Mutual lures investors with high rates

Mutual Finance is offering the highest rate in the market on government-guaranteed debentures as the company seeks NZ$2 million in May. The company has filed an amended prospectus after an 80 per cent stake was bought by an entity associated with Paul Bublitz recently. The firm is seeking NZ$20 million through the prospectus.

Mutual is offering 7.25 per cent on guaranteed debentures maturing on October 11.  It is also offering one of the highest interest rates on deposits maturing after October that don't have the benefit of government guarantee. For a 12-month term the company is offering 8.75 per cent and for two years it is offering 9.95 per cent.

Mutual has a large chunk of debentures due in the next few months and is likely seeking funds to aid in their repayment. As of November 2009, the company had about NZ$5 million of debentures, with NZ$4.5 million of these classified as current.  

The company had NZ$1.2 million of assets it had put for sale in November, and it is not known if it has managed to offload it and at what price.

Interestingly, there is no cap on interest rates that a company offering funds under the government guarantee can offer investors.