PINs protection weakened

The notes, which offered high coupon payment and principle protection, first ran into trouble when the credit crisis hit. Essentially the underlying assets were destroyed and the income disappeared.

Investors, who put $75 million into the notes, took some comfort because the the principal was protected by ABN Amro Bank. Dutch-based ABN Amro was invoved as it had a stake in Sydney-based Absolute Capital which promoted the notes in New Zealand.

Ratings agency Moody's have downgraded the ratings assigned to Packaged Income Notes (PINs) Series 2005-1 and placed them on review for possible downgrade.

It says the move follows the downgrade of ABN AMRO Bank from Aa2 to Aa3, and placed under review for possible downgrade.