KEY POINTS:
What is it called and what sort of savings product is it?
South Canterbury Finance Ltd is making an offer of up to $125 million of secured bonds.
What is the company behind it?
Timaru-based South Canterbury Finance is one of the bigger finance companies in New Zealand with a book of more than $1.39 billion in debentures and deposits.
Who is the target market?
Investors who are willing to take on some higher risk fixed-interest investments.
What return does it offer?
The rate will be set at the higher of 10.50 per cent or 2.75 per cent above the three-year swap rate on June 16.
When was it launched?
The offer opened on May 19 and closes on June 13.
What other products is it like or is it competing with?
There are a number of other bonds already listed on the NZDX, the trading market for debt securities, which are similar. However none are currently raising money.
Is this a long term, short term or medium term investment?
The bonds have a three-year term, and will be tradeable on the NZDX.
What is the unique selling point?
One of the more appealing features is that this has the ability to lock in a good, high, interest rate for a medium term. Interest rates will start falling at some stage and rates such as this won't be offered then. The other key point is that the bonds have a BBB- Standard & Poors rating.
How strong a stomach do you need for it?
Medium.
What's the hitch?
Perhaps the biggest risks are that South Canterbury Finance gets hit by the troubles in the finance company sector and an economic downturn impacts on borrowers' ability to repay loans.
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