can only early redeem the note when a ‘bad’ event has occurred.
Referring to the cut and paste done by Hopeful, the securities (unsecured bonds issued by ML) will only be repaid early when there is an event of default.
For example, you buy a government bond. The government cannot choose to early repay you your money UNLESS they are in default or there is an Issuer Call Option built in.
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Hopeful Reply:
October 15th, 2008 at 5:28 pm
Hi Intheknow,
The 2 jubilee that I bought earlier is called Jubilee Retail Secured Note Programme (Nov 2006) and Jubilee Step-up Fixed Rate Notes (Mar 2007). Both of the notes have a Issuer’s Call Option.
In Jubilee 8, there is no issuer’s call option. Obviously, this is a different situation as compared to the previous two notes.
Intheknow, really appreciate that you point this out.
So can I say that…
If there is an early redemption, there definitely will be loss of money?
If there is no early redemption and I hold until maturity (2.5 years later), I can get back full principal plus interest.
Please advice.
Thanks
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Hopeful Reply:
October 15th, 2008 at 5:09 pm
Hi Amy,
For the 2 early redemptions, I get back full principal plus interest. There is no loss. ML redempt the notes. That is why I continue to buy Jubilee 8.
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Intheknow Reply:
October 15th, 2008 at 6:35 pm
Yes Hopeful.
1. if there is an early redemption, it will be because of a ‘bad’ event and you will most likely get back less than 100% of your principal.
2. if there is no ‘bad’ event, ML will continue paying you the promised interest and you will get back 100% of your principal on maturity date.
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What kind of justice can be done for sales misinterpretation for Jubilee Series 8? Do we join the Jubilee ‘protest’ group as indicated in your front page?
Can we demand early redemption at 100%?
I know all this sound ridiculous but i just want to know my options at this point of time other than waiting.
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Intheknow Reply:
October 15th, 2008 at 10:31 am
Jubilee Series 8 is very similar to a fixed deposit except you are ranked as a Senior Unsecured creditor rather than Depositor. You are mainly taking on the risk of the ISSUER.
Jubilee Series 8 cannot be compared to the Lehman-linked notes which are complex derivative instruments with mainly Credit Default Swaps imbedded.
Not all structured products are like the Lehman-linked notes.
In essence, understand the structured product.
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Hi,
Thanks everyone for sharing their experience. I am also holding the jubilee 8 notes and did not know what I got into when I bought them. My RM told me the Merrill Lynch buy-back price is 87%, which is fairly low.
Is there anyone holding the Merril Lynch Citrine Golden Cushion notes? I have a larger amount there, and could not get much information on that. It seems that those notes were not sold to many people. I just want to know whether I should sell those. The buy-back price now is only 78%.
Anyone can share any information/experience on the Golden Cushion notes — I would greatly appreciate….
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Intheknow Reply:
October 15th, 2008 at 6:41 pm
Hi Confused.
Not to worry.
Citrine and Jubilee Series 8 are very similar in structure. All my earlier comments on Jubilee Series 8 and why it will be safer after BOA takes over ML continue to apply.
The only difference is the final interest payment on Citrine is not guaranteed. You could get 0% interest for the final interest period if the cushion amount is exhausted.
The 9% lower buyback price for Citrine compared to Jubilee Series 8 is because it’s widely expected that the cushion amount will be exhausted and that the investor will get 0% interest for the final interest period. Citrine is therefore a ‘lousier’ product compared to Jubilee Series 8 and hence has a lower buy-back price. However, CITRINE IS AS SAFE AS JUBILEE SERIES 8. Both are based on the credit worthiness of ML and BOA (after the takeover).
All in all, no big deal. Jubilee Series 8 holders will get 7.875% total interest over 2.5 years while Citrine holders will most likely get 7% total interest over 2.5 years (i predict the cushion will be fully exhausted).
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CKH Reply:
October 15th, 2008 at 6:47 pm
Hi InThKnow
any advise on the HSBC SGD Double No touch note on Financial Basket Notes.
I have some investment as well
thx
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Intheknow Reply:
October 15th, 2008 at 6:57 pm
Is that some sort of Range Accrual product?
Please post link to prospectus and I will take a look at it for you.
anyway it sounds like it’s issued by HSBC with its interest components liked to some bank stocks.
I will be able to better advise only after checking out the prospectus.. but i think it sounds pretty safe as I suspect you will only lose your principal amount should HSBC go bust.
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lioninvestor Reply:
November 9th, 2008 at 12:31 pm
It appears to be some form of Notes that provide “enhanced returns” if certain equity index or components of it stay within a certain range.
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Intheknow Reply:
November 9th, 2008 at 8:49 pm
Hi CKH,
Lioninvestor has emailed me the termsheet.
No problem. This is a principal protected structured product that is guaranteed by HSBC. So, you will only lose your principal if something bad happens to HSBC (e.g. HSBC defaults).
However, your interest amount is dependent on the performance of the 6 underlyings. ALL 6 underlyings have to have their market prices kept within 70% to 130% throughout the 1.5 years in order for you to earn 14%. If at any point in time, ANY of the 6 underlyings move out of that range, that’s it, the max interest payable would only be 8% as long as ALL 6 move back within the range on 24th December 2009. If ANY of the 6 underlyings move out of that range and STAY OUT as at 24th December 2009, you get 0% interest.
Based on current market prices, I believe the Lower Trigger event has occurred. Thus, the best case scenario would be for you to get back 100% of your principal + 8% in 1.5 years time. You can NEVER get 100% principal + 14% in 1.5 years time anymore.
The worst case scenario (other than HSBC defaulting) would be to get back 100% of your principal and 0% interest. This may be likely in my opinion, unfortunately.
As stated above, the worst case scenario would take place if ANY of the 6 underlyings remain more than 30% below their market price stated on Page 12 of your termsheet on the Valuation Date of 24th December 2009.
Merrill Lynch and Morgan Stanley are currently down more than 50% from your ’start price’. (You may want to argue a typo error as they spelt ‘Merill Lynch’.. joking..)
Cheers,
Intheknow
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Hi Intheknow,
Thanks a lot for your reply. I think your explanation on why the buy-back rate differs does make some sense.
I just wonder (and I believe many other people do as well) — how is this buy-back rate determined?
My RM told me that it is not determined by market (i.e., demand and supply). Rather, it is set by Merill Lynch and it is the price that ML is willing to buy the notes back.
Then it comes to the natural question — why wouldn’t Merrill Lynch just set the back-back price as low as possible (i.e. 0%)?
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Intheknow Reply:
October 16th, 2008 at 9:32 am
ML, being a reputable financial firm, has to provide FAIR buy-back prices on a regular basis (weekly where possible, monthly on a minimum).
You are right, they could set the buy-back price at 10%, but who would sell back to them at that price?
All issuers of structured products have to provide buy-back prices. Of course these buy-back prices can vary rapidly depending on market conditions, but they are usually a ‘fair’ price (after factoring in cost of unwinding and commisions.. etc..)
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Hi Intheknow,
Thanks for “unpacking” the finer points of these structured products so clearly.
Can you please shed some light on the “Merrill lynch SGD 3-Year Principal Protected Fixed Income Notes” product. Is this product the same as the MLJ8 and the Citrine Golden Cushion? I have just received the first dividened payment from this ML Fixed Income Notes. This is good thing, right? This means, there is no default on the part ML.
Would appreciate it if you can let me know your thoughts on this. Much thanks!
-ppl
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Intheknow Reply:
October 16th, 2008 at 9:36 am
Hi PPL,
Would you be able to give me the link to the prospectus/termsheet so I can examine the product before advising further?
ML has issued many structured products and as you can see, they can vary from potentially explosive credit default swap products to very safe ‘fixed deposit’ like products.
You are right. Receiving dividend payments indicate that everything is fine with the product.
If you do not receive dividend payments, it constitutes an event of default (unless the prospectus specifically caters for deferrment of dividend payments).
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PPL Reply:
October 16th, 2008 at 11:45 am
Hi Intheknow,
Thanks for your speedy reply! Unfortunately, there is no link to the termsheet but I do have it in PDF format. Hmmm…is there any way I can attach here for you. Can’t seem to figure out how though.
Is there a way I can send the document to you? Thanks.
-ppl
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Intheknow Reply:
October 16th, 2008 at 4:13 pm
Upload the file to:
http://www.filesend.net
and post the link here.
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lioninvestor Reply:
October 16th, 2008 at 4:23 pm
Hi intheknow,
I have emailed the file to you.
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Intheknow Reply:
October 16th, 2008 at 9:57 pm
I have looked through the termsheet and these are my conclusions:
1. The 3 year ML note is as safe as Jubilee Series 8 and Citrine.
2. The 3 year note can only be early redeemed if there is a bad event, which is ML defaulting.
3. If no bad event occurs, the note will be redeemed at 100% after 3 years.
4. This is like a 3 year fixed deposit paying 3% p.a. (quarterly payout) with a possible 0.1% bonus coupon if the underlying basket moves up 30%.
5. You are taking on the credit risk of ML (in future BOA).
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Hi Intheknow,
I had invested some ML Jubilee series 8 notes. Is adviceable to sell the notes now at a loss of 13% and put the sum into some STI index shares ?
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Intheknow Reply:
October 16th, 2008 at 4:14 pm
My advice is hold on to the Jubilee Series 8 notes.
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kilo Reply:
October 16th, 2008 at 4:52 pm
Thanks Intheknow, just need some assurance advice.
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stanley leow Reply:
October 18th, 2008 at 11:17 am
Dear all,
it’s been an excellent website here with so much varied contribution from both experts who are willing to share their knowledge, people like me who are amatures.
Just to inform all that I received a letter informing about the interest that has been credited into my account and it works out to be about 3.17%.
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anyone have the latest buyback price for this week? Thanks.
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An update here.
1) Saw the first coupon payout in my bank account today.
2) ML posted a net loss of US$5.2billion for Q3 2008. Heard that this is their 5th consecutive lossing quater.
We have to constantly lookout for the news on the merger. Hopefully they(ML and BoA) would have successfully completed the merger by end of Q1 2009.
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Hi Intheknow, many thanks for reviewing the termsheet and coming back so quickly with your feedback. Will continue to monitor the devt of the merger between ML and BOA. Thanks for availing your time!
Have a good weekend!
Hi LionInvestor, thanks again for facilitating this! You have a good weekend too!
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lioninvestor Reply:
October 18th, 2008 at 5:00 pm
Hi PPL,
you are welcome.
Many thanks to Intheknow for helping out here with his time and knowledge.
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Hi, intheknow,
thank you for you insight in jubilee series 8. I am also holding DBS high Note 2. DBS told us that they May early redeem the notes if the fund is insufficient to secure the obligation of Constellation, a investment vehicle of DBS, due to the credit events in the Reference Notes (CDOs of 100 companies). However, I do not think they can take such optional actions for their own benefit while sacrifcing us investors, as it is not clearly stated in the pricing statement (the early redepmtion terms mentioned are credit events in the reference entities). Do you think my argument make sense? please advice.
the pricing statement of HN2 can be download from
http://www.4shared.com/file/63984958/421d5bc9/high_notes_2_pricing_statement1.html?
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Intheknow Reply:
October 17th, 2008 at 3:49 pm
DBS High Note 2 has the same structure as Lehman Mini-bonds.
For both these products, there are reference entities as well as a basket of underlying securities.
1. If any of the reference entities default, the whole structure will early redeem and the investor will suffer a loss in principal.
2. If more than 8 (approximate) of the underlying securities in the basket default, the whole structure will early redeem and the investor will suffer a loss in principal.
The good news for DBS High Note 2 is neither Lehman, Freddie, or Fannie are the reference entities, so there is no early redemption under my point 1.
However, Lehman, Freddie, and Fannie belong to the basket to underlying securities. Once the loss amount in the basket exceeds a certain threshold, the whole structure will early redeem and the investor will suffer a loss in principal. This is what DBS is trying to say when they make statements like “fund is insufficient to secure the obligations of Constellation”.
The figure of 8 underlying securities defaulting is only APPROXIMATE and the number can change depending on the recovery amount from each defaulting security in the basket.
PLEASE NOTE THAT NEITHER JUBILEE SERIES 8 or CITRINE NOTES HAVE THE ABOVE STRUCTURE. THE ABOVE STRUCTURE IS ONLY RELEVANT TO DBS HIGH NOTE 2 and LEHMAN MINI-BONDS.
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LOST Reply:
October 17th, 2008 at 6:05 pm
Hi
I have placed an S$100k estate (from by husband) with DBS High Notes 2 two years ago. I am not a risk taker, and also with that sum of money that was left by my husband for my 2 kids, I really don’t know what to do with it except leave it with a reputable bank…thinking surely a very safe place
I am lost and don’t know what else to do, except praying that there’s a turn-around on the world financial crisis, and hoping that the money will be ‘well-protected’ until the maturity date.
The banker told me that should another 2 of the banks/financial institution that they have invested in, in relation to the DBS high notes 2, go bust…..the DBS high notes 2 will equal to $0. But after reading what you’ve said, it seems like my understanding from the banker is totally different from your statement.
Can you pls advise me what should I do next? To get out now? Cause the banker has called me and informed me to consider to get out now since many of her clients did the same
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Intheknow Reply:
October 17th, 2008 at 8:51 pm
What your banker said about “should another 2 of the banks/financial institution that they have invested in, in relation to the DBS high notes 2, go bust…..the DBS high notes 2 will equal to $0″ MAY be true. Why do you say your understanding from your banker is different? Are you referring to the number ‘2′?
As I mentioned in my point 2, If more than 8 (approximate) of the underlying securities default, the whole structure will early redeem and you will suffer a loss in principal.
Your banker has mentioned that if another 2 go bust (3 have already defaulted), you may suffer a loss in principal.
There is no magical number. If the first X number of defaults cause a loss above the threshold, the whole structure will early redeem and you will suffer a loss in your capital.
With regards to your question on whether you should get out, there is no right answer. I suspect if you get out now, you will already suffer a HUGE loss in your principal. Have you asked what is the latest buy-back price of your note? I suspect it will be 50% thereabouts or less since 3 underlying securities have defaulted already.
It’s up to you if you want to take the gamble. Sounds like a 50% 50% to me. Get out now and lose half. Or hold on to maturity and you may get back 100% or nothing.
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coffee-o Reply:
October 17th, 2008 at 8:59 pm
Lost :
From today’s Lianhe Wanbao, I read that DBS agreed to do full refund to two High Notes investors go see them with sad storys.
Go pick up a copy and read, hope you are the third person.
All the Best.
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financeBlind Reply:
October 17th, 2008 at 9:14 pm
Lost,
yes, ask your banker to guide you a way to see the relevant person in DBS to get your money back, or simply tell your PM about your case.
For me,I complained with the senior manager in DBS, no response, although I didn’t understand more about the product than you:).
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financeBlind Reply:
October 17th, 2008 at 9:21 pm
thanks a lot, intheknow.
But there is no statement regarding to your point 2 in the pricing statement. Are the pricing statements for all such products are ambiguous? or is HN2 a special case?
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Intheknow Reply:
October 17th, 2008 at 9:48 pm
DBS High Notes 2 and the Lehman Minibonds all have this sort of structure.
1. Credit linked to X number of reference entities. ANY goes bust, you will suffer a loss in principle.
2. Proceeds from investors will be used to buy a basket of underlying securities. Up to Y number goes bust, you will suffer a loss in principle.
I don’t have the pricing statement for DBS High Notes 2 on hand. But the FAQ from DBS on High Notes 2 actually mentions this (the part about THE COLLATERAL PURCHASED BY CONSTELLATION, 100 NAMES FROM 17 INDUSTRIES AND 14 COUNTRIES):
—-QUOTE—-
As explained in the HN2 Pricing Statement, investors are subject to the following credit risks:
a) The credit risk of the Issuer;
b) The credit risk of Constellation and the collateral purchased by Constellation (‘collateral’) to secure its
obligations under the Reference Notes; and
c) The credit risk of the 8 Reference Entities in the first-to-default basket (FTD basket).
With reference to (b), investors were informed that Constellation would be using the funds raised in issuing the
Reference Notes to invest in high quality bonds or structured securities rated at least AA by S&P, AA by Fitch
or Aa by Moody’s (at time of the issue of HN2) to secure its obligations under the Reference Notes (collateral).
Investors were also informed that the specific composition of the collateral was yet to be determined at the
time of the Pricing Statement. The collateral, which comprises of 100 names from 17 industries and 14
countries, was rated AA by S&P at the time HN2 was issued.
Lehman Brothers Holdings Inc., Federal Home Loan Mortgage Corporation (Fannie Mae) and Federal Home
Loan Mortgage Corporation (Freddie Mac), are not Reference Entities in the FTD basket but are all entities
linked to the collateral. As a result of recent events surrounding these 3 entities, S&P has on 23 September
2008 downgraded the collateral from AA to BBB+. The downgrading will not result in an early redemption of
the Reference Notes and the current valuation of HN2 has already taken into account the events surrounding
these entities.
If HN2 is held to maturity, and there is no credit event in the FTD basket and the Reference Notes are not
redeemed early, investors will receive at maturity, the principal that they invested.
As the amount of principal and/or interest payable to investors in HN2 is dependent on payments received
from Constellation, if the collateral becomes insufficient to secure the obligations of Constellation under the
Reference Notes, the Reference Notes may be redeemed early. If this happens, HN2 would be redeemed
early as well and investors may get significantly lower than their investment.
—-UNQUOTE—
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Intheknow Reply:
October 17th, 2008 at 10:00 pm
“As the amount of principal and/or interest payable to investors in HN2 is dependent on payments received
from Constellation, if the collateral becomes insufficient to secure the obligations of Constellation under the
Reference Notes, the Reference Notes may be redeemed early. If this happens, HN2 would be redeemed
early as well and investors may get significantly lower than their investment.”
This is the KILLER part..
In essence, what it is saying is if the pool of 100 securities have deteriorated to a level determined by DBS, the whole structure will be terminated and the note early redeemed AT A LOSS OF PRINCIPAL to the investor.
You see… how High Notes 2 and Lehman mini-bonds generate their income to pay the investors the 5 to 6% interest is like this. Of course, I am simplifying things:
a) they collect X amount of money, say USD100million.
b) they use the USD100million to buy a pool of securities
c) they SELL credit default swaps on the Reference Entities to willing buyers
‘b’ essentially is being used to ‘maintain’ your money and to pay you your principal back after 5-6 years.
‘c’ essentially is being used to pay investors the regular 5 to 6% interest
so if the pool of securities deteriorates significantly below USD100million (which is the 8 [approximate] defaults I mentioned), the Issuer of the note will ‘cut loss’ and liquidate whatever is left of the pool. This is because at this level, the issuer knows that they will never be able to pay you back 100% at maturity date.
and if the jackpot event ‘c’ happens, ho say liao… the buyer of the credit default swap will make a ‘claim’ on the Issuer. At that point in time, the issuer has to make a big payout to the party who bought the Credit Default Swap, and guess where the big payout is coming from? Of course, it’s going to be from the Pool of Securities and it will be liquidated.
