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Technical Analysis on the Singapore and U.S. Markets. Providing in-depth alerts for traders and investors
Strategy of Wealth
Channel News Asia, 15 November 2008
Pinnacle 9 & 10 Noteholders could Lose all of their Investments
Morgan Stanley has said investors of its Pinnacle Notes Series 9 and 10 are expected to lose all of their investments.
This follows an update issued earlier in the week by the US bank, warning of the fragile nature of the structured product.
The warning bells came as Standard and Poors downgraded the rating of underlying assets of the Pinnacle Notes from "AA" to a junk rating of "CCC—".
The breakdown in the Pinnacle product came from a "credit event" tied to its linkages with troubled financial institutions such as Lehman Brothers in the United States and Iceland’s Kaupthing Bank.
Others include US mortgage lenders Fannie Mae and Freddie Mac, and Iceland’s Landsbanki.
Morgan Stanley also said the notes were linked to collateralized debt obligations or CDOs.
The two series of the Pinnacle Notes have been sold since December 2007. The minimum amount required to invest in the structured product was S$5,000.
About 700 retail investors in Singapore invested some S$26 million in the product. The notes were sold through five distributors: DMG & Partners Securities, Hong Leong Finance, Kim Eng Securities, OCBC Securities and UOB Kay Hian.
Hong Leong had sent out Morgan Stanley’s update on the products to worried investors earlier this week. OCBC said it will continue to keep investors updated with news about the product.
The Monetary Authority of Singapore said that investors who felt they were mis—sold the product, or that the product was misrepresented to them, should file their complaints with the respective financial institutions.
