<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>High Notes 2 not a low-risk product
</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->I REFER to Mrs Ding Zhi Yuan's letter, 'Watch this High Note as well' (Sept 24), and wish to address her concerns and clarify some points in her letter.
DBS High Notes 2 (HN2) is a five-year, structured, credit-linked note designed for investors seeking enhanced yield by providing exposure to a basket of highly rated entities, each with a minimum credit rating of A- by Standard and Poor (S&P). The proceeds of HN2 were used to buy a note, referred to in the pricing statement as 'reference notes', issued by Constellation Investment.
HN2 is not a 'low-risk' product nor principal-protected. In the pricing statement, we also highlighted that, while investors can enjoy potentially higher returns, they are cautioned that their investment is subject to three areas of credit risk:
The credit risk of the issuer of the notes;
The credit risk of Constellation that is collateralised by a basket of securities; and
The credit risk of the eight reference entities in the first-to-default credit basket.
With reference to the second area, investors were told that Constellation would use 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 issue of HN2) to secure its obligations under the reference notes (collateral). Investors were also told that the specific composition of the collateral was yet to be determined at the time of the pricing statement. Having said that, since then the composition of the collateral has been determined, and the list is available on request from the bank.
To help investors monitor their High Notes investments, half-yearly statements are sent to reflect the value of the investment (including the effect of any deterioration in the credit quality of the collateral). We also inform our High Notes investors of any event which has or may have an adverse effect on the redemption amount or the outstanding principal amount in relation to the Notes.
We encourage HN2 investors who have further queries to contact us on 1800-111-1111 or e-mail customerservice
@dbs.com, where our dedicated team at our Investor Care Centre will be happy to assist.
Janet Mohan (Ms)
Vice-President
Customer Feedback & Service Management
Consumer Banking Group
DBS Bank <!-- end of for each --><!-- Current Ratings : start --><!-- Current Ratings : end --><!-- vbbintegration : start -->
</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->I REFER to Mrs Ding Zhi Yuan's letter, 'Watch this High Note as well' (Sept 24), and wish to address her concerns and clarify some points in her letter.
DBS High Notes 2 (HN2) is a five-year, structured, credit-linked note designed for investors seeking enhanced yield by providing exposure to a basket of highly rated entities, each with a minimum credit rating of A- by Standard and Poor (S&P). The proceeds of HN2 were used to buy a note, referred to in the pricing statement as 'reference notes', issued by Constellation Investment.
HN2 is not a 'low-risk' product nor principal-protected. In the pricing statement, we also highlighted that, while investors can enjoy potentially higher returns, they are cautioned that their investment is subject to three areas of credit risk:
The credit risk of the issuer of the notes;
The credit risk of Constellation that is collateralised by a basket of securities; and
The credit risk of the eight reference entities in the first-to-default credit basket.
With reference to the second area, investors were told that Constellation would use 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 issue of HN2) to secure its obligations under the reference notes (collateral). Investors were also told that the specific composition of the collateral was yet to be determined at the time of the pricing statement. Having said that, since then the composition of the collateral has been determined, and the list is available on request from the bank.
To help investors monitor their High Notes investments, half-yearly statements are sent to reflect the value of the investment (including the effect of any deterioration in the credit quality of the collateral). We also inform our High Notes investors of any event which has or may have an adverse effect on the redemption amount or the outstanding principal amount in relation to the Notes.
We encourage HN2 investors who have further queries to contact us on 1800-111-1111 or e-mail customerservice
@dbs.com, where our dedicated team at our Investor Care Centre will be happy to assist.
Janet Mohan (Ms)
Vice-President
Customer Feedback & Service Management
Consumer Banking Group
DBS Bank <!-- end of for each --><!-- Current Ratings : start --><!-- Current Ratings : end --><!-- vbbintegration : start -->
