tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, March 29th, 10:40AM

News

rss
Latest Headlines

ING shuts out investors as CDO losses mount

ING bowed to the inevitable yesterday by halting redemptions on two of its funds hit harshly by the sub-prime credit crisis, leaving approximately 8,000 investors stranded indefinitely.

Thursday, March 13th 2008, 6:00AM

by David Chaplin

The move comes in the wake of similar bad news from the Absolute Capital, ABN Amro, Macquarie, Basis Capital and New Zealand Funds Management, which have all faced serious losses in collateralised debt obligation (CDO) products.

However, the two ING CDO-related funds dwarfed these comparable products having collectively raised about $850 million from New Zealand investors.

Together the ING Diversified Yield Fund (DYF) and the Regular Income Fund (RIF) have dropped in value by almost $320 million since last June.

According to the funds' financial statements as at June 30, 2007, the DYF was valued at $592 million, with the RIF priced at almost $250 million.

Steve Giannoulis, ING head of marketing, said yesterday the DYF was worth $353 million and the RIF $167 million.

Giannoulis said after a run on redemptions over the last few months the funds could no longer pay out investors without jeopardising the remaining unit holders as it no longer had enough cash to meet requests.

In the June 2007 financial statements the DYF was reported as holding $80 million in cash and the RIF $23 million.

With cash running dry ING would now be forced to start selling the funds' assets to meet redemptions.

In a letter to investors sent yesterday, ING said it would be hard to find buyers for the funds' underlying CDO assets "in the current illiquid market".

"Second, as a 'forced seller', if the better quality assets were sold at uncertain or 'quick sale prices' below their true value, the overall quality of the Funds' assets would suffer, penalising investors who remained," the letter says.

"Third, the extreme lack of liquidity and sentiment in credit markets is making it increasingly difficult to reliably value the assets."

According to the ING website, the DYF unit price had sunk to 0.81 with the RIF hitting a low of 0.7. The halt on redemptions in both funds was made effective from March 13, the ING letter says.

"Pending withdrawal requests that were due to be paid on 15 March will not be processed; there can be no exceptions to this," the letter says.

Giannoulis said the DYF and RIF trust deeds allowed the trustees to halt withdrawals as long as the economic and financial conditions prevailed with no time period when the funds must be wound up.

The DYF closed to new investors in January 2006, but the RIF was still receiving funds as late as last week, but is now no longer accepting investments.

"The RIF will continue to distribute income on a quarterly basis as normal, but reinvestment to buy additional units will not be accepted. Distributions will be paid to investors as cash," the ING letter says. "To the extent that income is available to be paid from DYF at 30 June, the current intention is to pay this out to investors as cash, rather than for it to be reinvested as bonus units."

ING said it would "defer" the management and trustee fees while the two funds remained in limbo.

"Fees will be accounted for in the unit price but not deducted, leaving the money invested in the Funds," its letter to investors says. "Advisers will, however, continue to receive monthly trail commission."

In the year to June 30, 2007, ING collected just over $8.3 million in fees for managing the DYF and a further $2.6 million from the RIF.

« Dyer dumped as NZ Super 'restructures'Sovereign takes regulation bull by the horns »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Weekly Wrap

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 ▼8.09 ▼7.59 ▼7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 ▼9.09 ▼8.59 ▼8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

Last updated: 28 March 2024 9:42am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com