Minibond are not bonds, but financial derivatives based on credit default swaps (CDS), which are high-risk financial investment products. They were a brand name for a series of structured financial notes issued in Hong Kong and Singapore under control of Lehman Brothers. The name was also used for other likewise structured Notes, namely Constellation Notes and Octave Notes, respectively issued in Hong Kong under the direction of DBS Bank and Morgan Stanley.
Some countries prohibit or restrict the sale of CDS to non-professional investors. However, in many regions in Asia, banks sell them on behalf of others. In addition, banks to sell products to retired people, familiar neighbors, etc. in order to gain sizable commissions leading to possible misselling. Most investors do not read the terms of sale in detail and get the impression that mini-bonds are capital-guaranteed and low-risk investments.[1]
In 2008, these Minibonds led to the Lehman Brothers mini-bond affair, where as a result of Lehman Brothers bankruptcy the value of its minibonds plummeted, and problems gradually emerged for its investors.[2]