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financeBlind Reply:
October 18th, 2008 at 1:19 pm
intheknow,
thanks for the reply for my complaint about HN2. as a matter of fact, in the DBS website FQAs about HN2, DBS has intentionally changed the words, for example,
(1) the original sentence HN2 is “designed for defensive investors seeking enhanced yield” has been changed to “designed for investors seeking enahnced yield…”
(2). for the risk factor b, the original sentence is “you are subject to the credit risks of Constellation that is collateralized by securities rated AA or better”, has been changed to “The credit risk of Constellation and the collateral purchased by Constellation (‘collateral’) to secure its
obligations under the Reference Notes”.
besides, we haven’t been notified of the 100 CDOs until recently after the three credit events.
so, shall we have a say?
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Intheknow Reply:
October 18th, 2008 at 4:19 pm
Hi Financeblind,
I am not sure about your last 2 paragraphs.
Do you mean?
a) we haven’t been informed by the bank until recently that 3 of the 100 securities have defaulted? If you meant this, the default of Fannie, Freddie, and Lehman only happened within the last 6 months, so I don’t see this as a possible argument area.
OR
b) you never knew that the 100 securities played a part in your High Note 2? i am pretty sure something in the thick prospectus of High Notes 2 (i haven’t read the prospectus myself), there will be some mention of the ‘Pool of 100 securities’ and how their defaults will affect the ‘Collateral’ required to secure Constellation’s obligations.
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LOST Reply:
October 20th, 2008 at 9:15 am
Hi intheknow
Thanks for your explanations, and having read the paper on Sat and from the lists of response, guess what I can say is all this while my understanding from my banker about the HN2 was all a mistake.
I was actually investing on something know as Credit Rating (Credit Risks) and not simply ‘investing’ on the ‘chances’ of the entities going into bankruptcy. To me having an entity to go bankrupt is totally a different story of having an entity’s credit rating being downgraded. That was why I’ve mentioned that my understanding was difference.
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financeBlind Reply:
October 18th, 2008 at 9:35 pm
intheknow,
thanks for your patience and expertise. I think we are in urgent need of you and the like.
as a matter fact, the 100 securites was generally called Reference Notes in the HN2 pricing statement, but DBS had never told us until recently what it is and how it works. The reason they gave is that what security to hold had not determined at the moment the pricing statement was drafted.
the function of the Reference Notes is to “earn a high coupon”. the risk involved in the Reference note is very general, such as it will fluctuate with the market, the performance of the Notes is directly linked to the Reference Note, credit risk of COnstellation cited as (b) in my last post, no more details at all. There is no formula to tell us how it works. you can find the brief version which DBS applied to marketing (i.e., the one showed to uswhen we bought the product) from the following link:
http://www.4shared.com/file/63984958/421d5bc9/high_notes_2_pricing_statement1.html?
In the full pricing statement which DBS sent to us weeks after the transaction, there is a paragraph (Risk relating to COnstellation and the Reference Notes) as follows:
In addition, while the obligation of COnstellation under the Reference Notes are to be secured by the relevant Charged Assets and Swap aggrement, there can be no assurance that such Charged Assets or Swap Aggrement will be sufficient to secure any or all of the obligations of Constellation under the Reference Notes”.
that’s all, no specific details about how it will affect us investors.
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Intheknow Reply:
October 19th, 2008 at 10:45 am
Hi Financeblind,
No worries. I am glad to be sharing my views.
Just to set the record straight, I am not working in DBS nor one of the retail banks/FIs who sold these products to the retail investors.
I do not hold Jubilee Series 3, DBS High Notes, nor any Lehman Mini-bonds.
My views comes from my experience handling structured products due to the nature of my job. I am NOT into sales.
Thus, I can say my views are neutral and not biased in any direction. Also, my views should not be considered as legal advice.
Back to your question.
1. DBS was not able to break down the 100 securities when High Notes 2 was sold is because they have yet to buy the 100 securities. Remember my simplified example whereby DBS uses your USD100 million to buy the securities? Since they have not collected all the monies from the investors, they have indeed not purchase the 100 securities and thus could not tell you what they are.
2. Look at Page 7 of your attachment. It is stated that “you are subject to the credit risk of Constellation which is collateralised by securities rated AA or better”. This is making reference to the 100 securities.
3. Look at Page 69 (labelled as Page 53) of your attachment. This portion tells you that the USD100 million received from the investors is going to be used to purchase a pool of assets rated AA and above.
4. There is no formula to determine how many of the 100 securities defaulting will cause the note to early redeem since it depends on the recovery rate on the defaulted securities as well as the loss threshold of Constellation before they decide ‘ok.. time to cut loss and early redeem’.
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Hi, have found the many comments here very useful.
I’m also a investor in Jubilee 8 and have been appalled by the general lack of knowledge that my Citibank RM has displayed regarding this and similar structured products.
Unbeliveably, she forgot to call me on 9/10 Oct to update me on the redemption value despite my request a few days prior to 9/10 Oct. Also, she could not even confirm that redemption was on friday and had to check with her team to ascertain this! Of course, any other more technical questions were met with similar responses. I simply fail to understand why such RMs should be licensed to sell structured products to start with.
Just wondering if any one else has had a similar bad experience with their RMs at Citibank.
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Intheknow Reply:
October 17th, 2008 at 8:56 pm
Sometimes, the problem of adverse selection come into play.
Ask yourselves, who are the PFCs you see in the banks selling the products?
Will they likely be fresh grads eager to make big/quick bucks? Or would they likely be experienced finance professionals? I believe more likely the former.
Do you think fresh grads possess the right skills and sufficient knowledge/experience to clearly explain or even understand the complex products themself? I suppose not.
Even myself, who have seen and encountered hundreds of structured products will take a while to digest a prospectus/termsheet of a product and I dare not profess I understand it 100% all the time.
Just remember, RMs are hired to SELL, not to EDUCATE.
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Intheknow Reply:
October 17th, 2008 at 9:00 pm
of course they are always good RMs out there..
i should not have used a bamboo to knock the whole boat.. sorry about that…
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Alexis Reply:
October 18th, 2008 at 12:05 pm
Hi Annoyed,
I agreed with you. I also had the same experience like you when I tried to contact my RM at citibank.
Also, when she recommended the Jubilee Series 8 notes to me, she told me there’s no risk involved and it’s liked a fixed deposit and didn’t even explained to me about the product.
After i realised that merrill lynch has been brought over by boa and the recent market situation, I tried to contact her but she doesn’t even return my call and worse still, I had to go down to the branch to personally ask for the buyback rate.
Fortunately, there’s a RM there who explained the notes to me thorougly again when I went down recently.
Well, I guessed I will still be holding on to the notes for the time being and have to monitor closely to the situation.
Please share you views.
Thanks.
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I have the same experience as you.
I call up last Friday and was told the buy back rate is now 85%.
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Hi Lion Investor,
I bought the Jubilee 3 and as you know it burst and I got zero return. I bought it thinking it was safe because the brochure has a headline saying “Sound Investment”. above a list of 5 RE, which are Lehman, Macquarie Bank, Morgan Stanely, OCBC and UOB.
I bought it through mail and talking over the phone with the business development executive which I cannot recall his name no matter how hard I tried and end up with a headache. He said it was safe but I have no evidence to prove that because it was about 2 years ago. On hindsight, I realsized how stupid I was, even though I am an educated person. Although I invest in stocks, it’s always a few K for each buy, never so big an amount in one go. Most of my stocks are in REITS, shipping trusts or diversified funds that give an above market rate return. I don’t get into speculative stocks. I trust the FI because I had been with them for a long long time. Is there a case for “Breach of Trust”?
No one ever explain to be the complex mechanism underneath and frankly until today I stil don’t really understand. I was never told the risks involved as well. I intend to pursue this matter but I’m educated though (reference MAS announcement last night). I will be seeing the FI next week. Do you think I have a case with “Breach of Trust” and “Misled”, which I really feel so?
Henry…
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lioninvestor Reply:
October 18th, 2008 at 5:51 pm
Hi Henry,
I have sent you an email on this.
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Hi Hopefu,
I managed to ge the infor on Jubilee 9.
http://www.citibank.com.sg/SGGCB/APPS/portal/loadPage.do?path=/promo/det/ml_series9.htm&tabId=Investments+And+Deposits
To all Jubilee 8 holders,
We live in constant worry that ML may default on these Notes and yet Citibank is promoting Jubilee 9. Banks do not care that we have sleepless nights; all they care about is making money for their banks. Citibank has earned 3.9 % out of the money i have invested. There is no risk for them, see. I have truly learned my lesson-no more sturctured products for me.
Does anyone know what is the latest redemption price for Jubilee 8? My RM emailed last week that it is 86.5%.
All the best and I truly hope things end well for us.
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Hopeful Reply:
October 18th, 2008 at 7:31 pm
Hi Amy,
Thank for the info on Jubilee 9. I did not buy Jubilee 9 and I doubt anyone would have but I remember seeing the advertisement on ST and it mentioned Temasek Financial (I) Limited.
In overview (point 3), Temasek Financial (I) Limited is being mentioned.
It looks like Temasek is in approval of this structured deposit and its brand name is used in this marketing. Temasek Holdings (Pte) Ltd is an investment holding company owned by Singapore’s Ministry of Finance. So MAS is also in approval of this structured deposit.
IntheKnow,
I hope you can intrepret this point and give us your opinion. Again, that few sentences already are quite challenging for me to understand. Thanks again.
Quote
3 Potential to receive a Bonus Coupon of 0.10 per cent. of the Denomination for the Notes payable, on the Bonus Coupon Payment Date if (i) the interest amount payable in respect of the Observation Period from 21 September 2010 to 20 March 2011 on the 4.50 per cent. Guaranteed Notes Due 2015 issued by Temasek Financial (I) Limited, unconditionally and irrevocably guaranteed by Temasek Holdings (Private) Limited (ISIN Code: USY8585EAA65) (the “Reference Asset”) is paid in full or (ii) the Reference Asset is redeemed by Temasek Financial (I) Limited prior to 21 March 2011, and assuming no early redemption of the Notes. The guarantee by Temasek Holdings (Private) Limited is an unsecured and unsubordinated obligation of the guarantor*. Temasek Holdings (Pte) Ltd is an investment holding company owned by Singapore’s Ministry of Finance. The Company’s investments range from corporations to government-owned operations*. As at 1 August 2008, Temasek Ho ldings (Private) Limited indirectly held approximately 9.9% of the share capital in Merrill Lynch & Co., Inc. Temasek Holdings (Private) Limited has committed to purchase additional shares of common stock of Merrill Lynch & Co., Inc. but it will not make any purchase of such shares that would give it a greater than 9.9% interest in the share capital of Merrill Lynch & Co., Inc. unless and until it obtains of regulatory approvals to do so*.
*
Neither Temasek Financial (I) Limited nor Temasek Holdings (Private) Limited has consented to the inclusion of such information in this document. Please refer to Appendix 2 of the Pricing Statement for more information.
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Finally, I got in the mail … the 1st Qtr interest in J8!
Not sure if the bank credit this interest into my savings or continue to accrue & accumulate as sum of J8 investment by default. Got to check this out.
Obviously I will opt for the former cos I have lost all trust in confidence in any investment product sold by the banks.
Anyone has any idea where the interest is credited to???
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Hopeful Reply:
October 18th, 2008 at 6:51 pm
Hi WalkingDead,
It should be credited into your savings account.
It is for my case. You can check your saving account for the interest.
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I am in a dilamma on whether to keep the J8 or opt for buyback. Now that ML announced such a hugh loss, I am afraid that ML might default these notes.
Pls share your views.
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When I enquired on the J8, the RM told me they are safe and “principal protected” and they said that Temasek is also investing in ML. Unless ML goes bust which the RM said it will not happen as they are a very big and long standing investment company. So he said “no worry” That is how I invested a great amount in the J8.
I checked with Citibank and confirmed the frst interest was credited to my account. I am still very confused whether to hold on or to redeem early and suffer a loss of about 13.5%.
Can you share whether I should hold on (for another 27 months) and is quite worrying on unseen financial situation.
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novice Reply:
November 17th, 2008 at 3:38 pm
Hi Firstimer,
I just want to check with you if you got your interest paid fully i.e. 3.15% as stated in the brochure “Fixed coupons of 3.15%pa”? I am asking because i got alot less. I am abit confused if they have right to do so or I am the only one.
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FIRSTIMER Reply:
November 18th, 2008 at 9:38 pm
the 3.15% pa is split into 4 quarter ie every quarter,the interest rate is 3.15 / 4= 0.79% of the principal amount. Eg if you invest in S$100K, the interest is 100K x 0.79% = S$790.00
This is what my RM told me. You try out this formula & check whether this equate to the amount you are getting.
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Suggest you take time to chew on the clarifications & comments to queries over the past weeks, esp the ones by “”IntheKnow”.
Everyone including myself, wished we have a crystal ball on hand. Unfortunately, for now, we’ll just have to take this as another casino gaming … odds against the banker?
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For Jubilee Series 9, please note the following!!
“Neither Temasek Financial (I) Limited nor Temasek Holdings (Private) Limited has consented to the inclusion of such information in this document.”
This means that Temasek IS NOT ENDORSING THIS PRODUCT. Please do not misunderstand. Temasek never said that this product is good or safe and it definitely does not guarantee this product!
1. Jubilee Series 9 is similar to Series 8. They are very ‘fixed deposit’ like and you will suffer a loss in principal only if ML (BOA in future) defaults.
2. All the mambo jumbo you see about Temasek being mentioned is only making referring to the bonus coupon portion. Jubilee Series 9 pays a fixed interest rate of 3.20% p.a. There is a POTENTIAL bonus coupon of 0.1% at the end of 2.5 years if Temasek does not default on a reference issued bond. This Temasek issued bond has NOTHING to do with Jubilee Series 9 other than for the bonus coupon determination.
Jubilee Series 8’s bonus coupon is dependent on SGD Swap Offer Rate being in the range of 0% to 5% at Maturity Date while Jubilee Series 9’s bonus coupon is dependent on Temasek not defaulting on a reference issued bond (unrelated to Jubilee Series 9) before Maturity Date.
3. There are a few sentences below that on Temasek which is just publicising the fact that Temasek has bought ML shares and plans to buy more. Once again, this has NOTHING to do with Jubilee Series 9 other than trying to try people that Temasek has confidence in ML (since it is holding ML shares and going to buy more).
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Hopeful Reply:
October 19th, 2008 at 3:16 pm
Intheknow,
Thanks again for your valuable info. I believe by now, many of us must have a clearer picture of what Jubilee notes is all about. Of course, credit to you Intheknow and many who have shared.
At this point, many of us are considering whether to hold on to the notes or to get out at a loss.
But has anyone lodged an official complaint to MAS, Fidrec or the FI with regards to Jubilee notes (8 or 9 or etc)?
Any views or comments on this action?
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Once again, I would urge holders of Jubilee Series 8 and 9 to be calm.
Think over it properly.
Jubilee Series 8 and 9 are NOT like Jubilee Series 3, DBS High Notes 2/5, nor Lehman Mini-bonds.
You will only suffer a loss in principle for Jubilee Series 8 and 9 if ML (in future BOA) defaults.
Seriously, if I had a couple of million dollars spare cash, I would setup an investment holding company and offer to buy in all Jubilee Series 8/9 at a price higher than the ridiculous 87% that the banks are quoting for buy-back now.
The banks are just capitalising on your fear! Come on, 87% buy-back price is ridiculous for this sort of product.
DISCLAIMER: I MUST ONCE AGAIN STATE THAT THESE ARE MY PERSONAL VIEWS. DO NOT RELY ON MY VIEWS TO MAKE YOUR INVESTMENT/SELL-BACK DECISIONS. I cannot predict with 100% accuracy that ML (in future BOA) will not default.
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thank. intheknow,
I still think DBS is responsible for not disclosing all the risks to us, how can they not include any scenarios or formula for us since the risk of CDO is so serious as to sweep away all our money.
And, now that they did not determine the securities at the point selling the product, they should always keep in mind we investors only got a 4% interest, we could only shoulder a risk equivalent to the return, how can they take all our money to buy CDOs to miximise their profit? as said in the pricing staetment, they should buy several series of Note, including asset-backed product to secure their obligtion, not only telling us that Constellation’s obligation is at risk now.
Besides, the sayin of “credit risk of Constellation” is also misleading. To us layman, it means we can get back our money only if constellation is not defaulted while Constellation is part of DBS.
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Intheknow Reply:
October 19th, 2008 at 4:43 pm
Just be aware that Constellation is not part of DBS.
Constellation is a special purpose vehicle incorporated in the Cayman Islands for the purposes of holding the securities under the Note.
Constellation is NOT guaranteed by DBS nor will it follow the credit rating of DBS.
My personal opinion is that DBS did not CLEARLY HIGHLIGHT the risks of the 100 securities to the investor. The risk of the 100 securities should have been boldly highlighted along with the reference entities somewhere in front.
However, the details were indeed buried within the thick prospectus in the pages I highlighted in my above posts.
Thus, you cannot DBS failed to inform since they did provide the prospectus containing all these details to the investor.
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I believe that there are a number of investors who have complained about Jubilee Series 3 since they lost everything (the note has been early redeemed at zero value).
What’s there to complain about Jubilee Series 8 or 9?
1. It has not defaulted.
2. It does not have the same risky structure as Series 3, High Notes 2/5, or Lehman Minibonds.
3. It’s a plain almost ‘fixed deposit’ structure whereby the investor will only suffer a loss in principal if ML (in future BOA) defaults. The only difference between Jubilee 8/9 and a fixed deposit with ML/BOA is you are ranked as a senior unsecured creditor rather than a depositor.
4. There is no ‘pool’ of 100 securities where the investor will suffer a loss in principal if they default. Jubilee 8/9 is just taking on plain simple ML/BOA credit risk.
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Dear all juilee 8 investor
did you receive a letter from your bank on Principal Protected Structured notes. I receive from Salman Haider, Wealth Management Head from Citibank >> see below and hope someone can explain in simple terms or the legal implications :
PRINCIPAL PROTECTED STRUCTURED NOTES
GIven the recent credit events in the markets, customers holding structure product investment have seen significant price movemets in their investments. We hope this letter addressed some of yr concerns & we wouldlike to assure you that we will keep you informed in market events to help you stay updated.
As you are aware Principal Protected structure products have an underlying “bond/money market component” and this bond/money market component is valued based on market interest rate and the issuer’s credit outlook. With the deterioration of the liquidity and credit conditions in the market, the cost of borrowing for financial institutions had gone up considerably and this in turn has resulted in a lower valuation of the bond/money market component. These movements have consequently lower the Net Asseet Value or the marked to Market value of these structure products.
