Preference shares in South Canterbury Finance look set to test all-time lows - 22c last month - with the $1 shares trading down 15% during the past two days at 23c each.
The 100 million non-voting preference shares, which trade on the NZX debt market, were issued for $1 each in December, 2006.
They traded at a year-high of 63c, but in mid-April set the record low of 22c.
South Canterbury is seeking to raise $1.25 billion from investors, of which $1.2 billion is in debenture stock covered by the Government's deposit guarantee scheme.
South Canterbury chief executive Sandy Maier said while he was "not unsympathetic" to preference shareholders who may have seen the value decline, shareholders had to consider their risk appetites, ranging from high-risk speculators through to those staying in for the long-term yield.
"We are working hard to restore the company [through restructuring and recapitalisation] and hope they [preferance shares] come back to par value [$1]," Mr Maier said.
"We have never missed a payment of principal or interest; we are keeping up our side," he said.
Craigs Investment Partners broker Peter McIntyre said the value of a company's non-voting preference shares gave a clear indication of market sentiment.
There were 130,000 preferance shares traded on Tuesday, falling 15% to 23c per share, while on Monday there were more than 160,000 shares sold. They continued trading at 23c yesterday.
"Getting 5.61% [interest] for `at risk' capital is not a strong risk-reward equation for investors . . . in some cases they are cutting their losses," Mr McIntyre said.
The preferance shares have a dividend set for 2010 at 5.61%, which is reset annually.
Mr Maier said the preference shares "worked OK for us as part of our capital structure" at South Canterbury and there was "no need to fix or change" any aspect at present.
Of the buyers of preference shares in recent days, Mr Maier said: "Some [investors] have got more risk appetite and want to double their bet," while other holders would be looking to hold long-term for yields.
The South Canterbury preferance shares, which are not covered by the Crown guarantee, rank below debenture and bond holders in the event of a wind-up of the company, but ahead of ordinary shareholders, Mr McIntyre said.
