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New Zealand regulator probes broker over CSO sale, report newspapers

December 13, 2010


Wednesday, December 8, 2010

New Zealand newspapers the Otago Daily Times and New Zealand Herald reports that New Zealand regulators are investigating a local brokerage firm, Forsyth Barr, over its part in the sale of a retail investment backed by asynthetic CDO. According to the article, the Commerce Commission is probing the firm’s role in the 2006 CSO Credit Sails, arranged by Calyon. The deal was series 2006-16 from Calyon’s Momentum CDO Europe programme, says the New Zealand Herald.

The Ortago Daily Times adds that investors lost all their NZD91.5 million ($69 million) principal after six out of 120 names in the reference pool suffered credit events. The article does not explain fully how the bonds, rated AA by Standard & Poor’s, ended up suffering a total loss, but says that some non-defaulted names were sold “to service the debt”. The newspaper quotes a Forsyth Barr official as rejecting any accusation of wrong-doing.

Investors in the Credit Sails notes included charitable organisations such as the Hospice Southland Charitable Trust, the New Zealand Methodist Trust Association, the Youth Development Endowment Trust, the Roman Catholic Bishop of the Diocese of Dunedin, the Congregational Christian Church in Samoa and the Dunedin Orphans Club, add the reports.


One Comment leave one →
  1. December 13, 2010 2:51 AM

    The comments on this article are really interesting. Please follow the link at the top of the page.

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