It is important to note that the value of the structured products may well change during the tenor of the producti as is the norm with any security, but if held to maturity the principal is protected by the issuer as are any guranteed returns. The return of principal on maturity and guranteed returns, if any, are subject to the risks highlighted in the issuer’s offering documents, a copy of which you would have received at the time of subscriptions.
We hope the conceted effort across various central banks will improve the liquidity concerns amongst bank. This hopefully will result n the expected corresponding improvement to the value of the bond.money market component of structure products.
As mentioned previously, we will continue to keep you updated on market information. Pl note that any market information we communicate to you is intended to assist you in marking your decision regarding actions you may wish to take in respect to your investment: we are not acting in fiduciary capacity or rendering you any financuak advice. If you have legal or tax queries relating to your investments, you should consult with your legal and tax advisors accordingly.”
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Intheknow Reply:
October 20th, 2008 at 5:31 pm
Hi FirstTimer,
What the letter is trying to say is the Valuation of the Principal Protected Notes (such as Jubilee 8/9) will move up and down based on market perception of the Issuer.
Since now, everyone is fearful of ML, the buy-back price of the note is at 87%.
However, as the note is principal protected, it will be redeemed by ML at 100% provided ML does not default.
In essence, the letter is saying you can ignore the Valuation of the note as long as you hold the note till maturity and the Issuer doesn’t go bust.
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HI Intheknow,
thanks for all the useful infor.
Would like to know if all Citrine notes are the same as what u have mentioned earlier?
i have bought Citrine all weather booster notes. Is it the same as J8?
http://www.lioninvestor.com/citrine-all-weather-booster-notes/
thanks
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Intheknow Reply:
October 20th, 2008 at 5:35 pm
Citrine Golden Cushion and Citrine All Weather Booster both have the same structure as Jubilee Series 8/9.
All these notes will be redeemed at 100% by ML provided ML does not go bust.
The main difference between Citrine and Jubilee 8/9 is in the amount of interest the investor gets paid.
Jubilee 8/9 guarantees a fixed amount of interest that will be paid as long as ML doesn’t default.
Citrine (both Golden Cushion and All Weather Booster) guarantee a certain amount of interest (less than Jubilee 8/9). There is a ‘gambling’ feature whereby the investor can potentially get a large interest payout or none at all under the ‘bonus interest’ portion. Do note that even if the bonus interest portion is 0, investor will get paid the guaranteed interest still.
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cherry Reply:
October 22nd, 2008 at 12:16 am
Thanks Intheknow. Appreciate the great effort in explaining.
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I also received letter from CITIbank, can anyone help to explain the implications?
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HI Intheknow,
Thanks a lot for your help to all the people here. This can be a silly question, but I wonder if you could explain what “ML (BOA in future) defaults” means.
I googled the term and found that “Default may occur if the debtor is either unwilling or unable to pay their debt…”.
So BOA can simply choose to be *unwilling* to pay its debt when it no longer likes the notes, and then the Jubilee 8 notes will be redeemed early and we will lose the principle?
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Intheknow Reply:
October 20th, 2008 at 5:42 pm
no worries. this is not a silly question.
Currently, ML is standalone. Thus, all the Jubilee Series 8/9 and Citrine notes are issued and guaranteed by ML only. So if ML defaults on the notes, you can only go after ML’s assets.
In future, when the takeover by BOA completes, ML be part of BOA. BOA will take over all assets and liabilities of ML. Thus, this means that your note is now guaranteed by ML as well as BOA. If ML defaults on the notes, then you can go after ML’s and BOA’s assets.
On your question on why a company defaults…
Companies don’t just default because they are ‘unwilling’ to pay debt. For large companies like ML and BOA, by wilfully choosing not to pay debt when it can would affect ALL its other debt.
A simple wilful default on Jubilee 8/9 or Citrine just because BOA doesn’t like the notes will cause ALL the debts of ML/BOA to immediately become repayable. Do you think ML/BOA will let that happen?
Large companies only default when they really cannot AFFORD to pay its debt, either repayment or interest payments. When this happens, in US, they file for Chapter 11, which is what Lehman did.
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confused Reply:
October 21st, 2008 at 9:33 am
Thanks a lot for your reply. I have a better understanding now.
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hi !
Whats your recommendation if we are still holding it.
Last week the penalty was 13 % . This week is at 15 %.
Need yr professional advice.
Rgds,
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Hi Intheknow/Lioninvestor,
Can tell me more about the DBS Honey Account ? Have called DBS many times and to date no one respond to me.
thks.
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Intheknow Reply:
October 21st, 2008 at 3:57 pm
DBS Honey Account appears to be an Equity Linked structured deposit.
Once again, please post prospectus/termsheet for me to have a look before I can advise further.
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Hi Alexis, thanks for sharing your experiences at Citibank. My buying into Jubilee 8 arose from similar circumstances as yours. The unfortunate truth I suspect is that the RMs themselves failed to understand the notes themselves and actually thought they were “safe” investments.
The tardy attitudes of the Citibank RMs in such a sensitive investment climate is unforgivable. Why should customers have to bear the inconvenience of tracking down to one of the Citibank branches during office hours to have our pressing queries heard merely because our purported “relationship manager” has either gone AWOL at the first sign of a distress telephone call or has been so ill-informed that they disconnect their phones in fear of not being able to provide rationale answers???
I’m not biased against all RMs as I have a couple of good friends who are RMs of other banks. They are responsive to my queries and are highly efficient.
Whilst banks expect their RMs to sell and not to educate; it is within the reasonable expectation of investors to expect professional after-sales services, including elucidation of the workings of complex structured products and detailed knowledge of unwinding procedures. Surely, this is to be expected, after all, they had no difficulty with the initial purchase procedure!!!
Intheknow, has also demonstarted much knowledge here and should applauded & held as the standard expected of RMs selling structured notes. Get rid of the wet- behind-the ears graduate who is just passing off as a RM!
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Hi Lion Investor / Intheknow,
I am also an investor for the Jubilee series 3 and now cannot get back even one cent, i had bought through my friend who opens an finance company. He told me that he has about 7 clients who buy this from him, and he himself also didnt know that it was such high risk, and that the product provider didnt state in the prospectus that the risk is high.. and now he say his company is preparing to write into merrill lynch and MAS to ask for compensation. Pls advise me what should i do ? Should i write in myself ? or it will be more powerful for him to write on behalf of all 7 of us ?
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I have some concerns. When BOA agreed to takeover ML, do we know what is the terms and conditions? Is it stated that BOA must take over the Julibee Notes Series 8? Can BOA refuse some assets of ML? My concern is that the merging process is not complete till sometime next year. So along the way, can something happen and the deal breaks down? Where does Jubilee Global Finance Limited comes in?
Say before the merger completes, the deal breaks down and the notes got defaulted. Can we still get the bank to compensate us like what is happening now? Do we have grounds to say that we are mis-led by our RM into buying the notes? Can the bank turn around and say we have ample time to redeem the notes but we did.
Looking at Jonh’s post, the penalty increased from 13% to 15%. My questions is how/who determine the penalty? There is no way to find out what is the penalty except through the RM. Does it increase continuously or fluctuate with market conditions? Is there a possibility that it will increase pass 50%?
What about taxation? If there is tax imposed on the investment, will it cause an early redeemed. I remember I asked my RM what is the meaning of “..the Notes is redeemed early due to taxation or other reasons..” I was told something about the money is placed in some country where there is no/very little tax. With the current condition, can the country change their tax policy and this in turn creates taxation redemption?
I bought the Jubilee Notes Series 8. When my RM highlighted to me the risk, I asked what the chances of default are. My RM told me that ML is a big company and it is quite safe, looking at the performance of past series of the Jubilee Notes. I took her words for it and invested in it in June. I don’t blame her because I seriously don’t think ML will have any problems. But 2-3 months down the road, LB is history and we have all these problems. Only 3 months passed and there are about another 27 months to go. I felt it is quite a long time to wait for the investment to mature and give out back that 3.15% of return. I requested for redemption at 13% penalty.
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Intheknow Reply:
October 22nd, 2008 at 10:55 am
Hi Sylvestor,
1. The current takeover agreement is BOA will takeover all assets and liabilities of ML. Of course as you correctly pointed out, all agreements can be subject to change until it’s finalised. However, even if the agreement breaks down, you cannot assume that ML will default automatically.
2. Jubilee Global Finance Limited is like Constellation. It’s a thinly capitalised special purpose vehicle incorporated in Cayman Islands for the purposes of holding/facilitating the Jubilee notes.
3. I don’t think you can make the same ‘mis-led’ arguments about Jubilee Series 8 as per Mini-bond or High Notes 2/5. Jubilee Series 8 is indeed NOT a complex instrument. It’s just credit linked to ML (BOA in future). If they default, your principal will be affected. It’s just like a fixed deposit with say UOB. If UOB defaults, you may not get back 100% (of course with the government blanket guarantee till 2010, your fixed deposits are now 100% safe)
4. The decision whether to early redeem the Jubilee 8 notes now at a 15% loss is entirely yours. You cannot turn around and say you chose not to early redeem just because your RM assured you.
5. The buy-back price is a ‘fair’ price determined by ML based on current market conditions. Since the market is now ‘fearful’ of ML linked products, the buy-back price is naturally low now. No one can predict if the buy-back price will drop further. Of course, if ML defaulting is imminent, the buy-back price will drop even further.
6. The clause on taxation can be found in almost ALL structured products’ termsheets. Structured products are commonly issued by special purpose vehicles in tax haven countries like Cayman Islands. The viability/profitability of these notes are dependent on Cayman Islands not imposing any taxes on these special purpose vehicles. Of course, these countries can choose to impose taxes at any point in time. This will lead to potential early redemption of all structured products issued by those special purpose vehicles. My personal opinion is that these tax haven countries are unlikely to impose taxes anytime soon. This is because these tax haven countries rely a lot on investors setting up companies in their countries. A main source of income for them is financial services for these companies. By imposing taxes, these companies will likely withdraw from those countries.
7. It’s true that ML is a big company and quite safe based on its credit rating. To be fair, Lehman Brothers is considered as a safe company. You cannot say that a ’safe’ company can never go bankrupt. It’s just unfortunate that all the unthinkable events are happening. Do understand that we are currently in one of the worse financial crisis in human history. We are in a situation worse than 911, SARS, and 97 Asia financial crisis.
I would like to highlight my analogy once again. Is airplane travel safe? Most people would say it is. Just because you died in an airplane crash doesn’t mean you can blame the airline for misleading you that air travel is safe.
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FirstTimer Reply:
October 22nd, 2008 at 1:47 pm
Hi
I spoke to Citibank RM and was told J8 is a commercial paper bond and the credit rating of BOA is AA and ML is A+ by Moody. Based on the rating, the J8 is still safe unless the 4 things happens ie
(a) an Event of default under the notes
(b) the securities being repaid early for any reason for example because there is a an event of default under the securities or for tax reasons.
(c) the Swap Agreement being terminated early or
(d)the Caymens island imposing tax on the issuer or on payment under the notes which the issuer is unable to avoid.
Also were told that the outlook of J8 with the merger of BOA/ML, our Govt’s investment + Fed 700B bail out, J8 seems to be stable >> pl adv is this correct ??
What does the credit ratings mean and its significant ??
Also was told the BOA will be meeting its shareholder in Mid 08 to decide on the merger. What will happen to our J8 investment if the outcome of the meeting is not to take over the J8 ??
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FirstTimer Reply:
October 22nd, 2008 at 1:50 pm
should be meeting in Mid Nov 08
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Intheknow Reply:
October 22nd, 2008 at 8:01 pm
1. Yes. If the BOA takeover of ML completes successfully, Jubilee 8 will be safer as BOA will take over the assets and liabilities of ML. Thus Jubilee 8 is now guaranteed by both BOA and ML.
2. Credit ratings indicate the likelihood of a company defaulting on its obligations. AAA is best.
3. If the takeover fails, then ML is back to being standalone. This does not mean that ML will definitely fail. It will depend on whether it is able to survive on its own and whether US government will let it fail like Lehman.
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Hi,
I just checked with my RM yesterday on the buyback rate.It s 85% now. It seems to be dropping each day.
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Hi all,
I’d like to thank Lion the Den for providing the platform for Jubilee 8 holders to communicate with each other. I read both remarks and opinions by ‘Hopeful’ and ‘In the know’ and now I understand much more about the product.
I checked with my RM at Citibank . The pricing ( redemption price )from Merril Lynch is available on Thursday but she said that it will take 3 to 4 days for her to access the indicatice value. Last week, it was 85%. This week’s pricing will be released by Merril tomorrow.
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Hi In-The-Know et al,
I would just like to know now with the transition of ABN Amro Van Gogh Preferred Banking account into RBS’s Royal Prefered account, where our Jubilee Series 8 note is maintained, is RBS backing up this product which is distributed by ABN Amro or is the principal at maturity still dependent on Merill Lynch as backed by BOA?
Another question is with the protection announced by the Singapore govt: “In a joint press statement issued by MAS and Ministry of Finance yesterday night, the Singapore government announced that it would guarantee all Singdollar and foreign currency deposits of individual and non-bank customers in licensed banks, finance companies and merchant banks.
Is this product(Jubilee Series 8 notes) protected up till Dec 31 2010?
Thanks in advance for your advise!”
cheers
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Intheknow Reply:
October 22nd, 2008 at 4:53 pm
1. Whoever is holding your note has nothing to do with the performance of the note. Whether it’s ABN or RBS, they are merely custodians of the note. Thus, the performance of Jubilee 8 is dependent solely on the Issuer, which is ML (in future BOA).
2. Structured products will not be guaranteed by Singapore government. Only pure fixed deposits and foreign currency deposits will be guaranteed.
ALL > PLEASE BE VERY CAREFUL. DUAL CURRENCY PRODUCTS (some banks still call them Dual Currency Deposits) ARE NOT COVERED UNDER THIS SINGAPORE GOVERNMENT GUARANTEE.
Dual currency products are whereby an investor chooses a currency pair. A high rate of interest is paid but the investor will get returned their investment in the weaker currency at maturity.
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lowbang Reply:
October 23rd, 2008 at 7:07 pm
Hi InThe Know
Thanks for your effort and patient in answering so many questions that fellow MLJ8 notes holders posted.
I have to say that I have benefited a lot from fellow investors and especially your professional knowledge.
Do keep them coming.
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TanJ Reply:
October 23rd, 2008 at 11:57 pm
Hi Intheknow,
I invested S$100k on MLJ8 through Citibank.
After reading your analysis of J8 and with BOA onboard supported by the US govt, I feel very much more assured.
I will take my chance to keep J8 to maturity 9 January 2011 and enjoy the 3.15% per annum fixed rate.
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Hi Lion The Investor,
Just wondering if you could elaborate on this:
(1) “InTheKnow” said that these Jubilee 8 Notes are not linked to ML shares.
My question is if there there is a meltdown at Wall Street , will there be an indirect repercussion on JB 8? If so, will it lower the value of JB 8.?
(2) What factors, if any, will raise or lower its value?
Right now, there is much fear about Merril Lynch and because of this , the value is now at 85% , a drop from 86.5 %.
“IntheKnow” also mentioned that banks are capitalising on this fear.
What is your take on this?
Many thanks
Ali
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lioninvestor Reply:
October 25th, 2008 at 9:16 am
The value of JB8 is quoted by ML. So it is really up to them.
If they want to hold on to your money and dissuade you from redeeming, they can price it lowly.
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after seeing all the comments from fellow mates, i’ve decided to hold till maturity.
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Hi ….really glad I found this website as it has been informative. No one has mentioned Jubilee series 1 link gain notes. Bought this as a package for a special interest for Fixed deposit. (ie. in order to get the special higher FD interest, you have to buy the Jubilee series 1) Anyone has a take on Series 1? So far I have not received any letter from Citibank about it.
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Intheknow Reply:
October 27th, 2008 at 9:21 am
Do you have the prospectus/term sheet for Series 1?
Anyway, no letter often means good news! =)
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i was told by the rm in hsbc that the worst scenario for investing in citrine golden cushion notes is getting back the principal amount without any equity linked coupon at the end of the 2 years. can i file a compliant against the bank for mis-selling?
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Intheknow Reply:
October 27th, 2008 at 7:10 pm
do you have any evidence that your RM did not warn you about the default risk of ML?
i am sure in the prospectus as well as the in 2-3 page termsheet, there would be a phrase whereby it says principal protection is by ML.
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sleepless Reply:
October 28th, 2008 at 5:36 pm
Below is an extract of the email from the RM:
“….It is 100% principal guranteed at
maturity. …Since
its launch on Monday response has been very good. I belive this instrument
will be a very good option for you as compared to a normal savings account
if you do not have any use for you funds in the next 2 years and you dont’
like to take excessive risk.”
Is this sufficient evidence of mis-selling? He knew that I am not a risk taker and yet recommended a product that may become worthless overnight. If he has highlighted the default risk of ML, I would never have committed to such a product!!
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Intheknow Reply:
October 28th, 2008 at 8:18 pm
Hi Sleepless,
I don’t mean to sound biased, but you cannot expect to take no risk at all in exchange for returns. Even putting money under your pillow may result in it being stolen.
Even a pure fixed deposit at a bank, say DBS, may suffer losses in principal should DBS go bankrupt. (Of course, I am ignoring the recent announcement that all SG bank deposits are now guaranteed till end 2010).
To be fair, I maintain my opinion that:
1. Jubilee Series 8 is indeed a ’safe product’. Buying this product definitely cannot be considered as taking excessive risk. (Maybe if this was Minibond, High Notes 2/5, or Jubilee 3, I may agree that there is excessive risk).
2. Jubilee Series 8 is not a complicated product.
3. It’s true that it is 100% principal guaranteed (by Merrill) if held till maturity. This clause means that the guarantee is only as good as Merrill’s creditworthiness. Just like Mr A guarantees Mr B’s debt. If Mr A defaults, the guarantee is as good as worthless.
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Ok I found it off SGFUND.COM forum:
—quote—
- Credit-linked to 135 reference entities (Approx 80% is BBB rated, 20% A rated)
- 10 yrs tenor
- Callable in March ever year
- Principle protected upon maturity
- Yield is subjected to the no. of credit events:
0 default = 125% returns
1 default = 107.2%
2 defaults = 89.3%
3 defaults = 71.4%
4 defaults = 53.6%
5 defaults = 35.7%
6 defaults = 17.9%
7 or more defaults = 0%
My thoughts… Clearly this is a bundle of unwanted bonds being re-packaged into a CLN… and marketed as a potential 12.5% return per annum… “safe”… and principle protected financial product… Of coz, the target audience will be those aunties and uncles again… Sigh…
A quick check at S&P average default rates for a 10 yr BBB bond is 6.1%… If history is any guide… the realistic total return for this CLN at best is 17.9% (6 defaults)… which means its 1.79% per annum… Relatively, a risk-free 10 yr SGS bond will give you a yield of ard ~3.4% per annum.
