Ludlow banned from consumer finance

Bankrupt convicted fraudster Allan Ludlow has been banned from setting up, operating or working in the consumer finance industry.

Monday, 12 December 2011

The banning order, the first of its kind, was issued under the Credit Contracts and Consumer Finance Act by Judge Hinton in the North Shore District Court following a case taken by the Commerce Commission.

The Commission prosecuted Ludlow and his company Mortgage Rescue under both the Credit Contracts and Consumer Finance Act (CCCF Act) and the Fair Trading Act, in relation to consumer credit contracts entered into with two families.

Mortgage Rescue offered homeowners in financial strife temporary finance to stave off mortgagee sales.

The company encouraged homeowners to borrow more than was required to pay their arrears, so they could carry out renovations to their homes.

Judge Hinton observed that in his view Ludlow "lacked the skills to be in the industry" and did not "display the integrity and fair dealing that is appropriate in this type of dealing."

The judge said that Ludlow's response to borrowers cancelling their contracts or disagreeing with him was "clearly unlawful and in the circumstances, outrageous".

Broadlands Finance credit rating downgraded

Standard & Poor's has lowered its long-term issuer credit rating on Broadlands Finance Ltd (BFL) to 'CC' from ‘CCC', and placed it on CreditWatch with negative implications.

The ‘C' short-term issuer credit rating on Broadlands remains on CreditWatch with negative implications, where it was placed on November 24.

The actions reflect S&P's opinion that it is likely that BFL will selectively default on creditor obligations that are due to BFL's key shareholder, Anthony Radisich.

"We believe that BFL's intentions are to suspend and not make payment on an interest amount due on Dec. 15, 2011, on its loan from its key shareholder, and to suspend and not make payment on a quarterly interest amount due on Dec. 31, 2011, on debenture investments in BFL by its key shareholder," said credit analyst Gavin Gunning.

"Should these circumstances come to pass, we would be required under our rating criteria to revise our ratings on BFL on Dec. 16, 2011 to ‘SD' (selective default). Under our rating definitions, an obligor rated 'SD' has failed to pay one or more of its financial obligations (rated or unrated) when it comes due."

Standard & Poor's says the company's liquidity outlook is "weak" and there is uncertainty about its future business model, given that the debenture funding model has been seen by BFL as unsustainable, leading to its decision to withdraw from the New Zealand debenture market on October 19.

Local government bonds to be AA+

Debt issued by the new Local Government Funding Agency will be given an AA+ rating from Fitch and Standard & Poor's.

This is the same rating given to New Zealand's central government, although it is uncertain what sort of yield bonds issued by the new agency will bring.

The agency, which has been set up to help fund local authority borrowings, met last week to discuss its first debt issue, which will take place in February.

Local government debt is at about $5 billion but this is expected to more than double to $11 billion over the next decade.

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