Weekly Wrap: D for death row?

Geneva Finance may not have been a core finance company used by advisers, but I reckon many advisers will be watching with amazement what has been happening to the company.

Friday, October 19th 2007, 3:38PM

In the space of less than a few weeks the company has gone from a B+ Standard and Poor's rating to a D. I have no doubt that S&P's swift and significant downgrades have put Geneva on death row. Hopefully it will get a pardon and survive these actions.

The issue of the downgrades is something discussed in this Blog. I would be interested in your thoughts on what has happened here, and whether it could happen to other finance companies.

Another story which had a touch of disappointment to it was the decision not to include BT New Zealand in the share float later this year. It would have been nice to see the company included in the IPO. For the most detailed story on what has happened click here.

On a more positive note, today we have a list of the finalists in this year's FundSource Fund Manager of the Year Awards. Read this story to see who is in line for a gong.

Finance company news and changes in this sector never seem to be far away from the headlines. Another story, which is exclusive to Good Returns, is that trustees will have to disclose to the Securities Commission, on a regular basis, details of what their clients are up to, along with statistics. This information is going to give a far greater insight into what is happening in the finance company sector.

Geneva given a tough assignment
Poor old Geneva Finance. Last week I mentioned in the Good Returns Weekly Wrap that Standard and Poor's two-notch downgrade of the company, from B+ to B- seemed like pretty rough treatment from the rating agency. [more]

Other finance company news, reported in depositrates.co.nz, this week includes our regular rates update. Again we report on a number of finance companies which have made pretty big hikes to their rates. This seems to be saying a few things. The margin between what finance companies and banks offered wasn't great enough to reward the extra risk. Alternatively, speculation that these companies are desperate to get money in the door means they are offering some seemingly attractive rates. Or maybe it is a mix of these things?

Another depositrates.co.nz story today is that Asset Finance is offering its debentures to Australian investors. One of the papers this week ran a story that Australian fund managers may be able to skirt around tough Australian regulatory rules by having their funds in New Zealand and using securities law exemptions to offer their funds across the ditch. Asset Finance finds the shoe on the other foot. ASIC is saying it can't offer its fund in Australia under these exemptions. Seems to me the governments haven't thought this through.

In the Mortgage Centre we have an update on rates, and the message is there is nowhere to hide at the moment. None of the rates on offer look particularly attractive and it is unlikely we are going to see many rate cuts in the near future.

We make up for being a little light on People news this week with news of Tony Vidler crossing to the other side (should he keep his seat on the IFA Board?) A new chairman for the ISI, and a new BDM for OneSure.

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Weekly Wrap: D for death row?

Geneva Finance may not have been a core finance company used by advisers, but I reckon many advisers will be watching with amazement what has been happening to the company.

Friday, October 19th 2007, 3:38PM

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