I dun think its tat difficult for 7 out of 135 reference entities to default in a time horizon of 10 yrs… This CLN is as, if not, more risky than equities in my humble opinion…
All in all… the risks taken does not justify the rewards…
—unquote—
looks like the worst case scenario is you get back 100% of your principal after 10 years with no interest at all. But I haven’t seen the prospectus/termsheet so I could be wrong.
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May Reply:
October 27th, 2008 at 12:14 pm
Thank you ‘Intheknow’. Anyway I was already of thinking of cashing out before reading your comment. It is only a small sum, (the minimum needed to get the ’special’ FD rate) Hopefully the buyback is still not too bad. Once again, thanks for your take on it.
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Just wondering if you could clarify the following:
(1)When I purchased JB8 Notes, the RM at Citibank simplified things in this way-that I lend my money to ML and they pay me an interest ( coupon ) of 3.15% per annum , to be paid quarterly. Like you said, I am an unsecured creditor.
(2)My question is ‘ What does ML do with these securities? Do they just hold on to them for 2.5 years or are they traded in Wall Street?’ How do people then buy and sell these securities ?
You see, I watched the news on Channel NewsAsia and sometimes CNN and there’s so much infor on stocks and shares but none on securities.
Many thanks
Amy
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Intheknow Reply:
October 28th, 2008 at 8:11 pm
Hi Amy,
Jubilee 8 structure is like this (simplified of course):
1. Investor (you) gives money to Jubilee Finance Ltd.
2. Jubilee Finance Ltd give the money to Merrill in exchange for a senior unsecured bond issued by Merrill.
3. At quarterly intervals, Merrill pays Jubilee Finance coupons which are transferred to the investors.
4. At maturity date, Merrill redeems the senior unsecured bond by paying Jubilee Finance 100%. Jubilee Finance then pays the investors back their 100% principal.
So unlike Mini bond and DBS High Notes and Jubilee Series 3, there is no underlying basket of securities. There is only the senior unsecured bond issued by Merrill and the money collected from investors like yourself.
That’s why I said Jubilee Series 8 is actually a very ‘fixed deposit’ like structure with no major complications. You are only exposed to the risk of Merrill defaulting.
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Hi ‘InTheKnow’
I posed a question to you today at 12.54 p.m. but forgot to address it to you . Sorry about that.
Hope you will reply.
Thanks
Amy
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Hi Intheknow,
How about Accumlator Note Series 1 due 25 Jan 2010 issued by Societe Generale ? Does it work the same way as MiniBond, DBS High Notes, JB3 or Jubilee Series 8? Any underlying securities ?
Here’s the link to its prospectus/term sheet :
http://masnet.mas.gov.sg/opera/sdrprosp.nsf/dd7f36645521621848256b4d001536a0/5B39FB728A85D4F3482572990032B794/$File/SGA%20Soci%C3%A9t%C3%A9%20G%C3%A9n%C3%A9rale%20Acceptance%20Final%20Pricing%20Statement%20(2).pdf
Thanks,
Lyne
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Intheknow Reply:
October 30th, 2008 at 9:27 am
Hi Lyne,
Accumulator Note Series 1 does not work the same way as Mini Bond, DBS High Notes 2/5, or Jubilee Series 3. There is no underlying basket of securities whereby default in more than x number will cause a loss in principal. The structure of a basket of securities is usually found in Collateralised Debt Obligation (CDO) structures like First to Default types which Mini Bonds, DBS High Notes 2/5, and Jubilee Series 3 are.
Accumulator note Series 1’s ‘backing’ mechanism is more like Jubilee Series 8. You are only taking the risk of the Issuer (in this case Societe Generale) defaulting. But for the Accumulator Note Series 1, the worst case (excluding issuer default) is you get 0% interest (if commoditity prices didn’t move within the interest accumulation range) and 100% principal back. For Jubilee Series 8, there is no worst case (other than issuer defaulting), investor will be paid fixed and guaranteed interest of 3.15% p.a. (as long as issuer does not default).
Hope this reassures you.
Regards,
Intheknow
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Hi Intheknow,
Noted with thanks.
Best Regards,
Lyne
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Hi ‘InTheKnow’,
Thank you for that simplified version.
Amy
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Hi guys n gals,
Anyone has the latest buy-back price for JB8?
I read almost all the posts in this string… now is like an angle and devel by my head… 1 telling me to bite the bullet and sleep in peace, 1 telling me to hold on and gamble with the seemingly-still-not-the-worst-yet financial situation. But now I can’t figure who is telling me which action to take LOL…
Anyway I’ve put in a huge sum into JB8 and losing 15% is quite unthinkable. But then, even with all the logical “assurances” here and there about the structure of the note and the situation with ML, there are still all the what-ifs. Aiya… angle n devil at work again.. grr……
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lioninvestor Reply:
November 3rd, 2008 at 8:53 pm
Sam,
If the risk is too high for you yet the loss is not tolerable, have you considered whether it’s possible to sell part of the investment?
Maybe you want to check whether this is possible and consider it as one of your options.
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Hi Sam,
The latest , based on last week’s pricing is 86%
( from Citibank)
I’m not sure but I think the rate will be better after Americans vote their new President.
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Hi,
i’ll got my latest pricing from standard chartered at 85%. I’ve been getting 85% ever since the 2nd release of pricing, which seem lower than what i’ve read about citibank quote from here. Yet my relationship manager says they will process the unwinding for free. Not sure if there’s a document i can obtain from them if i choose to unwind to make sure if they really didnt charge the process fee.
Like sam. i’ve put in a large sum hence losing 15% can be quite an amount. But i still have this struggle of that ‘what if’ even i’ve read what intheknow have explained, but i must confess his explanation does make me sleep a little better this two weeks..
Not sure if any one write to FI for the mis-selling about J8? those that’s in the news are mostly those link to Lehman brothers…??
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Hi Intheknow,
If you have S$ cash and do not wish to place in bank/finance co to earn low fixed deposit rates, what structured products/bonds are there currently available but still relatively safe?
TanJ
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May Reply:
November 3rd, 2008 at 7:42 pm
Ha….that is a very good question. Any other place to park spare cash in this financial climate..? Even our Aussie cash FD has been hit so badly. So… Intheknow, any tips?
Won’t it be wonderful if we have a crystalball? Ha!
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lioninvestor Reply:
November 3rd, 2008 at 8:59 pm
Hi May and TanJ
What’s the time horizon and % returns are you all looking at?
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Intheknow Reply:
November 4th, 2008 at 9:29 am
Hi All,
If I have spare cash now, the following are my options in order of risk (lowest to highest):
1. Fixed deposits with ‘riskier’ banks like BEA or Maybank. Since deposits are now guaranteed by SG government till end 2010, there is little risk.
(About 2%)
2. Structured products like Jubilee 8 which are very ‘fixed deposit’ like in my opinion.
(About 3%+)
3. Foreign currency fixed deposits with ‘riskier’ banks like Maybank. Foreign currency deposits are now guaranteed by SG government, so there is little risk. Take note that even if AUD rates are 5-6%, the bid/ask spread is like 3%. So you would only be earning about 3% interest p.a. even if there is no currency movement.
4. OCBC or UOB preference shares. With a dividend yield of 5%+p.a., at with current low prices of $8X, I think further downside is unlikely. By buying into these preference shares, you have the potential to earn a higher yield of 5%+, and you may actually enjoy some upside on the preference share price itself. Of course, there is always the risk of OCBC/UOB not paying ordinary share dividends and hence can choose not to pay preference share dividends. And yes, there is always the risk of OCBC or UOB going bust. Preference shares will not be guaranteed as they are NOT FIXED DEPOSITS.
5. Direct equity investment into value SGX or NYSE stocks. I am a big fan of SGX and NYSE stocks. There is plenty of value out there, although I am not going to state which are the stocks I think are good. This can differ from person to person so I will leave it to the individual to choose. Do note that this is of course the most dangerous option as you could lose a lot of your principal.
I do not like unit trust or managed fund products, thus they are not on my list. I don’t see the point of paying a fund manager no matter they make or lose money for you. And it’s a bit like a black box. You don’t know what they are investing in until it’s too late. Suddenly they could announce they have holdings in counters like Lehman, Jade, CAO, etc… and you’re screwed.
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Hi,
I recently received my quarter dividend interest paid-out on Merill Lynch 3 year structure notes products from UOB. I am not too sure whether my investment series had anything to do with the mentioned product series ‘8′ or ‘3′.
I had make several visits to the bank and was repeatedly quoted the same statement ‘ things are under control” after the acquisition by BOA despite i wanted to cash out my investment after the 1st visit to the bank when it was priced at 0.95 +/- at that time. To tell the truth, I am a very ‘fixed deposit’ person and before i signed up for this investment and i obviously seek clarification on the product risk-level. I was clearly told by the the senior banker, the products is capital protected and the risk level of this product “is as good as to the local bank can go bust.” and obviously, i felt secured to go for it.
However, with this shocking news each day we facing, i certainly have my fear and i am beginning to lose faith with what my bank is telling me now.
Can anyone advised me what i should do for now and next ?
Thanks & Rgds
Tay
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Intheknow Reply:
November 5th, 2008 at 8:51 am
Hi Tay,
Before I can advise you further, you need to tell me/us what ML product you are invested into. This is because different products have different risks.
Look at your termsheet/prospectus. What is the title?
Merrill Lynch 3 year xx xx xx
But going by the looks of it, if the buyback price was 0.95 when the BOA acquisition was announced, I doubt it’s a dangerous product like Jubilee Series 3. It should be more like Jubilee Series 8 or “Merrill lynch SGD 3-Year Principal Protected Fixed Income Notes” which I had explained to PPL in one of my above posts. (Do a Ctrl + F search for it)
If yours is the ““Merrill lynch SGD 3-Year Principal Protected Fixed Income Notes”, it is as safe as Jubilee Series 8. And it is indeed very ‘fixed deposit’ like.
Cheers,
Intheknow
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Hi everyone,
I just want to share this bit of news:
“Shareholders of Bank of America Corp. and Merrill Lynch & Co. Inc. will vote Dec. 5 on Bank of America’s proposed acquisition of the New York-based company.
Charlotte, N.C.-based Bank of America agreed Sept. 15 to buy Merrill Lynch for about $50 billion.
The deal is slated to close in the first quarter.”
I hope these shareholders will vote “yes”.
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Intheknow Reply:
November 5th, 2008 at 4:27 pm
actually i think whether the acquisition completes successfully or not, it is unlikely for ML to default.
Morgan Stanley is in much poorer shape and it’s still surviving.
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CKH Reply:
November 6th, 2008 at 8:53 pm
In the know thx for the information, i was almost wanted to unwind but after all your advises, i decide to hold on and they have paid the 1st first interest coupon.
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Hi ‘IntheKnow’,
I hope you’re right.Anyway, your comments have not only reassured yours truly but also other like investors.
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Hi everyone,
Just want to share with you the NAV of Jubilee 8 as quoted by Citibank.
5 October 80.5%
14 October 86.5%
27 Ocotber 85%
30 Ocotober 86%
6 November 86%
I checked with my RM. There are no charges for redemption of these Notes.
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Good news
Today’s pricing ( Citibank )
87 %
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Hi All,
For those interested in my reply to CKH’s query on HSBC Double No Touch notes, please see:
http://www.lioninvestor.com/merrill-lynch-jubilee-series-8-notes/#comment-4266
Basically, this note is as safe as Jubilee Series 8. You can only lose your principal if HSBC defaults. However, the interest component for the product is not guaranteed as it’s dependent on all 6 reference underlyings keeping within 70-130% of their initial price.
Regards,
Intheknow
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Hi Intheknow,
I bought the Macquarie MQ Yield+ Series 2 last year. Is it similar to the Jubilee Series 8? The RM told me that it is like a FD. I do not have the link but how do i upload the prospectus?
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For Macquarie Yield Plus, please read:
http://www.lioninvestor.com/macquarie-mq-yield-plus-notes/
Don’t worry. It’s safer than Jubilee Series 8 in my opinion.
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blues Reply:
November 11th, 2008 at 2:55 pm
Thanks to Lioninvestor and Intheknow for sharing your analysis. You have helped me to understand the products much better.
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blues Reply:
November 11th, 2008 at 2:56 pm
Thanks to Lioninvestor and Intheknow for sharing your analysis. You have helped me to understand the product much better than my RM.
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Intheknow,
Just saw this on Merrill Lynch. What is the implication on MLJS8,
if any ? Thanks.
========================================
Merrill Lynch may sell 4 billion USD worth of non-performing assets
Merrill Lynch may have plans to sell about 4 billion USD worth of non-performing bonds including mortgages, CDOs and other structured products, The Wall Street Journal quoted from sources.
As the CDO market has dried up about a year ago, such assets are now hard to gauge their value.
In July this year, ML originally planned to sell 30.6 billion USD worth of CDO for 6.7 billion USD to privately operated Lone Star which let a lot of peole think that ML has gotten rid of most of its non-performing assets.
The global economic downturn let a lot of investors face the danger of depreciation of their assets value. Under such circumstances, ML joined the banks, hedge funds and other big investors in looking for buyers to buy up their hard to sell assets.
Investors need to reduce the loan amount which is being used for investments, the reason being more and more of such non-performing assets going on the market for sale. In the last 3 weeks, the amount waiting to sell in the Euro and US market have exceeded 12 billion USD.
Sources said that ML is trying to sell its non-performing assets by the end of the year. ML has send out documents to various possible buyers stating that it may sell part of its bonds starting from this week.
Posted by Micky Bluer at 1:14:00 PM
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Intheknow Reply:
November 12th, 2008 at 2:39 pm
no impact at all in my opinion.
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Hi
Does anyone know where the physical money is? Where does Cayman Islands come in? Is the money with ML or is it parked in Cayman Islands?
If the money is in Cayman Islands, is there a possibility that Cayman Islands will end up like Iceland? I read from the web that Cayman Islands is a major international financial centre. How does the current financial crisis affect the country? Can it be defaulted? If that happens, do we lose the money?
I believe the money is with ML, as she needs to somehow use the money to generate the interest to pay to investor. If the money is really with ML, would they have already loss the money? They have reported several quarterly losses. What money did they lose.
Anyone knows whether our investment is classified as non-performing assets? What is the definition of non-performing assets?
I read from this forum some product is as safe as FD. In Singapore, some structure deposit can be as safe as FD. But it is not protected / guarantee. So in the case of the Notes, is it really as safe as FD?
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Banker Reply:
November 15th, 2008 at 10:43 pm
The money is not with cayman islands. The money is invested in ML Euro-Medium Term Notes as stated in the pricing statement i.e its with ML. So the main risk investors faces is if ML defaults, rather than Cayman. Even if ML made losses, as long as it has not default (eg like Lehman), investors will receive principal at maturity from ML on MLJ8
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Hi xtrail73,
1. Structured products (usually senior unsecured credits) can never be as same as fixed deposits. Fixed depositors are on par with depositors like savings and currents accounts, and they will get their money back before senior unsecured creditors.
2. Non-performing assets for a bank usually refers to loans that have defaulted, for example, loans made to an individual who has not been able to repay.
3. ML may have lost money over several quarters. This would come from their shareholders’ equity or accumulated profits.
4. Banker has correctly pointed out that the money collected from Jubilee Series 8 investors are NOT in Cayman islands. The money has already been ‘paid’ to ML in exchange for a senior unsecured note/bond issued by ML.
5. Banker is also reiterating what I have mentioned a number of times in my posts above. It doesn’t matter if ML has posted losses or keeps losing money. As long as ML doesn’t DEFAULT on its liabilities (e.g. loans, bonds), investors will continue to receive their 100% principal at maturity + promised interest of 3.15% p.a..
6. Don’t be scared just because you heard of Pinnacle notes or High notes becoming worthless. Know what you are invested into. Even within Pinnacle series, the last few series are still fine. They are very similar to Jubilee Series 8 and the investor will only lose money if Morgan Stanley defaults.
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PPL Reply:
November 20th, 2008 at 11:39 pm
Hi IntheKnow,
What if the shareholders of BOA vote against the buying of ML? Would this cause ML to collapse?
Regards,
PPL
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Intheknow Reply:
November 23rd, 2008 at 7:45 pm
Hi PPL,
If the BOA takeover of ML fails, it is only certain that ML’s financial position will be weaker than if the takeover succeeds.
However, I do not have sufficient information to determine if the failure of the takeover will weaken ML sufficiently to cause it to collapse.
My immediate reaction is that ML should be able to survive on its own, given that it had been given capital infusion of USD10billion under the USD700billion bailout package.
Cheers,
Intheknow
Reply
PPL Reply:
November 23rd, 2008 at 10:20 pm
Hi Intheknow, thanks for your reply.
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Hi, Intheknow
Could you advise me on Prudential’s Pru 3Plus fund which started in August this year? is it going to have the same outcome as Pinnacle Notes 9? I was told by my FI that this rather safe as it is managed by Prudential Fund Manager, is it true that it’s really safe? As of now, there is already 2 credit events on the DSO securities.
Could you help me with this?
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Intheknow Reply:
November 17th, 2008 at 3:09 pm
Hi Jess,
You can refer to the thread on Pru 3 Plus fund.
http://www.lioninvestor.com/pru-3plus-pricing-error/
I never liked managed funds, worse when it’s a CDO-linked managed fund.
Whoever is your FI or Relationship manager has given you wrong information. The outcome of Pru 3 Plus does not depend on who the fund manager is. It depends on the performance of the underlying, which in this case is a bunch of CDOs, out of which 2 has defaulted. It’s just like DBS High Notes. The issuer, DBS, is perfectly sound and healthy. But the underlyings in DBS High Note 5 died and thus the note died along with it.
The structured of Pru 3 Plus is thus very similar to Pinnacle Series 9. If more than X number of underlyings default such that the ‘principal protection threshold is breached’, you will lose your principal.
Regards,
Intheknow
Reply
Hi Intheknow,
Tks for all your valuable advised posted in this website.
Can you pls advise me on UOB Life Maxi Annuity paying out 2.5% annually but can only withdraw the principle only from 366 days.
I have invested in this “Fixed Deposit” in end Dec 2007. Is this safe because nobody can advise me what is this product about?
Appreciate your assistance!
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lioninvestor Reply:
December 5th, 2008 at 6:31 pm
Hi LC,
The product is safe but you have to realise that an annuity plan is different from a fixed deposit and is meant for a different purpose.
Write to me and I can discuss your particular case offline.
Reply
Hi LC,
That seems to be a insurance product issued by UOB. Can’t really comment on that as I am not an insurance expert.
Cheers,
Intheknow
Reply
hi, anyone knows what’s the new rate for jubilee 8 for this week? dun feel very positive… maybe drop back to 85%? or worse…
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Hi Sam,
Sharing with with you NAV of JB 8 ( courtesy of Citibank )
7 Nov 87 %
14 Nov 86%
20 Nov 86 %
Once I find out whether shareholders from both BOA and Merrill vote in favour of the merger , I will post the news. They have to vote on Dec 5th.
Cheers
Amy
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sam Reply:
November 22nd, 2008 at 12:36 am
thanks amy!
actually i was thinking… in view of the current downturn, is it still viable for BoA to take over ML? wouldn’t it be better to save and sustain themselves first?
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PPL Reply:
November 22nd, 2008 at 9:33 pm
Yeah, I’m also worried about the BoA merger, whether or not it would still be viable.
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Hi Intheknow, Citigroup looks really vulnerable with its latest loss of its share value. Any idea what can happen to our Jubilee series 8 notes sold by them if Citigroup becomes another victim of the economic crisis?
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lioninvestor Reply:
November 22nd, 2008 at 8:17 am
Hi JL,
Citigroup has no direct impact on Jubilee 8.
Unless Merrill Lynch is bought down by their exposure to Citi.
Reply
Hi
Thanks for your response but who do I go to if Citibank is gone for redemptions, etc.
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Personally I think if Citibank is allowed to fail, like Lehman, the whole world’s financial system will fail.
US government will definitely find a solution for Citibank, and they will not dare to kill the equity holders, because there are just too many sovereign funds invested in the ordinary shares of Citibank.
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Hi all
Any one knows what time is the rally at Hong Lim Park on 29 Nov 08.
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Hi Intheknow,
If US government takes a big equity stake in Citi (like in the case of AIG), will it be considered as an credit event for Citi?
BTW, do you know where we can see the CDS prices (Default risk) for major banks? The amount of money required to insure $10000 for 5 years.
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after a long discussion with my wife, we have decided to redeem all our JB 8 tomorrow. we’ll effectively lose a car, but in exchange of a more peaceful sleep and not having to keep monitoring this for the next 2 years. too much stress for comfort. just treat it as lesson learnt and move on…
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compass Reply:
November 24th, 2008 at 9:13 am
Hi Sam, I have also decided to do the same. And like you, its has been one big painful lesson.
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sam Reply:
November 24th, 2008 at 11:02 am
haha… nvm la… there are too many things we can’t control in life. money is 生外物 after all, can’t expect too much in life…
cheers to better sleep! =D
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ohya btw, where would be the safest possible place to park money now? savings account? FD?
we already have figures in citibank, scb, ocbc and dbs. my layman gut feel tells me that dbs is the place, since i believe the govt definitely won’t let it fail. any catch?
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chong Reply:
November 24th, 2008 at 8:29 am
POSB My Savings account
1.6% if you are treasures
but you have to put in at least 1.5K monthly
anyone knows any higher rates for plain vanilla savings account interests?
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lioninvestor Reply:
November 24th, 2008 at 9:36 am
Bank of East Asia (singapore branch) offers 2%pa for 3-month FD and 2.125% pa for 6-month FD. Min 50k.
This is one of the more competitive rates around.
Reply
May Reply:
November 24th, 2008 at 10:38 am
sounds good. Lioninvestor, what is your take on the Australian dollars FD accounts? The interest (tho’ has dropped alot) is still higher than any of the local FD rates here but the AUD has gone down so much.
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sam Reply:
November 24th, 2008 at 11:05 am
does bank of east asia fall under the “protection” from MAS for full amount deposits guarantee till 2010? the higher rates… any catch? the rest of the banks can’t even smell 1% for their FD… haizz.. now too high also become sceptical liao…
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lioninvestor Reply:
November 24th, 2008 at 11:20 am
Sam,
Yes, the deposits under the BEA Sg branch will fall under the purview of the Singapore government’s guarantee.
May,
the currency movement is always one of the risks of investing in foreign currency FD. Short term wise, it is hard to predict how the currency might move.
Any money that you want to place in AUD should be money you can park there for the long term.
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holy smoke!! stan chart’s indicative rate is now 83%!! flip x 10…
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Hi sam, u bought JB8 from Stanchart? me too. I note that their indicative rate is always lower than citibank base on what Amy (on 21 Nov 2008 at 2:40 pm) share here. I got the indicative price last friday at 83% too. I wonder why there is such a differences in pricing given the fact that its the same fund? Anyone knows the reason?
A friend that i know who bought from SCB too, gave the go ahead to unwind but the RM didnt do it eventually cos the indicative price and the final unwind price is a few percent lower!
My RM told me even if i want to unwind now, i have to wait for the friday indicative price. Meaning, i cant sell any other day till friday. Not sure if it’s true.. Hope more pple who bought JB8 from SCB share their experience here..
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sam Reply:
November 24th, 2008 at 4:20 pm
yup… my wife was on leave so she went to settle… and was told that gotta wait till friday for the bidding too. so at the moment nothing can be done.
hmm… i thought somewhere in the middle of this thread was mentioned that the buy back rate is issued by ML, so shouldn’t it be the same across all retailers?
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Sim Reply:
November 24th, 2008 at 5:21 pm
Precisely the point, anyone can enlighten us with regards to this?
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Intheknow Reply:
November 25th, 2008 at 10:31 am
Hi All,
Buy back rate is quoted by the Issuer ML. It will be the same rate given to all its distributors e.g. Stan Chart, Citibank … etc..
However, the distributor may levy a commision/charge/spread on this rate at their discretion.
It’s just like FX rates. Different banks quote different rates even though it’s the same currency you are buying/selling right?
Cheers,
Intheknow
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I got this from Google Alert on Merrill Lynch. I hope this is just a rumour. Anyway , I will google again on 6th December to find out the outcome of the merger vote.
And The New York Times reports that some Bank of America shareholders are seeking professional help as they bid to try and put a stop to the bank’s intended merger with Merrill Lynch. Many apparently feel that current economy realities at the very least mean that the terms of the deal need to be revisited. Others feel that the deal will simply be a drag on earnings, and that the last thing BofA needs now is more investment bankers.
Got this from a blog(USA)
On September 15th, Bank of America announced that it would buy Merrill Lynch for $50 billion (Terms: BAC would exchange .8595 shares for each share of MER) the price WAS at 1.8 times stated book value. But all this was back when BAC was trading at $32.50 a share (that would make the deal for MER at $27.93 per share). However – since the deal was announced BAC is now trading $12 a share – making MER at $10.31 a share. But Merrill is now trading at $8.30 share (a significant discount to both deal terms $2 a share and the capital terms of $50 billion). The spread alone $2, based on the deal terms, is bringing the question to the table – “Deal or No Deal”.
I am sure everyone on both sides of the fence is wondering what is going on – things in the economy are changing fast and what looked like a deal in September may not be a deal in December. Keep your eye on this story – things could change fast.
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Intheknow Reply:
November 25th, 2008 at 10:41 am
Hi All,
My 2 cents on the merger.
I feel that even if the takeover of ML by BOA is cancelled or does not complete for any reason, ML is ‘too large to fail’.
It will be like Citi and will be rescued by the US government.
Thus, unless you are a shareholder of Merrill and are exposed to the share price movement, there is no need to panic.
Even if Merrill share price drops to USD1, as long as Merrill does not default, you will not lose your principal under Jubilee Series 8.
Cheers,
Intheknow
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Hopeful Reply:
November 25th, 2008 at 11:27 am
Hi Intheknow,
I agree that in the worst case, ML or BOA will be deem as “too large to fail”. However, there is also a possibility that banks are fully nationalized by the US goverment. In this senario, the equity shareholder will be wiped out. Does a full nationalization of the bank consider a credit event for the bank?
If ML or BOA (after merger) is fully nationalized, will we lose our principal under Jubilee Series 8?
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Hopeful Reply:
November 25th, 2008 at 12:15 pm
Hi Intheknow and All,
Lioninvestor posted in this blog ” Introduction to Credit Default Swaps”.
In this post, it is mentioned that CDS is a kind of “insurance” that can be bought to insure against a corporate going bankrupt.
As I understand, there is a CDS for all banks in US. The CDS (default Risk) price for ML is $212 to insure $10000 for 5 years. This is the price for early nov 2008. It may be higher today…
Let me try to intrepret this…
If I paid $212 for this insurance and if ML default, I am entitled to collect $10000.
If ML does not default, the amount I will lose is only the premium I paid (ie $212).
Now, in relation to Jubilee 8…
If I am worried that ML may goes bankrupt, can I go to buy this “insurance”? Instead of going to unwind JB 8, can we buy this “insurance”?
Let see some calculations…
Let say I have invested $10000 in JB8.
If I unwind this week, based on indicative price of 83%, I will lose $1700.
If I do not unwind and I buy “insurance”, cost is only $212. It is $212 for 5 years so this is all I paid as premium and I am covered/protected.
After the purchase of this “insurance”, there are 2 possible situations.
1. Nothing happens to ML in the 5 years. I lose $212. JB 8 is intact, the interest earn based on 2 years will be 3.15%*10000*2 = $630. There will be net gain and principal is returned.
2. If ML defaults, JB 8 becomes zero in value but I will get back $10000 base on the insurance and the cost is only $212.
Does my intrepretation make sense? What am I missing out? Please share and comment generously as I hope that we all can get out of this with our capital intact. If you have friends working in banks, please ask them about this. I am also asking my banker friends if this is possible. This idea came out through some conversation/sharing and lioninvestor post.
The question is also that can we buy this “insurance”? It does not seem that it can be bought over the counter at Financial institution. But collectively as a group, this may be possible.
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lioninvestor Reply:
November 25th, 2008 at 8:00 pm
Hopeful,
I believe the quoted premiums are payable yearly.
So you need to pay $212 x 2 if you want the protection for the full 2 years.
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lioninvestor Reply:
November 25th, 2008 at 8:05 pm
Also, the insurance payout won’t be 100% of the sum insured, but based on the recovery rate of ML bonds.
Say, ML bonds return 20% after default, the insurer will payout the remaining 80%.
As Jubilee 8 noteholders won’t get back 20% (unlike pure ML bond holders) after deducting all the related costs, there will still be a slight loss with the insurance.
Generally, buying CDS does sound like a reasonable idea. But as pointed out by intheknow, just bear in mind there there is insurer risk.
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Hi Hopeful,
I heard this from my RM before too. But he says the insurance is not available for us as it’s only available for the FI to purchase (in this case, ML) . Also, i heard they dont insure small amount (even if we all decide to combine our investment). It only insure ten of millions if not billions of funds.
May i know where did u get the $212 figure from? is there a website i can access to the figures? i heard from my RM, he says the insurances figure is very much higher around september period, when Lehmen Brothers go bust. The insure premium actually goes down after the news of BoA buying over ML. Which means the risk of ML goes default is lower at that point.
This couple of days that’s some negative news in the web about the merger of BoA and ML. Hopefully as what intheknow mentioned, ML is too big to fall even if the merger dont comes through.
I’m really thankful of this website for providing a platform for ML 8 investors and contributors to share infors and knowledge. And like Hopeful, perhaps we should be more proactive and try to gather some sources in helping ourselves through this difficult time instead of relying on the unreliable — the FIs to act for our interest!
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Intheknow Reply:
November 25th, 2008 at 7:42 pm
Hi All,
Yes, CDS is an insurance that you can buy.
2% for 5 year protection on ML sounds a bit too low.
Just take note that you are exposed to the entity that sells you the CDS. For example, if you bought insurance from say Citibank, and Citibank goes kaput, your insurance is gone.
Also, there is usually a minimum size of USD1mm for CDS which is open to private banking clients.
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Hopeful Reply:
November 25th, 2008 at 7:50 pm
Hi Sim and Intheknow,
The CDS Prices is not from a website but extracted from an article I read in yahoo finance. I cant seem to locate the web address of the article.
In the article (dated Nov 4), it listed the following CDS prices for the following banks. The info is reliable (at least some credibility) as it is written by finance reporter.
Citi 194bps
BAC 126bps
MER 212bps
JPM 112bps
GS 305bps
MS 402bps
WFC 95bps
Intheknow, do you mean the minimum premium is USD 1 million?
Thanks
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Intheknow Reply:
November 25th, 2008 at 8:06 pm
The minimum amount to insure is USD1mm, thus the minimum premium paid for 1 year’s protection is USD27k.
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Hi All,
Just checked Bloomberg.
A 5 year CDS on ML will cost 2.72% PER YEAR.
Not too sure who is the issuer of this CDS though.
Cheers,
Intheknow
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Hopeful Reply:
November 25th, 2008 at 8:45 pm
Hi Intheknow and All,
Insured amount of USD 1 million = SGD 1.5 million.
I am sure the amount invested in JB 8 is a lot more than SGD 1.5 million.
Let’s see what is required to pull this off…
1. Need to gather interested enough JB 8 investors with a total investment of more than SGD 1.5 million (I think it does not whether you bought JB 8 from Citi or SCB)
2. Need to seek out an investor who has excess to private banking
3. Need to find a financial strong entity that sells the CDS.
4. Anything else…
I have limited knowledge in financial. I maybe looking at this in an overly-simplistic manner. I still like to ask…
Can we use CDS to hedge our investments in JB8? If not? Why? What are the concerns?
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JQ Reply:
November 26th, 2008 at 10:48 am
Hi, M also a Jubliee 8 investor. I hv a private banker with Citi. Will try contact to ask abt insurance but dun know if she will help. As mentioned we must have 1.5 mil to go but i did not invest so much.
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Intheknow Reply:
November 26th, 2008 at 2:18 pm
Hi All,
Just note that by purchasing CDS on Jubilee 8, you are effectively giving up the interest of 3.15% p.a. since the running cost of the CDS is about 2.7% p.a.
Regards,
Intheknow
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kc Reply:
November 26th, 2008 at 5:09 pm
Hi JQ,
If we pool together, we should have more than 1.5mil. Maybe all who are interested to purchase CDS for Jubilee 8 can send you the amount invested , bank, contact info etc and we can buy the CDS collectively. I for one, and perhaps many others will be very happy to forgo the 3.15% if the principal can be “guarenteed”. It’s certainly much better then redemption at 84%(?) now.
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Hopeful Reply:
November 26th, 2008 at 7:15 pm
Hi JQ, KC and ALL,
Yes! Let’s pool together. That is 3 of us. Anyone else interested? Please reply in. If we have sufficient numbers (20 – 30), we may meet up to discuss further.
Please do not just adopt the wait and see attitude.
Buying CDS is not anything illegal especially we have vested interest in ML.
It is not like buying fire insurance on your neighbour house and hope that when your neighbour house burn down, you collect the insurance money. It is buying insurance on your own house (in this case your own investment JB
Or if you do not like the CDS idea, please also share your concern. If you do not understand the CDS idea, please ask. I believe Intheknow and lioninvestor will be very glad to answer you as they have faithfully done so all these while…I am grateful for their sharing and the sharing of many others here!
Collective wisdom…
Collective action…
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Pls Advice
my mum bought the JS8N from SCB. The R/S manager playerd with the words “principal protected” and Principal guranntee” when promoting the product.
we have lodged a case with SCB but our case was deem unsuccessful as they have found “evidence” tat the R/S manager DID NOT mislead my mum a chinese educated 50s lady. i wonder how they find the “evidence”?
how shld i purse the case?? or how are u guys who have the JS8N decided to do ?
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lioninvestor Reply:
November 26th, 2008 at 6:01 pm
Hi Alex,
Jubilee 8 is different from some of the other risky credit-linked products which are structured with synthetic CDOs.
Unless they told you something which was false, it is very hard to complain about mis-selling.
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Hi Hopeful,
The insurance looks attractive, capital guaranteed. How many percent of the amount invested is cover by the insurance, 100%?
Assume those stat board purchase billions of investment, also bought the insurance.
So, if ML default, will the insurance company also default?
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Hopeful Reply:
November 27th, 2008 at 11:01 am
Hi Chua,
For your questions, this is what lioninvestor said in the earlier post:
“Also, the insurance payout won’t be 100% of the sum insured, but based on the recovery rate of ML bonds.
Say, ML bonds return 20% after default, the insurer will payout the remaining 80%.
As Jubilee 8 noteholders won’t get back 20% (unlike pure ML bond holders) after deducting all the related costs, there will still be a slight loss with the insurance.
Generally, buying CDS does sound like a reasonable idea. But as pointed out by intheknow, just bear in mind there there is insurer risk.”
Yes! The insurer can also default.
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Hopeful, JQ,KC & all
May be we can meet at HongLim Park this coming Saturday to discuss ?
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Hi All,
There are two goods news for the BOA_ML merger.
WASHINGTON (AFP) – - The Federal Reserve on Wednesday gave formal approval to Bank of America’s acquisition of Merrill Lynch, the Wall Street icon battered by the housing and credit crisis.
http://sg.news.yahoo.com/afp/20081127/tts-us-finance-banking-takeover-merrill-972e412.html
Nov. 24 (Bloomberg) — Bank of America Corp. won support for its takeover of Merrill Lynch & Co. from Glass Lewis & Co. and RiskMetrics Group Inc., firms that advise institutional stockholders on how to vote their shares.
http://www.bloomberg.com/apps/news?pid=20601103&sid=a.gzOjnAwEWw&refer=us
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Hi All
Some BOA retail investors also pointed out:
The 50B deal (all shares) have shrank to half its size. That means BOA is buying ML for only 25B. Also with the 10B TARP money in ML, BOA pays 25B for ML and get 10B.
As for the loss (due to toxic asset) that ML may possibly incurr after the merger, it is possible that the loss can be writeoff as tax paid. That means BOA will not need to pay tax for many years to come. This is the preferential benefits for BOA to conclude the merger. You can see similiar situation in Bear Stern-JPM deal and Wochavia-WFC deal.
However, these are market talk only.
Personally, it sounds correct but I think there are still things (in ML or BOA) that are uncertain. Of course, there are investors who do not want the merger to be concluded.
Sentiments based on share price (ML-BOA)
ML share price close 26/11 : US$12.21
BOA share price close 26/11: US$ 15.43
1 share of ML = 0.8595 of BOA share
So ML share should be worth 0.8595 X 15.43 = US$13.26
Difference = ((13.26 – 12.21) / 12.21) X 100 = 8.65 %
Since there is only 7 trading days left to Dec 5, this difference hopefully will become smaller. If so, market is anticipating the merger will be likely to be concluded.
The highest diff is on 20/11 = 21.47%
The lowest diff is on 13/11 = 6.5%
At the end of the day, I guess we all have to make decision based on what we know and please do not regret on the decision you have made.
Cheers
PS: I still hope to see more responses for the CDS idea.
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Hi lioninvestor and all,
Is Jubilee 8 an ELN?
Hi Hopeful,
Remember SingTel buy over Optus deal, an arbitage took place and SingTel shares pirce was dropped to a level to equate Optus shares price by short selling some 4 or 5 years ago.
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lioninvestor Reply:
December 1st, 2008 at 1:31 pm
No. It’s not linked to the share price performance of any company.
Reply
I think below is a good news for MLJ8 investors .
