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

 

Fuels Rushing In: Govt "Ready To Act" On Petrol Market Report

The Government will now take the Commerce Commission’s recommendations to Cabinet...
• A more transparent wholesale pricing regime • Greater contractual freedoms and fairer terms • Introducing an enforceable industry code of conduct • Improve transparency of premium grade fuel pricing... More>>

ALSO:

Reserve Bank Capital Review Decision: Increased Bank Capital Requirements

Governor Adrian Orr said the decisions to increase capital requirements are about making the banking system safer for all New Zealanders, and will ensure bank owners have a meaningful stake in their businesses. More>>

ALSO:

Aerospace: Christchurch Plan To Be NZ's Testbed

Christchurch aims to be at the centre of New Zealand’s burgeoning aerospace sector by 2025, according to the city’s aerospace strategic plan. More>>

ALSO:

EPA: Spill Sees Abatement Notice Served For Tamarind Taranaki

The notice was issued after a “sheen” on the sea surface was reported to regulators on Thursday 21 November, approximately 400 metres from the FPSO Umuroa. A survey commissioned by Tamarind has subsequently detected damage to the flowline connecting the Umuroa to the Tui 2H well. More>>

Taskforce Report: Changes Recommended For Winter Grazing

A Taskforce has made 11 recommendations to improve animal welfare in intensive winter grazing farm systems, the Minister of Agriculture Damien O’Connor confirmed today. More>>

ALSO: