Macquarie Fortress Notes may suffer defaults from borrowers

"While there have been no new defaults in the current quarter, it is expected that the default rates will increase in the next 12-18 months," according to the update, which was released to the NZX.

There has been a "meaningful deterioration" in the outlook of some of the borrowers, it said.

The default rate over the past 12 months rose to 3.6% by number of senior loans, it said.

The loans are still expected to be repaid at par value despite the worsening outlook, it said. "The key factors that will affect the final return to investors are loan defaults and recovery rates."

By Jonathan Underhill

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