Hong Kong Seeks to Aid Investors In Lehman Debt

REUTERS NEWS SERVICE

HONG KONG -- Hong Kong's government proposed a way to let investors recoup some losses from a reported $2 billion in securities linked to Lehman Brothers Holdings Inc., urging distributing banks to buy the bonds back.

Tens of thousands of investors have bought Lehman-issued and referenced credit-linked notes, called mini-bonds, valued at $2 billion, local newspapers reported. Hundreds of investors have demonstrated outside banks in recent weeks, seeking their money back.

Lehman filed for Chapter 11 bankruptcy proceedings in the U.S. last month.

Financial Secretary John Tsang discussed his proposal with the banks involved on Monday, and said some had given a "positive response." Under the plan, banks would buy back the mini-bonds at a value to be decided on, Mr. Tsang said.

"This represents the best way forward," he said, adding it would help avoid a "long and tedious" liquidation process.

"This proposal will enable the investors to get some of their money back quickly," he said.

The trustee of the bonds, HSBC Holdings PLC, agreed to disclose to distributors details of the value of the underlying collateral on the securities, he said.

Mr. Tsang said it was unlikely that investors would get back all their money. A total of 16 banks and three brokerage companies distributed the products in Hong Kong.