Marac's first ranking secured debenture stock

Money at Work: This week we look at Marac's first ranking secured debenture stock.

Monday, 24 September 2007

Who is the company behind it?
Marac is owned by NZX-listed company Pyne Gould Corporation.

Who is the target market?
Investors wanting to get a fixed interest return which is higher than what banks offer, but carries some extra risk.

What return does it offer?
Marac currently is offering one-year rates on its debentures of 9.30%. It says this is the first time in a long time that its rates have got into the nines.

When was it launched?
Marac has been around since 1952, which tells a story itself. Finance companies are not Johnny-come-lately businesses. Many have been around for years and they play an important role in the economy.

What other products is it like or is it competing with?
Marac competes with all the other finance companies and in the current market it is up against bank term deposits and offers like those from Rabobank and Origin.

Is it long term, short term or medium term?
Marac offers rates from call to five years and has various interest options on terms of one year or more, including, monthly, quarterly and at maturity.

What is the unique selling point?
Marac is an example of a good sound finance company. Features included a Standard and Poor's rating of BBB- (investment grade) and three funding lines; retail deposits, wholesale bank funding and most recently it has securitised a portion of its loans.

How strong a stomach do you need for it?
According to S&P's the estimated default probability over a one-year period for companies ranked in the BBB range is between 0.2% and 0.4%.

What's the hitch?
No investment or finance company is absolutely safe!

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