Rates Round Up

Long term investment rates keep rising; Glimmer of hope for Fortress noteholders, English bats away FEC concerns over bank margins, TSB cuts lending rate, but may keep deposits level.

Sunday, 21 June 2009

Glimmer of hope for Macquarie's Fortress notes
Macquarie Fortress Investments, the trustee for Macquarie New Zealand Fortress Notes Trust, estimates the net asset value of the portfolio's senior loans was up 900% to around 9 cents per unit since the last estimate.

The notes have been languishing around zero cents since last October when investors were told the global economic slump had made them practically worthless.

Some $30 million was pumped into the notes by thousands of New Zealand investors.

English bats away FEC concerns over bank margins
Finance Minister Bill English batted away concerns that the major banks were keeping their lending rates excessively high, citing stability as the primary objective for the government.

Earlier this month, Parliament's Finance and Expenditure Committee tabled a report criticising the banks for maintaining high profit margins as the battle to attract offshore funding heats up.

English admitted there was a case to be made that the gap between the official cash rate and floating mortgage rates was too high, but said it wasn't his priority.

TSB cuts lending rate, but may keep deposits level
New Zealand-owned TSB cut its two-year fixed rate to 5.99%, becoming the first bank to take that rate below 6%, as it seeks to take advantage of the surge in demand for housing.

The bank said it is experiencing "record levels of fund growth", obtaining all of its funding domestically.

The bank may absorb the tighter margins, its deposit rates sitting at 4.6% on one-year terms, and 5.25% on two-year, saying it has an excess supply of funding and needs to push it out again.

PSIS sees deposit rate advantage disappearing in next decade
PSIS expects it won't be able to compete on price in the coming decade as the rivalry for customers squeezes margins for financial institutions and banks.

The mutual fund aims to become a bank in the coming year, requiring an upgrade to its BB+ credit rating to apply for a licence, so it can broaden the scope of products available to its clients.

The cooperative currently offers rates 10 to 15 basis points above the competition.

Finance companies keep boosting long-term rates
Finance companies continued to boost their long-term deposit rates over the past week as the scrap to attract funds remains tight.

General Finance lifted its 18 month term deposit rate 250 basis points, and increased its two-year rate 75 basis points, its three-year 25 points, the four-year rate 100 points, and its five-year term 50 basis points.

UDC upped its 18-month rate 50 basis points, while the two-year only advanced 15 points. Its three-year term increased 80 points, and its four- and five-year terms were boosted 115 basis points.

Equitable lifted its debentures and units 50 basis points on 18-month and three-year terms, while it increased four-year rates 75 basis points and five-year deposits 100 basis points.

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