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.

Moody says the rating action is as follows:

• PINs Series 2005-1 notes, downgraded to Aa3 and placed on review for possible downgrade; previously on February 3, 2009, rated Aa2 and placed on review for possible downgrade.
• These ratings address the repayment of principal only by the legal final maturity. They do not address coupon payments.

The ratings are based primarily on the following:

• Credit exposure to ABN AMRO Bank as provider of 100% principal protection at the legal final maturity date
• Legal and structural integrity of the structure

Moody's says it will provide a further update with regard to PINs Series 2005-1 rating following the conclusion of the ABN AMRO Bank review.