F&P Finance offering big incentive for 1yr rates

The finance company is offering 7.50% for 12-month non-guaranteed debentures which is a hefty 350-basis-point premium to a similar guaranteed debenture.

While around 150 basis points represents a cost to F&P Finance to cover the cost of the government guarantee, the balance 200 basis points is what the company wants to offer investors to start looking at non-guaranteed deposits, managing director Alastair Macfarlane says.

For the company it's a strategy aimed at getting investors to start looking at a world beyond the government guarantee and thus look at terms beyond 12 months like for example two years where the company is offering 8%.

"We want to demonstrate to investors that the tenure of the Crown guarantee is finite and investors now need to start assessing the risk profile of difference companies," Macfarlane says.