WASHINGTON (AFP) – - The Federal Reserve on Wednesday gave formal approval to Bank of America’s acquisition of Merrill Lynch, the Wall Street icon battered by the housing and credit crisis.
http://sg.news.yahoo.com/afp/20081127/tts-us-finance-banking-takeover-merrill-972e412.html
Reply
Hopeful Reply:
November 27th, 2008 at 5:36 pm
Hi All,
This is another good new…
Nov. 24 (Bloomberg) — Bank of America Corp. won support for its takeover of Merrill Lynch & Co. from Glass Lewis & Co. and RiskMetrics Group Inc., firms that advise institutional stockholders on how to vote their shares.
http://www.bloomberg.com/apps/news?pid=20601103&sid=a.gzOjnAwEWw&refer=us
Reply
Bank of America Receives Federal Reserve Approval of Merrill Lynch Purchase
CHARLOTTE, N.C., Nov. 26 /PRNewswire/ — Bank of America Corporation today received approval from the Board of Governors of the Federal Reserve System of the company’s purchase of Merrill Lynch & Co., Inc. Bank of America aims to close the transaction by the end of the year pending shareholder and other regulatory approvals.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050720/CLW086LOGO-b )
Merrill Lynch is expected to enhance Bank of America’s current strengths by creating a company with the leading position in wealth management as well as in global debt underwriting, global equities and global merger and acquisition advice. Once the purchase is complete, Bank of America will have the largest wealth management business in the world with nearly 20,000 financial advisors and approximately $2.5 trillion in client assets.
“Combining the leading global wealth management, capital markets and advisory firm with largest consumer and corporate bank in the U.S. creates the world’s premier financial services company with unrivalled breadth and global reach,” said Bank of America Chairman and Chief Executive Officer Kenneth D. Lewis. “This presents a compelling opportunity for our customers and shareholders.”
Additional Information
In connection with the proposed merger, Bank of America has filed with the Securities and Exchange Commission (the “SEC”), along with other relevant documents, a Definitive Registration Statement on Form S-4 that includes a joint proxy statement of Bank of America and Merrill Lynch that also constitutes a prospectus of Bank of America. Bank of America and Merrill Lynch have mailed the joint proxy statement/prospectus to their respective stockholders. Bank of America and Merrill Lynch urge investors and security holders to read the joint proxy statement/prospectus regarding the proposed merger because it contains important information. You may obtain copies of the joint proxy statement/prospectus and other relevant documents filed or to be filed by Bank of America and Merrill Lynch with the SEC regarding this transaction, free of charge, at the SEC’s website (http://www.sec.gov/). You may also obtain these documents, free of charge, from Bank of America’s website (http://www.bankofamerica.com/) under the tab “About Bank of America” and then under the heading “Investor Relations” and then under the item “SEC Filings”. You may also obtain these documents, free of charge, from Merrill Lynch’s investor relations website (http://www.ir.ml.com/) under the heading “SEC Filings”.
Proxy Solicitation
Bank of America, Merrill Lynch, and their respective directors, executive officers and other employees may be engaged in a solicitation of proxies from the security holders of Bank of America or Merrill Lynch in connection with the proposed merger. At the commencement of a proxy solicitation, Bank of America, Merrill Lynch and their respective directors, executive officers and other employees may be deemed to be participants in such solicitation. You can also find information about Bank of America’s executive officers and directors in its definitive proxy statement filed with the SEC on March 19, 2008. Additional information about the interests of potential participants is included in the joint proxy statement/prospectus referred to above. You can find information about Merrill Lynch’s executive officers and directors in its definitive proxy statement filed with the SEC on March 14, 2008. You can obtain free copies of these documents from Bank of America and Merrill Lynch using the information above.
Forward-Looking Statements
Bank of America may make forward-looking statements, including statements about the financial conditions, results of operations and earnings outlook of Bank of America Corporation. The forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results or earnings to differ materially from such forward-looking statements include, among others, the following: 1) projected business increases following process changes and other investments are lower than expected; 2) competitive pressure among financial services companies increases significantly; 3) general economic conditions are less favorable than expected; 4) political conditions including the threat of future terrorist activity and related actions by the United States abroad may adversely affect the company’s businesses and economic conditions as a whole; 5) changes in the interest rate environment and market liquidity reduce interest margins, impact funding sources and effect the ability to originate and distribute financial products in the primary and secondary markets; 6) changes in foreign exchange rates increases exposure; 7) changes in market rates and prices may adversely impact the value of financial products;
legislation or regulatory environments, requirements or changes adversely affect the businesses in which the company is engaged; 9) changes in accounting standards, rules or interpretations, 10) litigation liabilities, including costs, expenses, settlements and judgments, may adversely affect the company or its businesses; 11) mergers and acquisitions and their integration into the company; and 12) decisions to downsize, sell or close units or otherwise change the business mix of any of the company. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Bank of America does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements are made. For further information regarding Bank of America Corporation, please read the Bank of America reports filed with the SEC and available at http://www.sec.gov/.
Bank of America
Bank of America is one of the world’s largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The company provides unmatched convenience in the United States, serving more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, more than 18,000 ATMs and award-winning online banking with more than 25 million active users. Bank of America offers industry leading support to more than 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients in more than 150 countries and has relationships with 99 percent of the U.S. Fortune 500 companies and 83 percent of the Fortune Global 500. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.
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current rate for SCB: 84%
haiz… duno should take out or not…
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Hi Sam
Me too. Have to decide by 2.30pm.
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sam Reply:
November 28th, 2008 at 4:00 pm
so what’s ur decision? we’ve decided to hiong the 5th dec voting! it’s now or never! haha… a bit exaggerate la… but then 84% really too much… just really have to keep our fingers crossed for a positive outcome from the voting, then at least hope for a higher percentage.
our current stand is still to withdraw, but hoping for a higher rate, cos 2 years of nail biting is a bit too much to take amidst the current crisis and the quite obvious fact that we have not seen the worse yet, so the objective now is to minimise losses. and this voting imho could be a deciding factor between do or die. if things go well, i’m hoping for it to at least go nearer 90%, or at least higher than 85%. if voting falls through and no merger, then will be really suck thumb. =(
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jess Reply:
November 28th, 2008 at 9:25 pm
I did not sell either. Just wait n see. Hopefully the merger goes well.
May I know wat is 5 Dec voting?
Btw, How much is ur purchased ?
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Hi All
Sorry for the delay in rspn. I check with Citi’s RM and just got answer this morning. She told me that there is no such thing as insurance for this here, probably only available in US. Not sure if she is verse in this aspect or maybe she can’t be bordered to find out more.
I think I will hold out until rates moves about 90% but I won’t hold until maturity. After BOA takes over hope rates will improved.
At current suitation, we r looking at 84%, not so bad. Most other investment are betw 0-50%. I cannot imagine things could get any worst, but also not sure, now with terrorist also jumpin in to create havoc, sigh……….
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Intheknow Reply:
December 1st, 2008 at 9:46 am
Hi JQ,
Is she your Citigold or Private Bank advisor?
Citigold won’t offer CDS products.
If she is your Private Bank advisor, you can fire her. CDS is definitely available to Private Bank clients, although there is usually a minimum purchase amount of USD1mm to ‘launch’.
Cheers,
Intheknow
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JQ Reply:
December 1st, 2008 at 8:14 pm
She is citigold RM, sori thought its the same, didn’t know its not the same. I check agn today. She told me that she will try to find out the names of some of insurance company dealing with this type of ins. n revert asap. Will email agn when i hv details fm her.
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Hi everyone,
Regarding the insurance, I’d really like to read the actual document and get legal advice if necessary before I commit myself. It is a good idea though. But we have to be mindful of 2 things; first the insurer may go bust and second the BOA and Merrill merger will be a good thing for us , all things considered , and that the net value of JB 8 may actually rise.
I would like to wait until Dec 5 and then decide.
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Hi All,
Just want to share this with everyone.
Results of a Google Search today
Temasek Holdings raises stakes in Merrill Lynch
New York (Reuters) Singapore Temasek Holdings has increased its stake in Merrill Lynch and Co Inc to 13.7% from 9.4%, according to US regulatory filing.
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Hi All,
I still have the same advice for people holding on to Jubilee 8.
Understand what you have invested in. Do you have faith in ML/BOA and do you think they will collapse?
If you think ML/BOA will collapse, then by all means go and early redeem your note.
If you don’t think they will be allowed to fail, then hold on to your note. You are not exposed to any funny underlying securities like Minibond, High Notes, or Pinnacle Notes. Don’t let the blowup of these unrelated products scare you. You will get back 100% of your investment upon maturity.
Cheers,
Intheknow
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Hopeful Reply:
December 3rd, 2008 at 11:29 am
Hi Intheknow,
thanks again for your time and advice.
Hi All,
You may want to look at this video at CNBC (Gasparino’s report).
http://www.cnbc.com/id/28020076
Summary of Gasparino’s report…
1. The merger is going to go through (from what he is hearing…)
2. The US government will make it go through (the merger).
I think the key here is the US government will want the deal to be done…
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Intheknow Reply:
December 4th, 2008 at 9:59 am
Hi Hopeful,
Glad you appreciate it.
Anyway, my 2 cents is even if the merger does not go through, and ML is alone and weak, US government will not let ML fail.
It will be saved like Citibank. Even if ML is saved by wiping out the equity holders, holder of Jubilee 8 WILL NOT be affected!
Cheers,
Intheknow
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CKH Reply:
December 4th, 2008 at 10:05 am
Thanks and appreciate your professional advise in this blog on MLJ8. would like to this opportunity to wish you and all in this blog a Merry Christmas and Happy New Year.
Cheers
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Hi IntheKnow
You’re quite right. JB 8 has a very simple structure; and most importantly it does not have all those underlying securities like Pinnacle Notes and Minibonds.
You have reassured us once again that it is to our advantage to hold on to JB 8.
And I do agree that even if ML is back on a ’standalone’ basis, the Fed govt will come to its rescue , just like it saved Citigroup.
Cheers and Merry Christmas
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Hi all,
Guess no need to chase my RM on insurance anymore yes? She very slow, told me ystrday all her private banking collegaues on leave, so cannot check 4 me. Mayb cos I pull out funds fm Citi, so can’t be bordered with service anymore. Btw, can anyone tell me if JP Morgan 5Y Bond Linked Note on CapitaLand is safe? Last mth, RM told me went down to 80%. Very sick n tired of all these product but cannot get out. Looks like not so a merry Xmas 4 me but hope a better new year but I want 2 wish Merry xmas n a Happy NY 2 all. If not 4 u guys giving us all the important info, dun know how, situation 4 us will be worse. So tku very much and God bless you all.
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Hi,
Anybody know about the JB 8 unwind rate today?
I have call up and check, the rm told me is not out yet.
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the deal is done!
http://www.bloomberg.com/apps/news?pid=20601109&sid=aYQWOB9Mgako&refer=home
now gotta see how’s the sentiments and rates…
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Hi All,
Now that the BOA and ML merger is confirmed, it means that Jubilee Series 8 is SAFER!
It will take BOA + ML BOTH to default before Jubilee Series 8 holders take a hit on their principal.
Come on.. think.. is that possible? BOA + ML as a combined entity is the BIGGEST bank in USA now. Would the US government let the biggest bank in USA default?
Those who took my advice and held… i am sure you are feeling happy now.
Cheers,
Intheknow
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Hopeful Reply:
December 6th, 2008 at 10:30 am
Intheknow, Lioninvestor and all,
Indeed! Thanks once again for all your advice and help…
I must say that this blog is much wiser than the bank RM or the so called “professional”.
I learn so much more from here than talking to the bank or anywhere else. I am grateful. I believe many has also benefitted from this blog.
Let many people know about this blog so that we can all learn more and prosper in our financial journey.
Truly, the power of collective wisdom is amazing…(one gives an idea, another check, another search…)
JB8 is my very defensive portfolio. I think we can start looking on the offensive. I am looking at Blue-chip Singapore stocks…Comments anyone?
Cheers
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confused Reply:
December 6th, 2008 at 10:53 am
Indeed, I think the information I learned here is much more (and clearer) than whatever I got from all my RMs. This ironical — my RMs are being paid for their service…
Thanks for all people here who provided helpful information.
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lioninvestor Reply:
December 7th, 2008 at 2:05 pm
Hi hopeful, confused, intheknow and all,
Thanks for all the feedback.
When I created this site, my intention was to have a platform where I can share certain useful ideas in a one-to-many manner, which I find to be much more effective than one-to-one.
I certainly didn’t expect the big mess to erupt in Sep 08, and I’m glad the site became useful as a place for people to conveniently exchange ideas. For that to happen, everyone had to play a part, and I’m thankful for all the people coming by regularly to share what they know. I certainly wasn’t able to keep up with all the comments.
The minibond issue sort of side-tracked me from my regular type of articles, and I do hope to resume “normal service” soon to enable more people to benefit from the content.
Lastly, I do hope we can refrain from “RM bashing”. I’m sure there are some good ones around, so let us try not to over-generalize. The bad ones might not even survive this downturn.
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sam Reply:
December 6th, 2008 at 4:31 pm
it’s a sigh of relief definitely, but still can’t rule out that residual bit of fear as we still have 2yrs ahead… not very long but in times like this, 2yrs is like 20yrs lol… what lies ahead really is nobody will know. just have to keep our fingers crossed and continue to monitor… many thanks to all!
btw, anyone knows the current buy back rate now? both citi and scb…
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Hi Intheknow
Thanks for the professional advises.
I believed that many of us have benefited from your great advises and also this great website!
I have been retrenched, having lost my job real soon, in this month. I appreciated the great knowledge you have posted here.
At least now I can sleep slightly better knowing the JB8 eggs I have left are much more safer now.
Please continue to keep those great advises coming in.
Regards
lowbang
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The current buyback rate for ML jubilee Series 8 Notes is still an unknown. i have called up standard chart and checked but to no avail. Appreciate if there is anyone who is aware could furnish the current redemption rate. Much much thks
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current buy back rate now from SCB is 84%.
i have checked, partial minimum redemption of $5k is available.
Tough decision
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Intheknow Reply:
December 10th, 2008 at 5:00 pm
Hi November,
What so tough to decide?
If you think the BIGGEST bank in US will default, then please go redeem your Jubilee 8.
If you think the BIGGEST bank in US will definitely be rescued by US government, then please hold your note for another 2 years.
Cheers,
Intheknow
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Hi Intheknow
Thanks for your reply.
SCB Personsal Financial Consultant just called and update me on the following :
For the past few notes, it has been called off after 2nd quarter.
Jublilee 8 – 2nd quarter interest is on the way. If issuer not calling back J8, we will have 2 more years to go.
Since the BOA n ML has merged successfully, the note should be safe.
=)
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Intheknow Reply:
December 12th, 2008 at 10:35 am
Hi November,
I don’t believe ML has the right to early call back Jubilee 8. There is no Issuer Call option built it.
Anyway, why would the investor want the note to be called back early?
ML is paying 3.15% p.a. interest when the current fixed deposit rate for SGD is like 1.5%? Investors are getting double the interest!
Cheers,
Intheknow
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Hi All
The buy back price, quoted by Citibank
05 December 84%
Yesterday,11 December- still 84 %
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Hi Intheknow
The main risk now is the US real econmy. US just started to get into serious recession….
November
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Intheknow Reply:
December 12th, 2008 at 5:42 pm
Hi November,
Well, we are not talking about the share price of ML or BOA here. That’s shaky in my opinion as you correctly mentioned US economy is in the pits.
But as long as ML or BOA does not default, your Jubilee Series 8 note is safe.
Cheers,
Intheknow
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Hi All,
I AM OFFERING TO BUY JUBILEE SERIES 8, CITRINE NOTES, OR MACQUARIE YIELD PLUS NOTES (sorry I am not interested in Pinnacle 15/16 notes).
You must have the notes held in Standard Chartered or HSBC currently (since I only have accounts with them).
For more details, please contact:
structuredproduct@hotmail.com
I am currently checking with my bankers in both Standard Chartered and HSBC to confirm that this can be done. It will be a formal and official transaction where exchange of money and structured note is done simultaneously.
Please contact the above email address stating the amount that you wish to sell and we can discuss further.
I can guarantee that I will offer you a higher price than the current buy-back rate.
Thanks,
Intheknow
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Hi All,
Note that my offier is going to be a LIMITED offer.
I don’t have unlimited funds to purchase the notes.
So do decide quickly if you are uncomfortable holding on to these notes and were going to early redeem them with the banks.
I will definitely give you a better price than the banks.
Cheers,
Intheknow
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Hi All,
I have received a number of email enquiries already. Keep them coming!
To be clear, I am only interested in:
1. Merrill Lynch Jubilee Series 8
2. Merrill Lynch Citrine Golden Cushion (NOT ALL WEATHER BOOSTER)
3. Macquarie Yield Plus (any series)
As mentioned, I only have a fixed amount of money to buy over interested sellers’ notes.
Thanks,
Intheknow
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Bull Reply:
December 15th, 2008 at 10:58 am
Hi Intheknow,
I have the Jubilee Series 8, are you sure is transferable? and what is your offer.
Regards,
Bull
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Hi Bull,
I am still checking with my bankers if the transfer is possible.
Do drop an email to structuredproduct@hotmail.com so we can discuss further. My offer will be higher than the bank’s buy back rate.
Cheers,
Intheknow
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hi,
any ideas what is the latest buy back for merrill lynch jubille 8?
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Hi intheknow,
Thanks for the valuable advises you’ve given in this website. Can you share your view with regards to STI stock price in sg? how low do you think it will hit and is this a good time to invest if we intend to hold the stock for mid time line like 2-3 years? Also, what industries and / or stock do you think is a good bargain for investment?
Thanks for your time..
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Hi intheknow,
since you are offering to buy back those notes, are you betting that these notes will hold till maturity? It’s quite a big risk that you are taking. Is it worth the risk?
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Intheknow Reply:
December 20th, 2008 at 4:26 pm
Hi Rach,
Yes, I am betting that BOA/ML will not default until the maturity of the notes. Of course I may not be right, but I have a diversified portfolio so even if these go bad, I still have other stuff to balance out.
Since I have some spare cash on hand, and rather than plough it all into equities, I won’t mind buying some of these structured notes to complement my portfolio.
Do email me at:
structuredproduct@hotmail.com
if you are keen to early redeem your Jubilee Series 8 notes. I will be offering a price definitely above the latest buyback price of 84%.
It’s a win-win situation for both parties. Panicky sellers who would have sold at 84% to banks for piece of mind get more from me while I get to purchase the notes at a discount to their original price of 100%.
I have already received a number of queries and the moment I get the all-clear from my bank, I will be buying from the lowest priced seller(s) up to the quantity that I want. Thus, do hurry if you want to take advantage of this offer. I only have limited funds to buy Jubilee Series 8 notes.
Cheers,
Intheknow
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Hi All,
Anyone holding on to Macquarie Yield Plus or Merrill Lynch Citrine Golden Cushion and want to sell them?
