Now it has moved to the top tier of finance companies.
That worries meChris TimmsNEW Zealand investors still have an appetite for the higher interest rates being offered by finance companies, judging from the clamour to buy Marac Finance bonds.
The Pyne Gould Corp-owned finance company said it would accept oversubscriptions of up to an additional $25 million of secured bonds to take the maximum amount under the offer to $125 million.
ABN Amro Craigs broker Chris Timms said the offer was fully underwritten to $100 million so Marac was always going to get that amount.
"It staggers me to think they have got oversubscriptions.
"That indicates to me that investors believe the rate being offered is reflective of the risk."
Recent bank issues had been at 8%-9% so the 10.5% was not exceptionally higher but it was enough to attract investors from a "particular sector", he said.
South Canterbury Finance is offering bonds at 10.5% for three years.
PGG Wrightson Finance yesterday distanced itself from the rest of the finance company sector by saying it was a specialist in rural lending and had a reinvestment rate of 80%.
The statement comes as finance companies generally struggle to attract new retail funding and get people to keep money with them when term deposits mature in the wake of collapses in the finance sector.
Investors in New Zealand finance companies face an anxious wait for further news about the state of their investments.
At stake is not only the principal invested with stricken finance companies still operating, but also the interest payments due now.
St Laurence and Dominion Finance issued letters to investors late last week which said interest would continue to accrue until moratorium or repayment plans were put in place.
Dominion suspended repayments, both principal and interest, to its debenture investors on June 17.
"We can also advise that any repayment instructions that we have received for investments maturing on, and after, that date will not be actioned.
"We will therefore not be sending out maturity advice letters for investments maturing August 1 onwards until further notice," Dominion chief executive Paul Cropp wrote.
St Laurence managing director Kevin Podmore said interest was paid on July 1 but would continue to accrue at each investor's current interest rate until, and if, the scheme was approved and came into effect.
No principal of maturities after June 27 would be paid to investors.
Mr Timms said investors were looking forward to getting a clear indication about where the finance companies were heading.
"The stuff that is tending to happen to the latest companies is happening to those which have been strong and around a long time.
"The finance companies that tipped up earlier may not have been the best operators.
"Now it has moved to the top tier of finance companies. That worries me."
Dominion had been operating for 54 years, right through the financial turmoil of the 1980s and 1990s, and had endured, he said.
Myles Wealth Management director Craig Myles said the possibility of a moratorium was a better option for investors than liquidation.
Some companies were reporting profits while at the same time talking about liquidity problems.
Although some borrowers were in difficulty and unable to pay, there were some who could and would.
There was a move away from fixed-term debenture offerings from finance companies to bonds.
