Thursday 7th August 2008
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The Wellington-based company also couldn't attract the backing of an international ratings company to support its accreditation as an approved rating agency accredited by the Reserve Bank, it said in a statement.
"Eighteen months ago this was quite a vibrant industry," managing director Ron Keene said in a BusinessWire interview. "One would have to question how much of the business is going to be left when the dust settles."
Axis only had ratings on four such firms, including St Laurence, which had a B2 rating, one step above investment grade, before it was withdrawn amid news in June the company had sought a moratorium on paying its investors. More than two dozen financial firms have failed or sought to halt payments in the past two years.
"What's happening is quite unprecedented in New Zealand's history, that we should have such a flight away from finance companies by investors," Keene said. "The whole market has really been turned on its head by this contagion effect of investors fleeing to banks," he said.
Axis may continue to offer ratings analysis products through its relationship with Rapid Ratings, Keene said.
Finance companies have also increasingly been forced to compete with banks offering attractive deposit rates. That may change as the central bank cuts the official cash rate and bank deposit rates drop, he said. Some investors probably will be lured back to finance companies by the need to get higher fixed payments.
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