Rates round-up: January 31

Deposits versus bonds; Ludlow gets more jail time

Tuesday, 31 January 2012

by Niko Kloeten

Fixed-interest investors should avoid long-term deposits with banks and look to the bond market for better returns, Tower Investments chief executive Sam Stubbs says.

Stubbs said due to the loose money policies of central banks, interest rates are "very cheap historically" and although this is good for people with mortgages, the same can't be said for those suffering low returns from their deposits.

Deposit rates are "unattractive"; however, "if you invest in the bond markets there are some very good opportunities to make money."

For instance, he said Tower's bond investments had returned 11% annually over the past three years, compared to term deposits which offer returns at or even below the level of inflation.

"Politicians have effectively said, we can make a few people pay now or make a whole lot of people pay later; these are the fixed interest investors.

"By depositing that money you are losing money and recapitalising the banking sector.  We are in volatile times and people value safety but as a long-term investment it seems to us an inappropriate amount of money to be receiving."

Ludlow gets more jail time

Former National Finance 2000 boss Allan Ludlow has had an extra nine months added to his prison sentence after further convictions over his role in the company's collapse.

Ludlow was already serving a sentence of five years and seven months, handed to him last October after he was convicted of seven charges brought by the Serious Fraud Office, including false accounting and theft by a person in a special relationship.

Last week in the High Court at Auckland Ludlow had his sentence extended after he was convicted of eight charges brought in a separate proceeding by the Financial Markets Authority.

Ludlow pleaded guilty in December to the charges, which relate to misleading statements made to investors in the company.

Justice Kit Toogood ruled that a total sentence of six years and four months for all the offending would be appropriate.

National Finance 2000 went into receivership in 2006 owing $21 million, of which 49c in the dollar has been repaid.

Two other National Finance directors, Ludlow's estranged wife Carol Braithwaite and Tony Banbrook, have pleaded not guilty to their respective FMA charges and will go to trial later this year.

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