Aust. feels DFC’s fall

Press, 24 October 1989, Page 27

Aust. feels DFC’s fall

NZPA Sydney The collapse of DFC New Zealand has done immense harm to the credit-standing of companies and financiers in both New Zealand and Australia, the “Australian Financial Review” says. Those participating in the commercial-paper market were worst affected, the newspaper’s Chanticleer column said. “Forget the recent downturn of Australia by Moody’s. Forget even the problems of Australia’s entrepreneurs although there is some specific damage being done by Alan Bond in the Eurobond china shop,” Chanticleer said. “The collapse of DFC is adding between 10 and 20 basic points (0.1 and 0.2 percentage points) to the rates payable by most Australian issuers in the commercial markets of Tokyo and New York. “However, they are meeting a better fate than many New Zealand borrowers, who are finding that they are temporarily denied access to these markets.” Australian issuers were “tarred with the same brush as the Kiwis” because many bankers — especially Japanese — regarded Australia and New Zealand as “Australasia” and thought in terms of regional risk, Chanticleer said. The column said that a spokesman for New York banker J. P. Morgan, appointed as adviser to DFC’s statutory managers, had acknowledged that much of its assignment involved damage control. It would be trying to represent all New Zealand and Australian issuers in discussions with Japanese banks, aimed at restoring their confidence. It has also been reported that Japanese creditors would combine in a lobby group to apply pressure on New Zealand authorities over their decision to allowDFC to fail.