Rates round-up: July 23
PGC sells out of Heartland; government bond yields stay low; ‘prejudice' against finance companies
Monday, July 23rd 2012, 6:00AM
Pyne Gould Corporation has sold out its stake in Heartland, the financial firm it set up less than two years ago.
PGC announced to the NZX on Friday that it had sold 15.2 million shares in Heartland for $7.9 million, a price of 52c per share.
"Following this trade, PGC (through its wholly owned subsidiary Torchlight Securities Limited) no longer holds any shares in HNZ," PGC said in its announcement.
It said the funds raised from the sale would be used for further investment.
PGC has been selling down its stake in Heartland for three weeks; it has clarified that proceeds from previous share sales would be used to pay down bank debt rather than repay a $28 million related-party loan made by its subsidiary Perpetual to the Torchlight fund.
The loan is being investigated by the Financial Markets Authority.
Government bond yields stay low
The low interest rate environment shows no signs of abating after the latest auction of New Zealand government bonds last week continued to attract low yields.
Seven-year bonds maturing in March 2019, which had a coupon rate of 5.00%, attracted $430 million of bids for a $100 million offer, with a weighted average successful yield of 3.03%.
Meanwhile, $150 million of bonds maturing in 2023 attracted $185 million of bids with a weighted average successful yield of 3.35%.
New Zealand government bond yields have been coming down most of the year as investors increasingly look for safe havens.
However, the returns look good when compared to the negative bond yields investors in half a dozen European countries are getting, with Swiss bonds the lowest at minus 0.55%.
‘Prejudice' against finance companies
A High Court judge has told a jury to put aside any "prejudice" about finance companies, at the start of the trial of former National Finance 2000 director Carol Braithwaite.
Facing one Securities Act charge brought by the Financial Markets Authority, Braithwaite is understood to be the first of the finance company directors to stand trial before a jury rather than a judge alone.
And Justice Pamela Andrews warned the 12 members of the jury not to let their personal views on finance companies affect their judgment in the case.
"This trial is essentially about a finance company. You may have heard or read about trials of those who are directors of finance companies, you may know someone who has invested in a finance company and you may have your own views about finance companies.
"During this trial, you put all of those views to one side, you deal with this trial solely on the basis on the evidence that is given in court and you keep open minds until you have heard all the evidence."
The charges carry a maximum penalty of five years in jail or a fine of up to $300,000.
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