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Rates round-up: March 12

New finance company in SFO sights; Geneva Finance keeps credit rating; interest rate set for ANZ bonds; Bridgecorp verdict approaches

Monday, 12 March 2012

by Niko Kloeten

The Serious Fraud Office is near the end of its investigations into finance company collapses in New Zealand, but it has one more company in its sights.

Speaking at the Law and Order select committee hearing in Parliament last week, SFO chief executive Adam Feeley said the "vast bulk" of its work around finance companies had been completed.

"We have completed investigations into approximately 31 of the 65 failed finance companies, or put another way, out of the $8.6 billion which has been estimated to have been lost from the finance companies, we've investigated companies which have lost $4.4 billion, or roughly half of that," he said.

Feeley said about 300 charges had been laid against 30 people involved in finance companies.

The only current investigation is Hanover Finance, but Feeley said the SFO was looking at whether to investigate another failed company.

He didn't name the company, but said it was one of the more recent collapses.

A decision on whether to investigate will be made within the next fortnight.

Geneva Finance rating affirmed

GFNZ (Geneva Finance) has kept its credit rating, but Standard & Poor's has warned the finance company is not out of the woods yet

The ratings agency has affirmed its credit ratings on Geneva and its captive insurer, Quest Insurance Group (Quest) at 'CCC-', after a share issue that saw Federal Pacific Group take a 20% stake in Geneva.

"In our opinion, further funding is necessary to avert potential business reconfigurations, which may include downsizing to operate within available cash flows," S&P said.

"This could be alleviated by the planned pro-rata rights issue--a second equity infusion expected to further strengthen GFNZ's cash flow and capital position.

"In addition to the capital initiatives, Fed Pac has also agreed, in-principal, to: provide substantial debt funding via two allotments, with the first expected on or before June 30, 2012; and to assist in a capital-insured professional investor scheme.

"In our view, these initiatives, should they be successful, are likely to significantly improve GFNZ's liquidity position and ability to meet repayments in the short-to-medium term. This said, moderating factors include a degree of counterparty and operational risk that could impact cash flows needed to meet refinancing needs.

"In our opinion, and with all other things equal, greater certainty around these planned cash receipts are likely to have a positive effect on the factors underpinning this rating."

Interest rate set for ANZ bonds

The interest rate has been set at 6.25% for a $250 million seven-year bond issue by ANZ.

The rate was to be the higher of either 6.25% or the seven-year swap rate plus a margin of 2.10%, at the time the rate was set on Friday afternoon.

The unlisted, unsecured, unsubordinated bonds with a minimum investment of $10,000 will be issued tomorrow.

Bridgecorp verdict approaches

Accused former Bridgecorp directors Rod Petricevic, Robert Roest and Peter Steigrad are likely to learn their fate within a month.

The three are on trial in the High Court at Auckland on Securities Act charges over allegedly misleading investors with false statements in offer documents.

The trial is drawing to a close and Justice Geoffrey Venning last week indicated he would give his verdict on Thursday, April 5.

The charges carry a maximum penalty of five years in jail or a fine of up to $300,000.

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Cash PIE Rates
Institution Rate 30% 33%
ANZ 2.60 2.67 2.79
ASB Bank 3.15 3.29 3.44
BNZ 3.30 3.44 3.60
Direct Broking Call Account 2.80 2.92 3.05
Heartland Bank 4.00 4.28 4.48
Kiwibank 2.40 2.50 2.61
Kiwibank 3.15 3.29 3.44
Nelson Building Society 3.75 3.90 4.08
RaboDirect 3.30 3.44 3.60
SBS Bank 3.25 3.11 3.28
TSB Bank 3.50 3.63 3.80
Westpac 3.00 3.12 3.26
Westpac 0.10 0.10 0.11
Westpac 4.00 4.18 4.37

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