South Canterbury Finance guarantee comes in nick of time
Broker McDouall Stuart has praised Treasury for its quick action in getting South Canterbury Finance (SCF) accepted into the government's extended retail deposit guarantee.
Thursday, April 15th 2010, 6:12AM
by Paul McBeth
The firm credits the government department with "smart thinking" in effectively propping up SCF for the $1.1 billion worth of maturing deposits in the coming six months. SCF faced the sceptre of another credit rating downgrade after it was placed on creditwatch negative.
"If SCF had been downgraded to BB- or worse before it had been accepted, Treasury would have found it much more difficult to justify granting SCF access into the scheme," McDouall Stuart said in its report. "We suspect there were a number of sighs of relief at the news of SCF's acceptance, and not just from those residing in the vicinity of Timaru."
The firm said it was unlikely that the banks will need the extended guarantee, while the PSIS and building societies would probably eschew the scheme now investor confidence was back on the rise.
The strength of the scheme is that it allows a "decent length of time to manage the transition back to an underwrite-free marketplace," the report said.
So far, Marac, Equitable Mortgages, PGG Wrightson Finance and South Canterbury have been accepted, while Fisher & Paykel Finance is the only other eligible finance company that has applied and waiting on the result.
Of the deposit takers that are also eligible, Medical Securities has opted not to apply for the scheme, while ANZ-owned UDC and Oxford Finance have yet to make a decision.
Paul is a staff writer for Good Returns based in Wellington.
| « Former Justice Ministers prosecuted over Lombard offer documents | Reset rate market discounts, corporate bonds probably past peak » |
Special Offers
Commenting is closed
|
|
Printable version |
|
Email to a friend |
