Rates Round Up

Deposit war muted as mortgage rate cuts take centre stage; Demand for high grade fixed securities ‘very high', ASB says; Pyne Gould slaps down speculation over capital raising.

Sunday, September 20th 2009, 9:42PM

Deposit war muted as mortgage rate cuts take centre stage
The intense competition for depositors’ money took a back seat last week with cuts to floating variable mortgage rates taking centre stage among the banks.

Still, it was not completely devoid of action, with KiwiBank cutting its five-month deposit rates 85 basis points.

PGG Wrightson Finance entered the nine-month space with 4.95%, 5.15% and 5.25% offerings for deposits less than $10,000, between $10,000 and $100,000 and more than $100,000 respectively.

GoldBand Finance upped its efforts in the long-term space, boosting two-year rates 50 basis points, three-year 95 points, and four-year 50 points.

Southern Cross Building Society cut its three-month and two-year term deposits 25 points and boosted its six- and 12-month terms 10 points and its three-year deposits 25 points.

Demand for high grade fixed securities ‘very high’, ASB says
Since the large government bond maturity this year, the market has been heavily supported by excess liquidity, according to an ASB report. With no big issues on the market in recent times, there has been a surge in bond prices across the board as investment grade bonds record large falls in their yields.

ASB expects this tight supply to continue this month, and says invest looking to sell down their portfolios should do so now.

“Demand is very high for better grade securities and there is not much selling competition,” the report said.

Pyne Gould slaps down speculation
Pyne Gould, which is looking to become the first locally-owned listed bank through its Marac finance unit, has slapped down speculation around its pending capital raising, telling the market all will be revealed in good time.

Pyne Gould recently took Marac’s non-performing property development loans on to its books as the finance company looks to tidy up its balance sheet and regain its investment grade credit rating, which was cut to BB+ by Standard & Poor’s last month.

The company said it expects to make an announcement about its capital raising in the latter half of this month.

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