More than 90% of SCF debentures will covered by extended guarantee
More than 90% of debenture holders will come in below the $250,000 cap set by the government's extended retail deposit guarantee scheme.
Wednesday, June 16th 2010, 8:53PM
by Paul McBeth
Chief executive Sandy Maier told an investor roadshow in Wellington that the $1 million cap in the initial scheme was not a problem at all for the firm's debenture holders, and that the extensions tighter requirements will not affect many people.
"Less than 10% of investors come in above $250,000 - it's not a dramatic problem," he said.
The scheme, though very useful, had created a distortion in the market as customers flocked to the protected securities, and it is a major trial facing South Canterbury to roll over enough deposits to meet a large repayment schedule in October, when the initial guarantee runs out.
Maier said South Canterbury is focusing on rolling over investments to between May and December next year, with the "best" deposit rates on offer in the market. Once it has got passed its October deadline, the firm will look to spread its maturities more evenly.
When asked whether the extension was just pushing the so-called "wall of maturities" out for a further 12 months, Maier said that would only be the case if they were "incredibly dumb."
Paul is a staff writer for Good Returns based in Wellington.
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