Kiwi money sails away

FAIRFAX

SAILING AWAY: Kiwi investors have seen 99 percent of the money they put into Credit Sails bonds disappear over the horizon.

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Kiwis who invested $91 million in an extremely complex bond issue have now seen effectively all their money wiped out.

Cayman Islands-registered Credit Sail Ltd told investors today that for every $1000 invested they were now looking at a return of just $11.66, plus interest. That's a loss of nearly 99 percent on the bonds - named Credit Sails - that were issued in 2006.

The company's annual report shows that 1566 New Zealanders invested in the bonds. Of these, 56 individuals had $100,000 or more invested.

In 2006 the bonds were styled as "index-linked notes" with a suggestion they could return over 10 percent a year.

The money put into Credit Sails was effectively invested in a collateralised debt structure. The collapse in value of collateralised debt obligations, or CDOs was one of the principal initial contributors to last year's global financial market meltdown.

The Credit Sails investors had already been informed earlier this year that over 71 percent of their money had gone west - because of the collapse of an Icelandic bank.

The final blow was delivered at the end of March by the bankruptcy of large American online and yellow page directory publisher Idearc Inc. Credit Sail directors said today a loss of over $56 million on the bonds was attributable to the collapse of the American company.

This has reduced the amount of money due back to investors to zero - since the combined losses now exceed $91 million.

However, over $1 million was gathered when Credit Sails investment structure was "unwound" in November. The $11.66, plus interest, that this represents per $1000 is due to be repaid on December 22, 2012.

- © Fairfax NZ News