So far, I have only received sales queries on Merrill Lynch Jubilee Series 8 and I would like to diversify by splitting my funds across all 3 types.
Do keep your enquiries coming. Thanks!
Cheers,
Intheknow
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lioninvestor Reply:
December 22nd, 2008 at 12:25 pm
Hi Intheknow,
You might want to post your offer here for more exposure:
http://www.lioninvestor.com/macquarie-mq-yield-plus-notes/
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Hi all,
this is weird, i called up the sales person or rm (God knows who he is) personally this afternoon and asked him about the securities which backed this Merrill Lynch Jubilee Series 8. He told me they are Blue Chip firms listed on the SGX ?!?!?!?!?
i just found out today a relative of mine had purchased this TODAY and decided to call him!!
clearly, none of the above postings ever mentioned anything about blue chips? (correct me if i am wrong!?!?)
i read ALL the above postings, and i realised the asset backed is the Euro Medium Term Note Program, and clearly stated on page 20 in the Pricing Statement dated 6 June 2008.
anyone to correct me if i am wrong?
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lioninvestor Reply:
December 23rd, 2008 at 7:26 am
Well, ask that person to tell you what blue chips they are!
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I only found out about this from my relative today, she had bought it during the offer period (not today)
sorry for the typo.
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Intheknow Reply:
December 23rd, 2008 at 9:14 am
Hi CO,
Your relative could be talking about another Series of Jubilee notes which have performance pegged to a basket of Singapore Blue Chips.
Jubilee Series 8 is taking on the credit risk of ML/BOA (secured by a senior note issued by Merrill) and will pay a fixed coupon of 3.15% p.a. as long as no default has occured. There is a small bonus coupon of 0.2% p.a. payable in the last interest period of the SIBOR/SOR (one of them) is within a pre-set range.
Obviously, the RM you spoke to has communicated the wrong information. Jubilee Series 8 is totally not linked to any Singapore listed shares.
Cheers,
Intheknow
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Hi CO,
I think the RM confused Jubilee Series 8 with Citrine Golden Cushion (also issued by Merrill).
Citrine Golden Cushion is also taking on the risk of ML/BOA (principal only affected if ML/BOA defaults).
However, the fixed interest component is only applicable for the first 2 years. The final 6 months’ interest payment is dependent on the performance of a basket of 4 Singapore listed shares. In my opinion, the final interest payment is likely to be 0, thus my conclusion that Citrine Golden Cushion is a lousier product than Jubilee Series 8.
Cheers,
Intheknow
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Hi Intheknow,
Trying to help my very worried sister who bought into Pinnacle 16 notes. All her RM said was as long as MS stands, her money is safe. Her RM never mentioned anything about underlying securities, CDOs and what not.
I am asking you because you are offering to buy back some JB notes, Citrine notes, etc. but NOT Pinnacle notes. You must have some doubts about PN. Or I might be wrong… Please share if its worth to hold on or to redeem PN now.
Thanks!
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Intheknow Reply:
December 24th, 2008 at 4:24 pm
Hi Sticky,
Your sister’s RM is right about Pinnacle 15/16. As long as Morgan Stanley does not default, Pinnacle 15/16 investors will not lose their principal.
However, I feel that there is a relatively high chance that Morgan Stanley might fail within the next 2 years, hence I am not willing to take on the risk of buying Pinnacle 15/16.
Good luck to your sister and all other Pinnacle 15/16 investors.
Cheers.
Intheknow
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Hi All,
Latest buyback price for Pinnacle 15/16 is about 75%.
If you are a worried investor and want to get out of Pinnacle 15/16, please email:
structuredproduct@hotmail.com
and we can discuss further.
Thanks,
Intheknow
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CKH Reply:
January 16th, 2009 at 6:47 pm
Hi Intheknow
My RM from RBS told me despite the merger is completed. Tne
currently the credit risk of RBS existing ML issued notes and bonds remains with Merrill Lynch & Co., not directly to Bank of America.
Merrill Lynch & Co. is a 100% wholly-owned subsidiary of Bank of America.
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Latest news of BOA :
http://news.hereisthecity.com/news/business_news/8645.cntns
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BOA will not fail or the world will be in deep shit again. But ML may. Even if the merger goes through, I think BOA will likely break it up and sell it away. But this may happen slowly and over time. There are also cultural conflicts between the national bank and the investment, their mindset and businesses are different. There are just too many toxics in ML for a national bank to carry and the ML name stinks in Wall Streets. BOA had seal the deal in a hasty manner and hence may back out of it. Anything is possible if the negotiation with Treasuary falls through. Why should a strong, profitable and national icon bank be made to absorb the crook’s losses from greed, makes no sense right? BOA shareholders objected this merger.
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WASHINGTON (AFP) – - Bank of America will receive 20 billion dollars in fresh capital and a 118-billion-dollar asset guarantee program to help shore it up after acquiring Merrill Lynch, the US Treasury Department announced early Friday
http://sg.news.yahoo.com/afp/20090116/tts-finance-economy-us-banking-bofa-972e412.html
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In The know
any comments on the
Latest news of BOA :
http://news.hereisthecity.com/news/business_news/8645.cntns
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anyone know if merrill lynch is paying out the second coupon for the jubilee series 8 that was due on january 9? i just checked my account and found no payout yet…
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Bull Reply:
January 16th, 2009 at 10:46 pm
had received mine……
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CKH Reply:
January 17th, 2009 at 1:51 pm
received mine, you shall get it.
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Hi All,
Whether or not BOA wanted to withdraw or object to the deal, THE DEAL IS A DONE DEAL.
Watch out for the formal announcement. I am 90% sure that BOA will guarantee all liabilities of ML.
Cheers,
Intheknow
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confused Reply:
January 19th, 2009 at 1:32 pm
Hi Intheknow,
Thanks for all your help here.
Do you know when the “formal announcement” will be out?
Is it true that the after it is out, we will know 100% whether BOA will guarantee all liabilities of ML?
Thanks again and happy a nice day.
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CKH Reply:
January 19th, 2009 at 3:42 pm
Hi Intheknow
in what conditons BOA will not honor the liability?
thanks
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i received quarter 2 interest for Jubilee series 8.
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Quarter 2 interest for Jubilee series 8 is out.
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Thanks for this website, i spent 2 hours reading the whole tread. But it is really worth it as it is informative and especially the thoughts and views shared with regards to this ML Series 8.
I also bought from Citibank and the financial consultant also told me that this works like a fixed deposit and can earn high interest and principle is protected! I am still wondering why the MAS allows such confusing terms like principle / capital protected / guaranteed when there is no protection or guarantee whatsoever.
I am still scared about holding onto this for another 2 years……
First, i am scared that Citigroup may fail (since recently they announced that they are splitting into 2), (Citibank’s shares plunged to 16 year low to US$3.50). , and thanks to all the “masters” who shared their views here, although i now know that ML series 8 does not depends on the institutions that sold this product, but depends on Merrill Lynch and Bank of America.
Secondly, Obama has been wanting to try to use the remaining 350b to help the US economy more in job creation and natural gas development and I’m afraid he may not want to pump in more $$ into the financial sector, especially when Bank of America has also said that the loss that they are facing now are mostly from Merrill Lynch. Bank of America’s shares has plunged to 18 year low to US$7.00. Obama’s team of advisors are now working on a “final bailout for bailout”. And that the financial institutions has again proved to fail the people with the lack of transparency on how the money are being used.
All these negative news seem worrying.
I have been burnt terribly from the plunge of the stock prices from these 2 banks (from 2-digit per share price to now “a-burger -cost-more” price) and really cannot afford to lose any further $$ from ML 8.
Any advice, please help ?
dynomin
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Hi All,
Just like to share this.
The latest buyback price for JB 8 is 88.60%. Things are getting better for us.
A very prosperous Chinese New Year to one and all.
Cheers
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Hi Amy
Thanks for the info.
SCB’s RM did not reply my email since 16 Jan.
Not sure they are willing to help to arrange for a buyback…..
Happy and Healthy New Year.
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A nice website. With CDS, I think if one of the big guys such as Citi or BOA defaults, other banks will fail too. US$ will crash and it is end of the game anyway. So I am not worry about my holding:-)
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Hi Jesse,
Good point.
I think if either Citi or BOA is allowed by US government to fail (like Bear Stearns)… the world’s financial system is finished.
Cheers,
Intheknow
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IC Reply:
January 29th, 2009 at 8:33 am
Hi
Am just wondering whether the current saga between ML and BOA will have any adversed effect on JB8? What if BOA decides to dump ML?
Any advice please?
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Can anyone share whether ML and BOA has concluded the deal ? Very worry if every times read remarks like IC.
cheers
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from what i know, us government guarantee certain class of assets (toxic) up to $110b, not everytihng. i’m not sure whether jubilee is consider as siv, foreign company, or not?
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Hi All,
Things are looking up for all of us.
07/11/2008 NAV 87 %
15/01/2009 NAV 88.60 %
22/01/2009 NAV 90%
I am keeping my fingers crossed. If the value increases by another 6%, I will redeem JB 8.
Cheers
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Been a while since the last update on the redeemable value. Anybody knows the latest?
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Merrill Lynch quietly paid out at least one million dollars bonus each to about 700 top executive even when the investment house was bleeding with losses last year, a probe has revealed.
???
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Hi i have a urgent question. If BAC gets nationalized…will bond holders like us get wiped out?
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Hi Salvin,
No. Bond holders will not get wiped out.
Equity holders will get wiped out though.
Cheers,
Intheknow
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Hi Intheknow,
Could you share with us why would equity holders get wiped out?. Doesn’t the equity still trade unless it is taken private and equity holders are not compensated?
(seems like the BAC share price is dropping by the day. good thing i read this else i was still thinking of buying a bit of bac shares)
Thanks.
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Intheknow Reply:
February 18th, 2009 at 10:25 am
Hi Jack,
Nationalisation means the government owns the bank. Equity holders are kicked out and no longer have a ’share’ of the banks networth.
It could also be the case of ‘almost’ nationalisation like AIG. Government owns majority of the company with existing equity holders getting severely diluted. This will cause the share to drop to prices like $1 or less, effectively being wiped out.
But I think BAC and Citi are unlikely to get nationalised. There are too many sovereign and institutional investors involved. US government cannot risk offending them by wiping out their equity holdings.
Cheers,
Intheknow
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Thanks Intheknow.
Sometimes I wonder ‘who’ sets the rules and controls the game. It’s just like taking back everything. Things just gets wiped out every few years – debts, valuation, etc.
The whole world is ‘wiser’ but history is going to repeat itself in another shape or form.
Let’s see what’s going to happen to our dear notes.
Rgds,
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You are in these shit is because of those bloody, greedy, selfish, etc investment bankers in Whore Street who think of nothing, but ever increaseing salaries and bonuses. They have a one way bet, win or lose, they take increasing salaries and bonuses, while the shareholderss, customers took all the losses. And they keep throwing out all sorts of misleading products to mislead the public, while at the same time increase their bonuses due to increase in sales
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I think BAC will not be nationalized. Citi may be, their shit is too big, more than US$300B. BAC have a back-stopper of US$105B protection together with the US$45B cash versus est. toxic assets of US$99B (data from CreditWatch), so there’s still a margin of US$6B. But this toxic value is true or not, i don’t know so don’t challenge me but check it out yourself. I bought it recently after doing my due diligence but i may be wrong also. Wall Streets has a lot of con man, you just don’t know who is telling the truth. I’m also not sure about jubilee. Treasury has a list of what they will guarantee and what they don’t. Check this out yourself. It’s anybody’s guess??? Ignorance is not a reason as many had learnt when LB collapse.
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Sorry the guarantee for BAC is US$118B excl foreign toxics. What i’m trying to say is their losses was already covered by the US government, they will lose US$10B at most according to the details. If i got it correct, it is a good long term bet and i betted. You must be able to sleep well despite the volatility though.
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Hi all,
Just like to share the latest buy back price of JB 8.
12 February 2009 90.65 %
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Hi Intheknow.
Bad news! Just learnt Citi & Bank of America will be nationalised. Would this effect our JB Note 8? Is JB Note 8 consider Bond holder? and where do we stand in the current development? Await your advice.
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Jack Reply:
February 23rd, 2009 at 9:38 am
Hi Johnny,
Could you share the source or refer us to the link?
Thanks.
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Johnny Reply:
February 23rd, 2009 at 10:52 am
Hi Jack,
The word should be “might” instead of “will”. sorry for the error.
The link is http://www.chartingstocks.net/2009/02/gone-in-60-days-citi-and-bank-of-america-wont-live-to-see-may/
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Hi Amy,
The latest buy back price is from StanChart or Citibank?
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Hi Intheknow,
Let assume tt BOA being nationalise, any affect on JB 8 ?
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Hi Johnny,
Please don’t spread rumours. There is no confirmed information that BOA and Citi will be nationalised, unless your information source is superior to Bloomberg or Reuters. This is the lastest:
http://finance.yahoo.com/news/Govt-reportedly-mulls-taking-apf-14434394.html
Anyway, as mentioned in my above posts, even if BOA is nationalised (not restructured), Jubilee 8 notes should be fine as they are debt obligations that are not linked to the share price performance. As long as BOA/ML continue to pay its debt obligations (bonds), Jubilee 8 is fine (the underlying of Jubilee 8 is a unsecured note issued by Merrill).
Cheers,
Intheknow
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Johnny Reply:
February 24th, 2009 at 6:17 am
Hi Intheknow,
Tks for the lastest update on the situation regarding the nationalisation of BOA and Citi. It is a big relief to hear from you regarding the JB8 position even if they are nationalised.
Tks alot.
Regards,
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Hi to all,
This is what Alan greenspan said…
The former Fed chairman said temporary government ownership would ”allow the government to transfer toxic assets to a bad bank without the problem of how to price them.”
But he cautioned that holders of senior debt – bonds that would be paid off before other claims – might have to be protected even in the event of nationalisation.
”You would have to be very careful about imposing any loss on senior creditors of any bank taken under government control because it could impact the senior debt of all other banks,” he said. “This is a credit crisis and it is essential to preserve an anchor for the financing of the system. That anchor is the senior debt.”
http://www.ft.com/cms/s/0/e310cbf6-fd4e-11dd-a103-000077b07658.html?nclick_check=1
It looks like even if there is nationalisation, the US government will want to protect holders of senior debt…if not there will be another credit crisis…
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any expert can advise? what will happen to JB8 when BOA is nationalised?
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Hi Rach,
The latest buy back price is from Citibank.
Cheers
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hi i just heard latest buy back is 0.8 from my RM…anyone can confirm?
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Hi All,
Latest update from Citibank.
The buyback price for JB 8 is 90.85%.
There is a silver lining for us.
Cheers
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Hi all
with the current buyback price for JB at 90.85%, I think of letting go of my notes. But my relationship manager said that if I give the green light to make the necessary paperwork this week , the price will be based on next’s weeks price which is not announced yet. ie if the price drops next wek, theres no turning back.
Any one out there has sold your notes? whats the procedure like. or anyone else has any advice on my decision. Should I sell or hold. I very scared leh.
Jia hui
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Jia hui, that’s not what i went thru. I checked the price on Friday moening with my broking house and drop them an email to authroise and the price was based on that Friday’s price and i got the full amount. That was last month and a different note though. But i understand from my broker that’s the way it is, regardless of which note you sell. Friday authorise, sell at Friday’s valuation and get the money 3 working days later.
At 90%, the upside is only 10%, so might as well take the loss and sleep peacefully. The situation in the US is evloving in quite a scary manner, ML was obviously a bad decision for BOA, i’m not sure what will happen next. There are rumours that if US wants to nationalize BOA, Ken Lewis will return ML to the Treasury and the Fed because he was arm-twisted to abosrb ML when Ken found out that ML was in deep shit and want to back out of the deal but the US government refused. So now US government die die also must back up BOA from nationalization.
Since you are so anxious, plse let me share a piece of info with you. The US$115B guarantee by Treasury to BOA (& ML) does not include “Foreign Assets” and several other categories of things. You can find this info on the Treasury or White House website site. I don’t claim to be “In-the-Know”, so you got to decide for yourself whether these notes are include in the guarantee, that’s the risks. Many people are not aware of this. From what i know Jubilee was incorporate outside the US.
Why i know so much is because i go to US quite often for work purpose. You can verify my words by doing a search, again i don’t claim to be “In-the-Know”, just that i have been keeping very close watch on the situation in the US and through my colleagues there because of my job and my investment in BOA. Nobody can be sure, even Warren Buffet said that yesterday. So a 10% loss is a good bet. But plse decide for yourself and don’t hold me responsible, i’m done and through with these garbage.
God bless you.
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Hi Henry,
Thanks for the insight.
I’ve no luck in digging out more resource. I’ve looked at the whitehouse website as well as US treasury.
Could you help provide a link or links to “The US$115B guarantee by Treasury to BOA (& ML) does not include “Foreign Assets” and several other categories of things. You can find this info on the Treasury or White House website site.”
Thanks.
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lioninvestor Reply:
March 1st, 2009 at 5:01 pm
Hi Jack,
I’m posting this on behalf on henry as he accidentally sent it to my email:
“Try this. I subscribe to daily updates including yeild reports, so they email to me automatically. You may also want to sign up, it’s free, S’porean like this, haha.
http://www.treas.gov
Again, i’m not saying it will happen, i’m not God or In the Know. I was shocked when i first read those 2 words, i read it a few times but there are some ambiguities as usual, How you want to interpret it, it’s your choice, i won’t debate about it. Good luck. US government has not been very clear in their bank resuce bank.
That’s why the bank stocks plunge, recover a bit, then plunge again. There is a lot of fear in the market. I’m trying to guess the direction of Citi and BAC price tomorrow, should i buy or sell? Again, it’s individual interpretation.”
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There were many different news the last 3 weeks in the US and naitonalization was and is still the hottest topic in America. But be careful, many gurus gave their views and want nationalization. Greenspan is just one of those idiots. They continue to spread rumours to drive the stock prices down. I was of the view of no nationalization before Obama and Benerke made the annoucement. Again i’m no guru, i have a few reasons to think so. You can read Seeking Alpha web site if you want to know more of this topic, i had contribute my comments there several times the last few weeks.
Some of those rumours spreaders had been being accused of having personal interest in hedge funds and some were short sellers. These 2 categories of people will benefit if the bank stocks drop to $1. Desipte so many wayang, Benerke and Obama were not moved and announced no nationalization mid this week. But the rumours go on. And the gamblers continue to gamble in the casino. That’s Wall Streets.
Ultimately, and most importantly, it’s the decision of 3 persons: Obama, Benerke and Geithner, the rest are “noise”. So don’t read too much into it. It’s a confusing situation, hence I only look for facts, policy and plan.
