Savings Product Review: St Laurence Dual Currency Debenture Stock

Wednesday 1st February 2006

What's it called and what sort of a savings product is it?
St Laurence Dual Currency Debenture Stock.

Who is the company behind it?
St Laurence is a Wellington based finance company which provides a range of investments, mainly property based. The company started out as a property syndicator, but has developed and successfully marketed a number of innovative investments.

What return does it offer?
It pays 7% annually on the original amount invested, with quarterly interest paid in arrears. However the final payment will be determined by where the New Zealand dollar is relevant to the US dollar at the end of the investment period. If the Kiwi falls against the greenback then the return will be greater. However the opposite applies if it increases.
If the exchange rate swas 62c then the return would be 10.2%, if it was 74c the return would end up being 4.3%.

When was it launched?
December 2005.

What other products is it like or is it competing with?
This baby has got the market to itself. However, similar products do exist in other countries.

Is it long term, short term or medium term?
The investment is for a fixed term. Applications close on December 16 and the investment matures on October 31, 2008.

What is the unique selling point?
Undoubtedly the currency kicker.

How strong a stomach do you need for it? (in other words, what's the risk profile?)
This is one of those unusual investments that don't fall into any of the "ordinary" investment categories (although its underlying investment is finance company debenture stock). It's not quite a gimmick, but it is designed for people who are reasonably sophisticated and understand how currency markets work.
St Laurence are using it to attract new investors to the company and to build its profile.

What's the hitch?
The biggest hitch is what happens to the NZD/USD. Not even currency experts can accurately forecast which way currencies are going to go in the future.

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