What is it called and what sort of savings product is it?
Kauri Notes are interest-bearing debt securities, packaged up with capital protection.
Who is the company behind this new product?
The notes are being promoted by Savings and Loans, an Auckland based investment and
lending company. The notes have capital protection from international investment bank Merrill Lynch, which has a AA- Standards and Poor's credit rating.
Who is the target market for these Kauri Notes?
Savings and Loans says Kauri Notes are for people who want to diversify their finance company debenture holdings and other fixed interest investments into one with a rating.
What return does this investment offer?
The 9.50 per cent paid quarterly. However, there is what is known as a "redemption premium". If the underlying notes generate a return of more than 9.50 per cent annually, 100 per cent of this premium will be paid to investors.
When was it launched?
The notes were launched earlier this month.
What other currently available products is it like, or what else is it competing with?
While the notes are up against most other fixed-interest investments, they don't appear to have an absolutely direct competitor at the moment.
Is it long term, short term or medium term?
Kauri Notes have a term of seven years and three months.
What is the unique selling point of Kauri Notes?
Capital protection is a firm selling point in this market. So too is the attractive interest rate and the tie-up with Merrill Lynch. The money raised will be invested in a US$7.9 billion fund, which is diversified across 50 managers. This money is invested in the financial sector, the metal, energy, agriculture and currency markets, as well as other markets.
How strong a stomach do you need for it?
Like other capital protected products, Kauri Notes have a lowish risk threshold, despite the high interest rate.
What's the hitch?
There aren't too many hitches with this offering. Perhaps the biggest is the guarantor, Merrill Lynch, getting into trouble.
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