Investors in a troubled financial product have been told they will get back less than 2 per cent of their money and will have to wait until 2012 to see it.

Credit Sails, a Cayman Island registered company which is listed on the New Zealand debt market, yesterday said it would only be able to pay $11.66 per $1000 invested plus interest to investors.

The product was marketed by Forsyth Barr in 2006 and attracted $91.5 million. Its latest annual report shows 1566 Kiwis invested in the product which was set up to offer regular interest payments as well as a possible capital gain at the end of its six-year term in December 2012.

But it began to hit trouble in 2007 when the credit markets froze.

Like ING's frozen Regular Income Fund and Diversified Income Fund it was invested in collateralised debt obligations (CDOs) - which bundle different types of debt together into a security.

Credit Sails invested into a European fund which then invested into CDOs over 125 different companies.

When the credit market froze, those investments became illiquid and then the underlying companies which provided the securities began to collapse.

First to go was US bank Lehman Brothers in September which forced the product to put a halt to the September interest payment.

That was followed by the collapse of three Icelandic banks and then Washington Mutual which reduced the fund's buffer below 1 per cent and triggered a wind-up of the Credit Sail product.

But the news only got worse as more companies began to collapse.

In January Credit Sails wrote $65 million off the value of the $91.5 million investment.

Yesterday the company said aggregate losses had blown out to $560 million and as a result the value of the securities had been reduced to zero.

"Since the Momentum Collateral Securities will be reduced to zero on the scheduled maturity date, the holders of Credit Sails will not receive their principal back and the Credit Sails will be redeemed at zero," the company said.

All investors would get was a share of the $1.07 million realised when the product was closed in November, a payment of $11.61 per $1000 invested plus interest at the end of 2012.