Savings Product Review: Hanover Capital Secured First Ranking Preferential Bonds

Wednesday 1st February 2006

What is it called and what sort of savings product is it?
Hanover Capital Secured First Ranking Preferential Bonds are a finance company based investment.

Who is the company behind it?
The offer is being made by Hanover Capital - which was established last year - to provide equity funding to Hanover Finance. Hanover Finance was formerly known as Elders Finance. It is the largest privately-owned finance company in New Zealand.

Who is the target market?
These bonds suit people who want a fixed return and are prepared to take on some risk.

What return does it offer?
The bonds are offering relatively high rates, ranging from 9.25% for 12 months, through to 9.95% annually for 48 and 60 months.

When was it launched?
Hanover launched these bonds in October 2005.

What other products is it like or is it competing with?
These bonds are up against the plethora for finance company offerings from more the Research from www.depositrates.co.nz shows there are more than 60 companies with offers in the market and rates range from 7.00% up to 10.10% for $10,000 on a 12 month term.

Is it long term, short term or medium term?
The terms on offer are from short - one year - through to five years.

What is the unique selling point?
It is an investment with one of the bigger, and arguably stronger finance companies, which has an established track record, as opposed to a small, new company. The rates are attractive.

How strong a stomach do you need for it?
Moderately strong.

What's the hitch?
The main hitch is that the markets Hanover lends into - primarily property - run into problems and their are defaults. However with this investment your money is being used to fund the company - Hanover Finance - as opposed to the lending to borrowers.

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