New Zealand government offers wholesale guarantees

New Zealand's government offered wholesale funding guarantees Saturday to leading banks and financial institutions, seeking to boost their ability to attract investment in tight international credit markets.

The move, announced jointly by the treasury and central bank, matched guarantees offered by other leading industrialized nations attempting to woo skittish international investors. The government had previously moved to guarantee retail deposits.

The guarantee facility will be offered on an opt-in basis to financial institutions with an investment-grade credit rating and with substantial New Zealand borrowing and lending operations.

A guarantee fee will be charged, determined by the credit rating of the issuer and the term of the security being guaranteed.

"The fee schedule is designed to ensure that the facility is used while it is needed, but to encourage issuers to graduate from using the guarantee as market conditions permit," the reserve bank and treasury said in their joint statement.

http://www.iht.com/articles/ap/2008/11/01/business/AS-New-Zealand-Bank-G...