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PGG Wrightson sets up banking syndicate

PGG Wrightson Finance, the finance unit of the rural services company, has set up a formal banking syndicate with Bank of New Zealand and Commonwealth Bank of Australia to provide wholesale funding to the business for the next two years.

Thursday, December 17th 2009, 11:16PM

by Paul McBeth

The syndicate replaces the previous bilateral facilities and will allow other banks to join the funding framework, giving Wrightson greater flexibility to source funds as the new regulatory framework is phased in for non-bank deposit takers in the coming year.

"Forming a syndicate provides a structure to which other banks can easily join, and it is certainly our intention to broaden the syndicate further in 2010 with additional banks being added," said executive director mark Darrow in a statement. "The new bank facility is another important building block to prepare the company for life under the new Reserve Bank regulatory framework."

The finance company received a funding package of some $32.5 million last month when its parent raised $250 million and took on Chinese agricultural and seed research company Agria climbed on board as a cornerstone investor. The deal will allow Wrightson Finance to meet the minimum capital ratio requirements of the new regulatory regime, and it expects to achieve a credit rating of at least a BB, which will let it apply to the extended government deposit guarantee scheme.

The new banking facilities are the third largest source of funds for the company, behind secured and unsecured deposits and its NZDX listed bonds.

See PGG Wrightson's long term rates here

and rates for 12 months or less here

Paul is a staff writer for Good Returns based in Wellington.

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