Rates round-up: May 14

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Term deposit rates fall; Asset Finance remains in limbo; Govt bond sale fails

Monday, May 14th 2012, 6:30AM

by Niko Kloeten

Term deposit rates are falling across the board, despite an impending change to bank regulation that is tipped to give deposit rates a boost.

Most major banks cut their rates last week, with locally owned Kiwibank and TSB kicking things off, followed later by Westpac, BNZ, ANZ National and RaboDirect.

Kiwibank cut its three-year rate by 20 basis points to 5.10%, its four-year rate by 35 basis points to 5.25%, and its five-year rate by 15 basis points to 5.85%. 

TSB cut its six-month rate by five basis points to 4.40%, its twelve-month rate by 10 basis points to 4.50%, its eighteen-month rate by 10 bps to 4.60%; two-year by 10 bps to 4.70%; and three-year by 10 bps to 5.10%.

RaboDirect cut its six-month to two-year rates by between 10 and 20 basis points.

BNZ cut its one to five-year rates by 10 to 35 basis points, with the exception of its two-year rate, while ANZ and National banks cut their six month rates by 30 basis points.

However, demand from the banks for terms deposits is tipped to increase when the Core Funding Ratio increases from 70% to 75% next year, meaning a greater proportion of banks' funding must be sourced locally.

Asset Finance remains in limbo

Finance company minnow Asset Finance is still not taking any money from the public, despite a Financial Markets Authority freeze officially lifting.

On April 13 The FMA issued an interim order preventing the Whakatane-based company from issuing debentures.

In the order the FMA also said it was considering whether to cancel Asset Finance's prospectus and investment statement, on the grounds that they could mislead.

The order expired on May 4 but the FMA said Asset Finance has agreed not to accept any further deposits or rollovers until its enquiries are complete.

The FMA wouldn't say what its concerns were in relation to the prospectus and investment statement but Asset Finance founder has told media the issue related to a loan made a number of years ago to a company called Rexon, which was placed in liquidation in 2009.

Asset Finance had $17 million of debenture stock on issue as at March 31 last year.

Govt bond auction fails

Investors are snapping up New Zealand local government debt but central government bonds had a tough week last week, with one auction failing.

The failed auction was for $100 million of bonds maturing in March 2019.  It attracted only $10 million of bids with none successful.

Investors were slightly more interested in the government's issue of $100 million of bonds maturing in April 2023, which attracted a pedestrian $110 million of bids, with a successful range of 3.74% to 3.79%.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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OPI's receivers struggling to collect on parent's guarantee »

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