Firms at risk of default

Most of New Zealand's finance companies have a one-in-10 chance of defaulting on investments over a five-year period, new ratings show.

Yesterday was the deadline for all non-bank deposit takers to register a credit rating with the Reserve Bank in the wake of the finance company collapses. Of the 29 companies registered, only three have a BBB or above rating - classed as adequate and investment grade.

The worst-rated company is the listed Geneva Finance, which last week received a CC rating, which means it has a one-in-two chance of defaulting. Most are either B- or BB-rated which means they have a one-in-five or one-in-10 chance of defaulting.

Reserve Bank Governor Alan Bollard said the credit ratings would be useful in helping investors to compare the relative riskiness of deposit taking companies.

"It's up to the investors to make the final decision as to where to invest their money and credit ratings are a very useful tool to help them."

Those with a BB rating or above can apply to be included in the extended Government deposit guarantee scheme which rolls over in October.

Investors can see the full list at www.rbnz.govt.nz.