HSBC Institutional Trust Services (Singapore) Ltd, the trustee for the Lehman Minibond notes programme, has informed the Monetary Authority of Singapore (MAS) that the receivers for the Minibond notes series 5 to 10 have taken steps to terminate the swaps between Minibond Ltd and Lehman Brothers Special Financing Inc for series 5 to 8 of the notes. Both the trustee and receivers believe that restructuring is not a viable option at the moment.

This follows earlier steps to terminate the swaps in the underlying securities for series 1 to 8 of the notes.

In a press release issued by MAS yesterday, it announced that similar steps will be taken for series 9 and 10 which defaulted on November 29, 2008, and the rest of the Minibond notes series as and when they default and receivers are appointed for them.

These are part of the steps that the receivers are taking to minimise shareholder risk, as they are currently unable to either restructure the notes or to realise value by selling or liquidating the underlying collateral.

The trustee has also informed MAS that the lawyers acting on the bankruptcy proceedings for Lehman brothers in the United States have reserved the right to challenge actions taken by the trustee on the notes.

MAS has asked the trustee and receivers to resolve the legal complexities as quickly as possible and to take all necessary steps within their powers to safeguard noteholders' interests.

It reassured the public that these issues will not affect the handling of complaints according to the three-step process set forth by the MAS.