Banking and finance briefs: CPI linked bonds? ASB helps out Serepisos

1. Inflation linked bonds in the budget? - This week's budget could include an announcement from the New Zealand Debt Management Office on new inflation-linked bonds, BNZ economists predict. They say focus will be both on the size of the bond programme and on whether the DMO decides to issue new inflation linked bonds. Transpower recently became the first New Zealand company to issue bonds linked to the consumer price index raising NZ$100 million from institutional investors.  BNZ's economists, in a markets outlook note say inflation linked bonds may make sense given global fears of inflation. 2. ASB helps out Serepisos - The ASB has helped out property developer, ferrari driver, The Apprentice TV show host and Wellington Phoenix owner Terry Serepisos with its rates bill, according to The Dominion Post. The bank apparently coughed up NZ$900,000 of an estimated NZ$2 million owed by Serepisos to the Wellington City Council via a loan extension with ASB advancing him the money against his assets. 3. The Mercer-SCF money go-round - South Canterbury Finance (SCF) chief executive Sandy Maier is adopting a conciliatory stance to the Allan Hubbard-controlled Mercer Group's "unilateral" decision to stop making principal repayments, Marta Steeman at The Press reports. Mercer's half-year report to December 31, 2009 shows SCF was owed NZ$1.2 million with a 15% interest rate being charged. Mercer, a stainless steel products manufacturer, told the NZX its principal payments to non-bank lenders were on hold and it was in breach of one of its banking covenants. But it would continue with interest payments. The two non-bank lenders are SCF, controlled by Hubbard, and Gresham Finance, owned by wealthy Christchurch businessman Humphry Rolleston. Both Hubbard and Rolleston are shareholders in Mercer. The Companies Office information shows Hubbard owns 45% of Mercer and Rolleston 18.3%.

Maier said "We will have to work our way through that with them. I mean unilateral decisions are always interesting, but we will have to make sure there's some sensible plan. "It's not binding (on SCF). It takes two to tango in these things." With regard to halting principal repayments, Maier said: "It may be the most sensible thing in the world. I don't know. I will have to sit down and see what it looks like mutually with them." Mercer's half-year report says SCF can demand repayment. Maier said that was usually one of the rights of a lender but that did not always make sense."That's all normal, we treat them like any other borrower."

4. ANZ leads exporter trip to China - ANZ is leading a tour to China by 27 New Zealand exporters this week. The trip aims to help them identify growth opportunities and gain a better understanding of the Chinese market. ANZ's commercial managing director Graham Turley said there had been overwhelming demand from New Zealand companies to be part of the tour. The week long tour includes Shanghai, Tianjin and Beijing. It leaves on May 21 and includes representatives of companies from the seafood, agribusiness, food, manufacturing, textiles, wine and pharmaceutical sectors. ANZ is also sponsoring the New Zealand Pavilion at the Shanghai World Expo. This was first published in our Daily Banking and Finance newsletter, which is for our paying subscribers. Find out more here.