There are people who said preferred shares are safe but i didn’t agreed last month, see what happen to GIC, haha. Now some people say bond holders are safe. Really? Americans are very innovative, otherwise there will be no such things as Minibond. The complex mathematical formulas was invented by some MIT people to reduce their risks and transfer it to the ignorant by us. Anything can be converted and then swap here, swap there until it becomes nothing. It’s not our say. Do we think GIC likes to convert, i don’t think so. Did GIC have a choice, i don’t think so.
So if one cannot afford to lose some money, it’s better to stay out completely.
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Hi All,
1. Remember that Jubilee notes are not linked to BOA or ML share price.
2. Remember that Jubilee notes are NOT GUARANTEED by US government or anyone but ML for now. It might be guaranteed by BOA if BOA choose to do so.
3. The guarantee by Treasury is only to insure BOA against toxic assets on BOA’s balance sheets. It does not guarantee any of BOA’s obligations. It also has nothing to do with Jubilee notes.
4. Jubilee is fine as long as ML does not default on any of its obligations.
5. As far as I know, the published buy-back price is indicative and will apply to people who applied to redeem BEFORE the price is announced. It’s like mutual funds, if the NAV is $90 today, and you put a redemption order today, you will NOT get $90, you will get the price either 1 or 2 days later. Applying that to Jubilee, if you see the published NAV of $92 on 6th March 09 and you put in a redemption order on 6th March 09, you will get the redemption price AS AT 13th March 09.
Cheers,
Intheknow
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Thanks Henry and Lioninvestor for the links and feedback and IntheKnow for your views. I think I have the necessary info (or lack of) to make an informed/uninformed decision.
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Hi all
Thanks for your precious feedback. I think you all r more helpful than my relationship manager. I asked him to update me on the price, no reply. sms him, no reply. sigh……
I might just go ahead n let go notes this Friday so i can sleep in peace. then I work n save what I lose. an expensive lesson for me. Next time, I wont gullibly think all products sold by banks are safe. Not entirely the fault of others. Ive got myself to balme for being too trusting n not doing my homework.
I pray this financial situation will bottom out soon. those poor ones with many mouths to feed are having a hard time.
Thanks
jiahui
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Hi All ,
As of 26 February, the NAV of JB has increased to 91%. ( courtesy of Citibank )
I’ve also asked my RM how redemption works. If you redeem JB today, you’ll get your money based on this week’s pricing. In other words, the amount you receive is locked in, based on Friday’s price. It will also take between 3 and 5 days before you can get your money.
I hope this infor helps.
Cheers
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Intheknow Reply:
March 5th, 2009 at 11:58 am
Hi Amy,
Would advise you to get that advice from your RM in black and white (amount received is locked in, based on Friday’s price).
That’s not how banks usually work for redemptions, especially structured products.
Cheers,
Intheknow
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Hi InTheKnow,
Thank you for your advice. You are right. I checked with my RM again and this is her answer, lifted from her email:
“You will not be able to know the price before you sell. It is purely an indicative price. Hence, due to this reason we usually do not encourage customers to sell before maturity.
Upon maturity of the note on 9 Jan 2011, you can take back your principal amount. From now till before 9 Jan 2011, you have to bear the risk of getting lesser than what you put in if you choose to early withdraw.
When you choose to redeem the note before maturity, we will give you the redemption form to sign, with the indicative value and the trading date. We can make a copy of the transaction form if you need something in black and white, however you will still have to bear the risk of the price movement because the price will only be out after you sell. For example, if you sell today, I will only have the price for 26 Feb 2009 which is 91%, however, you will only know the price for 5 March 09 on 6 March 09, hence, it will be unknown to you what is the price you sell at.”
I will just get the redemption from from her this Saturday and read it carefully. May need your advice regarding some terms in that form.
As for the other JB 8 owners, I hereby retract my early entry about the price being locked in. In the Know is right-the price is only indicative. You may end up getting much much less. Hence , I will hold on a bit longer.
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Robine Reply:
March 5th, 2009 at 5:23 pm
Hi Amy,
I thought I read somewhere in this site whereby a guy suggested putting a remark on the redemption form to specifically instruct the bank to only redeem at or above the NAV he wants. Not sure if it is feasible with the bank this way.
Think lets monitor the price for few months to see the movement. The final value shouldnt be far off from the estimated price (unless the market tumbles). Just my opinion…
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Intheknow Reply:
March 6th, 2009 at 9:20 pm
Hi All,
I work in a bank and I come into frequent contact with structured products, hence I am In-the-know.
You CANNOT put a limit sell price on the redemption form. It doesn’t work that way. If you put in a redemption order, you are subject to the mercy of the issuer’s buyback price, whatever it may be. Of course, the issuing bank has to give a reasonable price, not something like 10% when it was 90% one week ago. But it is usually different from the indicative price you were made aware of. Hence some form of gamble there. (It could be higher!)
Any queries, just post and I will try to address.
Cheers,
Intheknow
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Hi In-the-know,
I’m holder of Jubilee Notes Series 8 and other structured products.
In gloomy times like this, it’s really nerves breaking to keep listening to bad news.
Citibank seems to be a black hole with billions of dollars being thrown into it.
If Citi really goes bankrupt, what will happen to all the notes, structured products and unit trusts bought from but not issued by Citi ? And how about Citi time deposit ?
Really appreciate In-the-Know and others for their selfless time and effort in giving amateur investors like us good and solid advice…
Thank you.
Best Regards,
Lyne
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Intheknow Reply:
March 7th, 2009 at 8:00 pm
Hi Lyne,
If your note is merely HELD in Citi and not issued by Citi, there is no problem. You will still get it back. Citi is just your custodian and their bankruptcy will not affect your note. There is only a possibility that some fees may be levied should Citi be forced to transfer your holdings to another bank e.g. HSBC or StanChart, but nothing major.
Even better, if you are talking about Citi Singapore, it is a separate subsidiary (not branch) of Citi with its own share capital and assets.
Time deposits in Singapore approved deposit taking institutions are guaranteed 100% by singapore government till end 2010.
Cheers,
Intheknow
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Interesting article in Channel News Asia regarding Bank of America which I read on the iPhone.
Key points:
Lewis told executives the bank “would generate nearly 50 billion dollars in profit this year”.
Lewis said that “the last thing we need to do is start nationalizing banks.”
“By nationlization, I mean a full-scale takeover of an institution by the government in which common shareholders, and possibly debt holders as well, would be wiped out. This, in my view, would be a nightmare.”
BAC shares have been climbing very fast lately. Hopefully, things get stable and don’t swing wildly, regardless of which direction.
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Hi All,
Just like to share the latest NAV of Jubilee 8.
12 March 2009 91.25% ( quoted by Citibank)
Cheers
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Just let go of my Jubilee 8 today, have been thinking very hard for the past few weeks. No more worries for me!
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lioninvestor Reply:
March 17th, 2009 at 12:10 am
Hi Blur,
Well, at least you can sleep in peace now no matter what happens.
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Hi Lioninvestor,
Everytime when i watched news, i got so sad & worried. can’t remember the number of sleepless nights that i had.
Great relief for me.
Thanks Lioninvestor for this wonderful site!
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hi
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Hey Blur and in-the-know,
does it mean if i choose to redeem my Jubilee 8 notes early i will not be able to know the exact price i’m redeeming at?
if its 91.25% as quoted by Citi, does it mean i get back 91.25% of whatever i put in at the start, like 91.25% of say $100,000 = $91,250?
anyone knows how much is RBS/ABN quoting now?
Blur: how much did you redeem your notes at? if it’s convenient to share.
cheers,
Collin
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hi collin
i redeem at 91%, i confirmed this price with my RM.
she called back the next day to tell me this price is locked. I will get my money back in 3-5 days time.
My RM just revert today, i will get it by Friday.
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Have been checking this site for comments and opinions of MLJB8. I finally decided to redeem 2 Fridays ago at 91 % I got back my money today. I am very relieved and have no more worries, though a little upset that I lost some money. I don’t think I want to go through the stress until it matures. It’s NOT worth it. Thank you LionInvestor for this site. All the best!
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Just an update, i’ve just received 91% of my principle sum
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why redeem when the market is turning…..
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i have enough of sleepless nights and worries, u will never know when is another bad news coming…
anyway i’m happy i can get back most of my $$… treat it as a lesson learnt.
no more bonds,minibonds, notes for me…..
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any further updates on ML series 8?
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Robine Reply:
April 6th, 2009 at 10:47 am
Hi,
The NAV of JB is 86.25% as at Mar26….(from Citibank).
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Hi Intheknow,
Cayman Islands together with Singapore, Hongkong and others have been “grey” listed by OECD recently. Could you comment on how this may or maynot affect JB8 being defaulted.
Thank you.
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Hi In The Know,
Could you possibly give a reason for this slide in the NAV of Jubilee 8?
26 March 86.25 %
3 April 86 %
You did mention in one of your posts about the spread-that there could be discrepancy in NAV of JB 8 depending on the bank. Is it possible that Citibank purposely reduce the value of JB 8 because the next coupon is payable in the first week of April?
Aside, to those of you who managed to redeem JB 8 at 91% , you were fortunate. Now I have to go thro’ the cycle of waiting the value to rise. And, I am seriously considering getting out when the value reaches 92 %.
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Hi In The Know,
Could you possibly give a reason for this slide in the NAV of Jubilee 8?
26 March 86.25 %
3 April 86 %
You did mention in one of your posts about the spread-that there could be discrepancy in NAV of JB 8 depending on the bank. Is it possible that Citibank purposely reduce the value of JB 8 because the next coupon is payable in the first week of April? Could the bank do this?
Aside, to those of you who managed to redeem JB 8 at 91% , you were fortunate. Now I have to go thro’ the cycle of waiting the value to rise. And, I am seriously considering getting out when the value reaches 92 %.
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Hi All,
1. One reason for the decline in NAV could be due to a rush of people wanting to redeem their note. In order to discourage people from redeeming, the issuer could have intentionally reduced their buy back price even though there is no material negative news.
2. Cayman Islands and all tax haven countries have all along been on the grey list of OECD. I don’t see how this will impact Jubilee Series 8. Jubilee Series 8 may be affected if Cayman Islands decides to start imposing taxes on the special purpose vehicles incorporated in Cayman, but this does not have much relation with OECD’s grey list which has more to do with a need for greater tax information release to authorities.
Cheers,
Intheknow
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Out of curiosity, does anybody know
1. What is the approx total size of JB 8 in dollars?
2. How many countries sell JB 8? (only Singapore and Hong Kong?)
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Hi Jack,
I believe the issue size for Jubilee Series 8 is SGD500million and only sold in Singapore.
Cheers,
Intheknow
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Hi IntheKnow and Friends,
I have Citrine All Weather Booster Notes held in Citi. I understand interest is due to be paid on 31 March 09. Why is my savings account is still not been credited with the quarterly interest yet? It is already 7 March, quite late. Secondly, the first round of interest was due on 31 December 2008. Why was interest credited only 5 days later on 5 Jan 2009? Does a delay mean that anything is going wrong? Thank you.
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Hi All,
I am reopening my invitation to treat for the purchase of Jubilee Series 8 notes from you all. I am only interested in Jubilee Series 8 notes and they must be held in Standard Chartered currently.
For more details, please contact:
structuredproduct@hotmail.com
Please state the amount that you wish to sell and we can discuss further. My offer price will be higher than the bank’s current buy-back price.
Cheers,
Intheknow
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Dear ALL
any ideas when is next interest payout
Thanks
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stanleyleow Reply:
April 14th, 2009 at 6:58 pm
just received my interest of 3.1% credited to my stanchart account
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9th april 09 followed by 9th july 09.
expect to get the interest credited within 5 working days (depending on which bank is holding your note).
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FirstTimer Reply:
April 15th, 2009 at 11:39 am
till now, have still not received under Citibank.
Is citibank always late ???
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Hi
i received the interest today from SCB.
=)
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still haven’t received any payout from citibank…this is bad…
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Johnny Reply:
April 17th, 2009 at 11:22 am
Hi Worried,
You should check your account in Citibank again since I rec’d my interest pay-out from Citibank on 16 Apr 09.
Regards,
Johnny
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I have received the interest from RBS
cheers
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Hi Worried,
don’t worry. no default event on Merrill Lynch has occurred.
citibank also has no liquidation event.
only possibility is operational error/delay which is easily resolved.
Cheers and TGIF,
Intheknow
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Hi In The Know,
I retrieved this from Google. I did not copy the whole extract. For what I gather, US President Obama proposed to make some changes which would eventually lead to Cayman Islands imposing taxes on multinationals and financial companies who have been running their businesses and operations there.
However , the report did say, these proposals would only take effect in 2011.
Could you please give your take on this? What impact will this have on JB 8?
“WASHINGTON—President Obama on Monday called for curbing offshore tax havens and corporate tax breaks to collect billions of dollars more from multinational companies and wealthy individuals, a move that appeals to growing populist anger among taxpayers but that is likely to open an epic battle with some major powers in American commerce.
With the proposals he outlined at the White House, the president sought to make good on his often repeated campaign promise to end tax breaks “for companies that ship jobs overseas.”
The proposals would especially hit pharmaceutical, technology, financial and consumer goods companies — among them Goldman Sachs, Microsoft, Pfizer and Procter & Gamble — that have major overseas operations or subsidiaries in tax havens like the Cayman Islands. ”
Thank you very much.
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Hi Amy,
1. Maturity date is 9th Jan 2011. So unless the change takes effect before 2011, there is minimal impact.
2. It appears that if Obama succeeds to get Cayman Islands to impose tax (Cayman Islands has to agree, US alone can’t force Cayman Islands to imposes taxes), then ML has the right to early terminate the notes.
3. I would interpret your article as saying Obama is trying (US is trying) to impose a tax on US companies running operations in tax havens. So perhaps it would be more of an additional tax being imposed on “foreign operations” rather than Cayman Islands itself taxing the companies incorporated in Cayman Islands (this is the trigger event for early redemption).
Any tax experts out there can comment?
Regards,
Intheknow
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Hi All,
This is the full link:
http://sg.news.yahoo.com/ap/20090504/twl-us-obama-taxes-ef375f8.html
From what I read, it appears that US will impose ADDITIONAL taxes on foreign operations.
It should not have any impact on Jubilee 8 since the trigger event is if Cayman Islands themselves impose taxes, not US.
Cheers,
Intheknow
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With Temasek selling all its stake in BoA, how does it affect us as holders of Jublibee Notes? Is this a pre-empt sign that Temasek thinks that BoA will fall? Comments from all is welcomed.
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In the know
any advise
Cheers
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i think it’s apparent to all that the sale of BAC at end March was a BIG MISTAKE..
’nuff said.
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Hi there,
Does anybody know what is the latest NAV for JB 8 ?
Thanks for sharing…
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Hi Boon
If you mean the current price of JB Series 8, it should be about 85.75%.
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Hi All,
My indicative offer is still open.
If anyone wants to sell me their Jubilee Series 8 notes held in Standard Chartered Bank, please email:
structuredproduct@hotmail.com
and we can discuss further.
If the current price of Jubilee Series 8 notes is 85.75%, I can probably pay you about 90% to 93% (this is a non-binding offer which will be subject to further negotiation).
Cheers,
Intheknow
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Hey people,
Does anybody know what is the latest NAV for JB 8 ? Tried calling RM, no response, no sms. Thanks in advance..
Best Rgs
SP
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hi helpless,
about 91.5 now.
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Hi In The Know,
A colleague at work shared this headline with me:”US govt extends tax exemption deadline for offshore accounts.”
(1) Does this headline refer to individual offshore accounts only?
(2) Will it have any negative impact on Jubilee 8? I know that JB 8 is set up on Cayman islands.
Could you elaborate, please.
Thank You.
Desperate
Reply
Hi Ali,
It would be helpful if you gave me the link for that article.
But it sounds like it applies to OFFSHORE ACCOUNTS that individuals/corporates use to store their wealth.
Doesn’t sound like it will apply to Jubilee which is a special entity incorporated to issue Jubilee 8.
Anyway, Jubilee 8 will only have problems if CAYMAN islands decide to impose taxes. Nothing to do with US government imposing taxes.
Anyway Jubilee 8 only has 15 months remaining. Any tax changes usually takes 1-2 years to take effect.
Don’t worry, be happy!
Cheers,
Intheknow
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Hi In The Know,
Thank you very much.
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Hi all
A report on International Herald Tribune dated 5th October 2009 on possible imposition of taxes by Cayman Islands
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Eric Reply:
October 5th, 2009 at 11:03 pm
Hi All
I have found an article on Cayman Islands regarding taxation.
Don’t know whether there is any impact on JB8?
http://www.nytimes.com/2009/10/04/business/global/04cayman.html?em
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this is the article:
http://www.nytimes.com/2009/10/04/business/global/04cayman.html?_r=1&ref=global
unlikely for cayman islands to shoot themselves in the foot by imposing taxes and forcing out the hedge funds and corporates!
even if taxes are imposed, it would probably be in 2-3 years time, way after Jubilee Series 8 matured in early 2011.
don’t worry!
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Eric Reply:
October 8th, 2009 at 9:49 am
Hi Intheknow and All
Thanks for your advises!
Still holding on to my JB8 notes.
Tmr, quarterly payout coming.
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i wonder if anyone has received the latest payout? up to now still not credited in my account
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Johnny Reply:
October 20th, 2009 at 1:00 pm
I have just rec’d my dividend on 19 Oct through Citi bank. You should receive your as well.
regards,
Johnny
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I didn’t received Mine either.
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my friend’s mum bought J8 from 2 banks.. when she was comparing the documents, she noticed that one of the bank has this document called the “know your investment risk”. in the document, it states that J8 is principal guaranteed, and the issuer is Merill Lynch. in the document from the other bank, it said principal protected and issuer is Jubilee. She went to her bankers to double check, and realized that it is principal protected and issuer is Jubilee. Thus she went back to the first bank to complain and was compensated with the full principal plus the interests that was paid. in addition, she even received some vouchers as compensation..
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you can’t find a better deal than this note in current market situation.
where to find 3.15% p.a. now???
i hope your friend’s mum didn’t regret ‘refunding’ her purchase. You probably get 0.7% p.a. by putting the same amount in bank fixed deposit now.
For J8, the Issuer and Guarantor is Jubilee. The underlying securities securing the note (and hence Principal Protection) is a bond issued by Merrill Lynch.
Indirectly, you are taking on the risk of Merrill Lynch. Do you think Merrill Lynch will collapse in next 1 year+?
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update… BoA sued for fraud over the merger. i’ve not been following up so have no head no tail over this issue. any pointers?
http://www.channelnewsasia.com/stories/afp_world_business/view/1035447/1/.html
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Hi
i deposit 20k, now my bank balance is only 18,600.00.
any1 knows what happen ?
tks
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latest market price of the note is 93.00
so you bought 20k of the note which is worth 18.6k now.
don’t worry, hold it for another 9 months, and you will get back 20k + interests if no default has occurred.
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Oic, is paper loss is it. Thanks v much.
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