South Canterbury bonds hit 40%
Bonds of $1.2 million face amount changed hands on Wednesday, compared to values of around $100,000 in previous weeks. Total turnover this week was $1.47 million from $338,000 last week.
South Canterbury's June 2011 bonds, which fall outside the existing guarantee scheme but would be within the extended scheme if the company qualified, are yielding around 25%. The bonds maturing in October this year - well within the guarantee, are yielding 8.25%.
"Clearly there's some concern in the marketplace about whether they are going to qualify," said David Speight, a director at Direct Broking in Wellington.
That's "evidenced by the increase in yields that run outside the guarantee." South Canterbury's credit rating was cut to BB this month by Standard & Poor's, even after owner Allan Hubbard moved to shore up its finances by selling two profitable businesses into the company from his private investment arm Southbury Corp.
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