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Marac Launches Secured Bond Offer

Fuseworks Media
Fuseworks Media

Wellington, June 23 NZPA - Demand continues to be strong for loans to buy agricultural equipment and in connection with infrastructure projects, finance company Marac says.

Managing director Brian Jolliffe today said demand was pretty well in line with what would be expected given the state of the economy.

There was clearly a slowdown in requests for motor vehicle financing in the past three months, while demand from the manufacturing sector, including printing, and for transport finance was also down, he said.

Expectations for growth in the first half of the new financial year, starting in July, were likely to be "very subdued", he said.

Mr Jolliffe was commenting as Marac launched its inaugural offer of up to $100 million in fixed-rate secured bonds, with a further $25 million available through over-subscriptions.

The offer comes when many companies in the finance sector have been hit by problems. More than 20 have failed in the past two years, in part reflecting the effects of a global credit crunch.

Last week, Dominion Finance Holdings said it was considering a moratorium on payments to debenture holders after becoming concerned about the liquidity of its two subsidiaries, Dominion Finance Group and North South Finance.

Today Mr Jolliffe was keen to point out why Marac, owned by publicly-listed Pyne Gould Corporation, differed from many other companies in the finance sector.

His company had attracted an investment grade rating from Standard & Poors, which was a strong signal of difference from many other finance companies, Mr Jolliffe said.

On Friday S&P said it had given the secured bond issue a BBB- long term rating. Marac said that was consistent with the company's rating of BBB- (Stable).

Mr Jolliffe said Marac had prudent policies, and strong diversification in both funding and lending.

In contrast, companies that had failed had tended to mostly be in only one business, predominantly either property financing or consumer financing, he said.

Earlier this month, Marac advised that it expected net profit for the year to the end of June to be above the $24.7m in the previous financial year.

That was even as asset growth in the second half of the financial year had slowed.

In March, Marac increased its bank funding lines by $80m to $480m.

Forsyth Barr has been appointed arranger and organising participant of the bond offer.

Forsyth Barr and ANZ National Bank are joint lead managers, and have underwritten the offer to $100m.

Mr Jolliffe said the offer would enhance Marac's liquidity reserves, which were $141.5m at the end of May.

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