South Canterbury Finance Limited

[GTM 3442]

I have put where I live ( which is more than you )
Not hard to work out that I am from Temuka.
I played seniors for Temuka from 1980 and played my last game in 2007.

it shouldn't be hard find me!

Even poorer form. . . . . .

Temuk - you make some pertinent points. Don't detract from them by playing silly "I know who you are" games with other posters.

Now, back to SCF, if you could be so kind . .

[temuk]

OK GTM you are right, have deleted my last post.

[westerly]

Can someone lend me $100m with no recourse?

If I make money on the $100m I get to keep it, but if the ventures I have invested in goes belly up, then I get to walk away... oh, I forgot, you will get an interested rate of 8% p/a.

Cheers mate, I will shout you a beer also.

Every bank has provided millions of dollars for losses on impaired loans. Every other loan providing institution has also allowed for the same. To say so called "mum and dad" investors were naive or stupid is a bit rich when professionals were collectively losing
billions of dollars.
N.Z. has poorly regulated financial markets and a generally inept financial press providing
the average investor with little protection from the incompetent or devious.
SCF has not yet failed to pay what is due and probably won't!

Westerly

[Alan3285]

Hi Westerly,

Every bank has provided millions of dollars for losses on impaired loans. Every other loan providing institution has also allowed for the same. To say so called "mum and dad" investors were naive or stupid is a bit rich when professionals were collectively losing billions of dollars.

N.Z. has poorly regulated financial markets and a generally inept financial press providing the average investor with little protection from the incompetent or devious.

SCF has not yet failed to pay what is due and probably won't!

Westerly

I realise that, to some extent, you are reacting to the extreme views that some are putting forward above regarding SCF.

If you scan back up, I have been reasonably confident that SCF will come through their difficulties.

However, having said that, I would not be so rash as to say that there is no risk of losing your money - at least for anything that isn't covered by the government guarantees (which is secured deposits maturing before Oct 2010 I believe).

If you are a bond holder or a preference share holder, then you are much more at risk. That's why, I believe, many bond holders are bailing out by selling on market (which they at least have the option to do whereas term depositers don't) for around 80c in the dollar. Better to get back 80% now.

I think I noted before that, I bet many Hanover creditors wish they could have sold out at 80% a few years ago. Probably many would not - it takes a very confident individual to admit they made a mistake and crystallise a loss - but at least the SCF bond holders still can for now.


Alan.

[GTM 3442]

In the (admittedly brief) time I held some SCF prefs, I read a copy of the annual report.

My recollection is of many more references to "provisions" and to "impairment" than I would normally feel comfortable with.

Having said that, I bought the prefs quite cheaply, on the basis "that the receivers will find more than 35c in the dollar should the time come."


Alan3285 bought "entirely for the yield which at that price was about 24% pa."


The bonds and the prefs are liquid, whereas other deposits are not. That makes a big difference.

The market has re-rated the SCFHA's from 24c to 60c, which seems to imply some degree of improved confidence.

I also note that the owners have been putting money in, rather than taking it out, as in some other companies.

Time will tell, and it will be interesting to see what SCF looks like in (say) 2 years time.

[Alan3285]

Hi GTM 3442,

In the (admittedly brief) time I held some SCF prefs, I read a copy of the annual report.

My recollection is of many more references to "provisions" and to "impairment" than I would normally feel comfortable with.

Having said that, I bought the prefs quite cheaply, on the basis "that the receivers will find more than 35c in the dollar should the time come."


Alan3285 bought "entirely for the yield which at that price was about 24% pa."


The bonds and the prefs are liquid, whereas other deposits are not. That makes a big difference.

The market has re-rated the SCFHA's from 24c to 60c, which seems to imply some degree of improved confidence.

I also note that the owners have been putting money in, rather than taking it out, as in some other companies.

Time will tell, and it will be interesting to see what SCF looks like in (say) 2 years time.

I didn't mean to say that I though SCF would actually fall over, just that there is (has to be) some risk of that (as with any business).

My point was that at least if you hold, say, bonds rather than term deposits, you have the choice of when to exit (albeit with a possible capital loss).

There have been many trades on market on the bonds recently, and that means that some people are getting out, and others are getting in - hopefully transferring whatever risk the market 'determines' is appropriate from those that can't or don't want to bear it to those that can / do.


I'd rather be a bond holder with the option of getting out at 80c than a term deposit holder with uncertainty and nowhere to go (not including those covered by the govt of course).


I think we are agreeing??

Alan.

[GTM 3442]

Hi GTM 3442,


I'd rather be a bond holder with the option of getting out at 80c than a term deposit holder with uncertainty and nowhere to go (not including those covered by the govt of course).


I think we are agreeing??

Alan.

Alan, I rather think we are.

I hope you made/make as much out of SCF, both short and long term, as I did/will.

Cheers.

[Alan3285]

Alan, I rather think we are.

I hope you made/make as much out of SCF, both short and long term, as I did/will.

Cheers.

Thanks GTM.


Alan.

[Alan3285]

Hi All,

It looks to me like an interesting situation has developed now (this is probably not news to those of you paying attention, but I am a bit slow):

• The Preference Shares (SCFHA) have a 'last' trade price of 51c. This equate to a yield of approximately 11% (there were actually some trades at 57c a few days ago, which is a yield of approximately 9.84%).
  
  
• The 2012 Bonds (SCF010) have a 'last' trade yield of 19.5%.

Now, can someone help me understand that??

Surely the bonds are safer than the prefs, since the prefs rank ahead of the ordinary shares only, whereas for the bond holders to lose some of their money, the prefs would already have to have been totally wiped out?

If that is correct, then how can it make any sense for the bonds to have a yield almost double that of the prefs?

Perhaps the market just hasn't caught up yet, and the bonds (SCF010) will follow the prefs up, thus reducing the yield?

Seems to me that bonds SCF010 is an excellent buy at that yield - just like the prefs SCFHA were a while back at 23c (24% yield)?


Or am I missing something completely obvious here (seems likely!)


Thanks,

Alan (with his finger poised on the 'buy now' button).

[COLIN]

Hi All,

It looks to me like an interesting situation has developed now (this is probably not news to those of you paying attention, but I am a bit slow):

• The Preference Shares (SCFHA) have a 'last' trade price of 51c. This equate to a yield of approximately 11% (there were actually some trades at 57c a few days ago, which is a yield of approximately 9.84%).
  
  
• The 2012 Bonds (SCF010) have a 'last' trade yield of 19.5%.

Now, can someone help me understand that??

Surely the bonds are safer than the prefs, since the prefs rank ahead of the ordinary shares only, whereas for the bond holders to lose some of their money, the prefs would already have to have been totally wiped out?

If that is correct, then how can it make any sense for the bonds to have a yield almost double that of the prefs?

Perhaps the market just hasn't caught up yet, and the bonds (SCF010) will follow the prefs up, thus reducing the yield?

Seems to me that bonds SCF010 is an excellent buy at that yield - just like the prefs SCFHA were a while back at 23c (24% yield)?


Or am I missing something completely obvious here (seems likely!)


Thanks,

Alan (with his finger poised on the 'buy now' button).

Alan: I covered this point in my post #387. The situation defies logic.
The yield on the prefs is adjustable, of course, on the reset dates, and will move up with the expected general firming of interest rates, but this still does not explain the huge distortion, given the relative rankings of these securities.