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Weekly Wrap: Credit crunch continues

The Weekly Wrap is a review of all the top news of the along with comments.

Friday, August 10th 2007, 12:36PM

The on-going theme of the week has once again been the worsening crisis in the credit markets and the impact of the hundreds of millions of dollars invested into this sector.

ING's funds, which are some of the biggest in the market, had their unit prices written down during the week. Macquarie's Fortress Notes sold some assets to reduce debt. Two of the other listed funds also announced events. The PINs units had their price set at around the 92c market and S&P put Credit Sails on a negative credit watch.

I suspect there are some very nervous investors and advisers out there at the moment. Especially when you think about how much money has been lost in the unit price write-downs. There is more than $1 billion in this sector, and write downs could possibly be averaging 10% - that's $100 million gone. But as some point out it's only a paper-loss, and the issue is really for short-term investors, as opposed to those in these products for the long term.

The out-of-left field story was Westpac's announcement that it planned to do a partial float of its wealth management business, BT Funds. As our story shows it is still uncertain whether the New Zealand part of the business will be included in the listing.

While the credit story has been evolving during the week, finance company news kept bubbling along too. NZX chief executive Mark Weldon stepped into the fray suggesting that the collapse of Bridgecorp strengthened the case for the government to speed up regulation of the advisory sector and the finance company space. Some of his thoughts echoed those made in this Blog recently. One has to wonder, though, if speeding things up is going to result in good legislation.

An angle on this story which makes more sense is Strategic Finance boss Kerry Finnigan's idea. As we report in depositrates.co.nz, the industry needs to get things in shape quickly, otherwise we could end up with more draconian rules.

In that part of the site we have the latest action in the deposit taking sector, where two trends are evident. One is finance companies are raising their rates on the back of the OCR increase, and banks are battling it out in the one-year term. You can keep up-to-date here. Also our new calculator allows some greater search functionality when looking for rates.

PWC has put its latest report out on the Provincial Finance receivership. Two thoughts on this are, firstly these investors are probably better off than those in Bridgecorp (I know that will be little comfort to them), and secondly could this company have survived?

To round out this section details of a $300 million bond offer to help fund the Yellow Pages purchase emerged yesterday.

Over in the mortgage sector there is talk that long-term fixed rates are likely to keep rising on the back of developments in the United States market. The other key story is that BNZ is quashing speculation it plans to re-enter the mortgage broker market.

A couple of significant appointments during the week including a new boss at Spicers and a new chief investment officer at Arcus and a new manager at AIA. .

Next week we will have a new Special Report – this one is on Liontamer's Water Fund. In the meantime you can find out about Savings and Loans' Kauri Notes here.

 

« BT NZ likely to join new listingSovereign takes regulation bull by the horns »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 ▼2.29 ▼2.59 ▼2.65
ANZ 4.44 2.89 3.25 3.39
ANZ Special - 2.29 2.69 2.79
ASB Bank 4.45 2.29 2.59 2.65
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.29 2.59 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 2.89 3.19 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
HSBC Special - 1.99 - -
Lender Flt 1yr 2yr 3yr
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.79 3.04 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 2.79 2.79 3.15
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.29 2.29 2.65
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 2.29 2.59 2.79
The Co-operative Bank - Standard 4.40 2.79 3.09 3.29
TSB Bank 5.34 3.09 3.29 3.45
TSB Special 4.54 2.29 2.49 2.65
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.29 2.69 2.79
Median 4.55 2.79 2.99 2.80

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