Borrowing in the new environment
Sitting in my small home office in Auckland - as I must now by decree - I was delighted to receive another gem of a newsletter from Bob Jones. I actually did meet Bob when I was a raw graduate just out of University in my first job in Wellington, and have admired his columns ever since. This is a must read. I’ll leave it to you to reply to him.
Sitting in my small home office in Auckland - as I
must now by decree - I was delighted to receive another gem of a newsletter
from Bob Jones. I actually did meet Bob when I was
a raw graduate just out of University in my first job in Wellington, and have
admired his columns ever since. This is a must read. I’ll leave it to you to
reply to him.
Another columnist I’ve known and followed for years is Tony Alexander. You can
subscribe to his newsletters here. In a recent newsletter he sent a survey
request to 100 bankers and financiers asking for their insights into how banks
are handling the Covid-19 crisis. Tony reports the results of this showed “bankers are
run off their feet working long hours but their banks are liquid with good
funding.”
He goes on to say “Accommodation, hospitality, and retail property are the sectors
banks largely consider of highest credit risk currently, but with concerns also
evident about property development with regards to falling asset values,
capital needing to be injected to lower debt ratios, and end-buyer demand
dropping off hitting residential property developments in particular.”
I don’t think he’ll mind me saying we both feel that the property development
sector is going to have some difficulties getting money out of banks in the
next couple of years so opportunities to raise capital for developers are
likely to appear.
Well at TBK Capital that’s one of the services we provide!
This week Treasury released a report outlining the
economic impacts of seven possible government responses to COVID-19. Its
findings appear to make the case for more government support - in addition to
the $20 billion already announced.
For example finance Minister Grant Robertson has this week said: "Work
on further significant Government investment to protect jobs, support cashflow,
and prepare the economy for recovery is well advanced. The next steps in the
Government’s plan to support businesses will be released later this week."
We’ll all be looking forward to that!
A step in the right direction is the $3 billion business tax package launched today. It will
enable a business to offset a loss in a particular tax year against a profit in
a previous year, and receive a refund of the tax paid in the previous
profitable year. Of course the devil will be in the detail.
Businesses
open and about to open
The level 4 lockdown meant all bars, restaurants, cafes, gyms, cinemas, pools,
museums, libraries, playgrounds and any other place where the public congregate
had to close their face-to-face function. It also included educational
facilities and takeaway food shops.
It was rather confusing at the beginning which businesses would be allowed to
remain open and once known resulted enormous supermarket
queues. It appears that most people have found the inconvenience of so many
business sectors closed bearable, but can’t wait until more are allowed to
open.
At the time of writing the details of the level 3 lockdown are yet to be seen
but here’s what we seem to know. According to Director-General
of Health, Dr Bloomfield, he would "expect that at alert level 3 we would have more
widespread activity happening with more people back at work, but maintaining
those strict things around physical separation, hand hygiene, and so on, to
prevent infection". Again the devil’s in the detail and I
can’t wait to see that!
But for those who are not allowed to open we are already seeing some dire
consequences and as I write this newsletter another well-known name bites the dust. Let’s hope the
next steps in the Government’s plan to support businesses is both sensible and
successful.
Loan
finance is available!
Meanwhile business must go on, and I think many people are surprised by how
much work they can do by email and over the internet without having up to be
physically at the office.
Just before and over the Easter break I’ve been talking to a number of lenders
- including banks. And for the majority it’s business as usual.
But there are some the new “rules” - have a read of Tony Alexander’s newsletter
mentioned above. For example one of the specialist lenders we recommend has
restricted the industries it wishes to deal with.
So for those of you seeking development finance, or bridging finance, or short
or long term loans, please email or give me a call on 021 902
901.
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Any
reference above to investment is not an offer of financial products that
requires disclosure under the Financial Markets Conduct Act 2013 (Act) and is
available only to wholesale investors as defined by that Act. It
is intended for distribution only to selected people to whom, under the
relevant laws, it can be lawfully distributed. It cannot be distributed in any
other jurisdiction, or to any other people. It is not an offer or solicitations
in any jurisdiction in which such offers or solicitations are not authorised,
or in which the person making such offers or solicitations are not qualified to
do so, or to any person to whom it is unlawful to make such offers or
solicitations. Any representation to the contrary would be unlawful. No action
has been taken by any person that would permit a public offering in any
jurisdiction where action for that purpose would be required.
Cheers
John Paine B.Sc., Dip BIA
TBK Capital Limited
Level 10, 120 Albert Street
Auckland 1010, New Zealand
Phone +64 9 307 3257
Mobile +64 21 902 901
Email john.paine@tbkcapital.co.nz
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