Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

South Canterbury bond speculators reap fat reward

South Canterbury bond speculators reap fat reward as finance firm fails

By Paul McBeth

Aug. 31 (BusinessDesk) – Bargain hunters who bet against South Canterbury Finance in the NZX debt market will be rubbing their hands with glee today with the guarantee covering the failed financier’s listed bonds plus interest.

The Timaru-based finance company called in the receivers today, triggering the government’s retail deposit guarantee which will pay out the face value for the firm’s debenture and bond holders.
Prices for the company’s listed bond maturing in 2012, after the extended guarantee, fell to a deep discount earlier this year, with the yield reaching 40% in March. That meant audacious punters could buy them cheap and get paid out in full if South Canterbury failed.

“There will be a lot of money made in the listed bonds with prices up to 20, 30 and 40 percent, which was all paid today,” chief executive Sandy Maier said in a conference call. “A lot of bets in the casino paid off big time today.”

The yield had abated in recent weeks, and was last at 24% before trading in the security was suspended. The government will have to pay-out $125 million on the bonds.

Maier said the guarantee, which many commentators claim distorts the market, gave him confidence to accept money from “widows and children” as he sought to save the company from collapse.

The failure of the finance sector has seen a number of low-ball offers for debenture stock, and prompted the Securities Commission to warn investors to make an informed decision before accepting bids significantly below face value.

(BusinessDesk)



© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

DIA: First Prosecution For Failing To Identify A Problem Gambler

Director of Gambling, Chris Thornborough, today announced that the Department of Internal Affairs (the Department) has charged a manager of a gambling venue for allegedly failing to take all reasonable steps to identify a problem gambler. More>>

Zero Gross CO2 Target, Separate Biological Emissions: Environment Commission On ETS

A report about taking an alternative ‘landscape approach’ to Aotearoa New Zealand’s long-term climate change targets and policies has been released today by the Parliamentary Commissioner for the Environment, Simon Upton. More>>

ALSO:

Tax Bill Passes, Drops: “An End To Unnecessary Secondary Tax”

“The changes mean Inland Revenue will more closely monitor the tax paid by wage and salary earners through the year. If it appears the worker is being over taxed, Inland Revenue will suggest a more suitable PAYE tax code tailored to that worker.” More>>

ALSO:

Ethiopian Airline Crash: Boeing 737 Max Aircraft Operations Temporarily Suspended

New Zealand’s Civil Aviation Authority has suspended the operation of Boeing 737 MAX aircraft to or from New Zealand. Currently this affects only one operator, Fiji Airways. There are no other airlines that fly this aircraft type to New Zealand. More>>

ALSO: