Anyone bought Investment in Pinnacle Notes Series 7?

[Bmwcar]

Dear all,

 

May I know anyone bought Pinnacle Notes Series 7 issued by Morgan Stanley?

 

Basket Company

(1) Bank of America Corporation

(2) Citigroup Inc

(3) DBS Group

(4) UOB

(5) Singtel

(6) OCBC

 

Hong Leong Finance sold this product to my wife. They explained that as long as above Basket Company didn't bankrupt, the fund will be safe.

 

However, what happen when Morgan Stanley go bankrupt? What will happen to this investment?

 

Thanks for sharing in advance :)

[Cheekg98]

very complex ... you better call Hong Leong Finance to check it out ...

 

But should be alright ba ...

[Ticklish8]

Morgan Stanley yesterday plunged after S & P said it is reviewing its long-term debt ratings of Morgan Stanley for possible downgrade.

 

Make your own judgment.....

 

 

Morgan Stanley sank $2.77, or 22 percent, to a 12-year low of $9.68, while Goldman Sachs Group Inc. fell $12.55, or 12 percent, to $88.80 after their credit outlooks were cut to negative by Moody's Investors Service. The review of Morgan Stanley's A1 long-term credit rating affects about $200 billion of debt, Moody's said. The ratings assessor affirmed its Prime-1 grade for Morgan Stanley's short-term debt.

Edited October 11, 2008 by Ticklish8

[Ticklish8]

NEW YORK (Reuters) - For U.S. authorities watching from the sidelines as Morgan Stanley struggles with doubts about its survival, letting the investment bank fail is not really an option.

 

While near panic about the No. 2 independent investment bank's future wracked stock and bond markets this week, a person familiar with the matter said the government is unlikely to allow Morgan Stanley to fail and would instead engineer some sort of sale or bailout.

 

The bank's share price has fallen some 70 percent over the last week and potential ratings cuts are looming, spurring many to make comparisons to Lehman Brothers Holdings Inc's (LEHMQ.PK: Quote, Profile, Research, Stock Buzz) final days.

 

But shockwaves have been felt throughout the financial system since Lehman filed for bankruptcy on September 15 after regulators refused to help other banks buy it, an experiment U.S. authorities cannot afford to repeat.

 

A person close to Morgan Stanley said: "The government is persuaded that this is where they have to draw the line."

 

Analysts view this assessment as sensible.

 

"You can't possibly allow Morgan Stanley to go. The unrelenting pessimism and absence of confidence that we've seen for the last two weeks would get worse," said Michael Holland, who oversees more than $4 billion of assets at Holland & Co LLC in New York.

 

But some analysts say Morgan Stanley does not need any sort of bailing out at the moment. On Tuesday, it is expected to close on the sale of a 21 percent stake to Japan's Mitsubishi UFJ Financial Group Inc

 

But it is also becoming clear throughout the credit crisis that seemingly stable financial firms can collapse quickly.

 

"As we've seen with Bear Stearns and Lehman, once the fear virus has infected the story, it is tough to shake," David Trone, an analyst with Fox-Pitt Kelton Cochran Caronia Waller, said in a research note.

 

The fear has already had some affect on Morgan Stanley. The company has in recent weeks lost at least 25 percent of its prime brokerage clients, a key source of profits for the company.

 

If the firm does come under further pressure, there are myriad reasons for the United States to consider a rescue as it did with American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz), which teetered on the verge of bankruptcy before receiving an $85 billion loan facility from the government, followed by another $38 billion earlier this week.

 

For example, prime brokerage, which processes trades for hedge funds and finances their positions, is still a big business for Morgan Stanley even after client departures. If Morgan Stanley failed, billions of dollars of prime brokerage client assets would be tied up for months, hobbling a huge swathe of the world's hedge funds, a fund manager said.

 

Morgan Stanley may seem to be teetering as its share price hovers below $10 and the cost of protecting its debt against default surges.

 

A BUYER AT SOME PRICE

 

But at this point, the government cannot allow more dominoes to fall, because the impact on the financial system could be even worse than Lehman's failure.

To the extent that Morgan Stanley needs funds, it has a few options. It may be able to tap MUFG for more money or support, a step the Japanese bank may be willing to take to protect its $9 billion investment.

 

"I think you'll find that MUFG will support Morgan Stanley," said Charlie Peabody, a veteran bank analyst at Portales Partners.

 

And Morgan Stanley could likely sell itself if it wanted to, perhaps in a government brokered deal, analysts said. When Lehman Brothers collapsed, prospective buyers pored over its books and refused to purchase the company without government assistance, which the government in turn refused to provide.

 

"You don't have the same asset toxicity with Morgan Stanley. I think they can find a buyer at some price," said Holland & Co's Holland.

[Yoongf]

In this case, MS is the issuer of the note, and thus is exposed to a term called "issuer risk". This is similar to the Lehman Brothers issue now where the issuer of the Minibond (LB) kena game over.

[Picanto]

dun listen to anyone here. seek advise from the pros.

[Speedsun]

It doesn't mean in a car forum, there is no pros. You may have just jump into conclusion. Anyway, pros also make mistakes else the world financial crisis would not have happened.

Edited October 12, 2008 by Speedsun

[Chongster]

if it is any comfort, MS actually is still profitable, has been profitable throughout this crisis, is sitting on a lot of cash, and really is a victim of inordinate fear in the mkt. i think it will survive. i am going to buy its shares.

[Galantspeedz]

Shouldn't those that has been selling this products be the pros? You still think you can trust them?

[Chongster]

no, they are the fresh grad financial adviser that the banks hire a dime a dozen. preying on old folks trying to renew their fixed D, telling them that this will give them 4% carry instead of the 75bps fixed d earn you. and then telling them it is as good as capital protected.

 

because of the high inflation and low interest environment, a lot of people were understandably hungry for better returns. that's why a lot of people fell for this, a lot of people went for preference shares, a lot of people went into Aussies (god bless those as well).

 

i almost went into aussie myself, if it has been a female officer who put half ball instead of a young punk who cant speak properly, i think i wld be 30% down... heng ah

[Bmwcar]

Dear all,

 

Thanks for all the input. I will request my wife to call Hong Leong Finance tomorrow.

 

I was with her when she purchased this investment and we kept looking at the 6 Basket Companies but we were not told the issuer was MS :(

I think this is consider Mis-lead too :(

 

Next what happen to Preference Shares?

I bought UOB Preference Share recently

[Hishercar]

YOU ARE right

 

each time I queue at the POSB counter to withdraw or deposit, teh counter girl will not give chance always tell me you keep money in the deposit earn you so little interest why dont you try this and that and interest many times more

 

once I sounded interested they immediately got a relationship manager to speak to me

 

i guess they all get commission for all these products sold

 

how to blame these people

 

should go for the guys who push them to do this and that with quota and all

 

 

i think we should not be missing the forest for the trees

 

 

I think not all blame should go to the frrontline staff

 

they also need to make a living

[Anodiz3]

this is true..... for every structured investments that they sold to you..... they get a % cut of the amt that you invest.....

[Galantspeedz]

Exactly. If these people are fresh grads and investors chose to believe them then i think there is something very wrong with the investors mindset.

 

Anyway the key word is 'invest' it co-relates with risk. Low risk does not mean no risk