First the good news: That nice little gift from Cemex for Rinker shareholders I wrote about last week is till on offer and is now worth more. The Rinker share price has been bouncing around a bit but today (July 4) it's been as low as $18.48 - meaning a gross profit of $2,040 on a quick trade of 2000 shares.
Now the bad news: With Bridgecorp becoming the fourth property finance company to go belly-up in 18 months, the only comfort for punters who may have lost money is that they will have more company soon enough. The high-yield and high-risk debenture market remains a minefield.
Furthermore, the Bridgecorp failure makes a mockery of the Australian Securities and Investments Commission's plan to clean up this dubious end of the finance market.
ASIC told a parliamentary committee in May that the highest risk sector was debentures that were unrated and unlisted - a category that takes in 83 outfits holding $8 billion of other people's money.
ASIC was sufficiently concerned about Bridgecorp to stop it raising more funds in Australia last year, but its New Zealand arm kept taking cash from the public, helped by a three-and-a-half star "investment grade" rating from Property Investment Research. So Bridgecorp wasn't in the highest-risk category, according to ASIC.
Part of the pitch by ASIC boss Tony D'Aloisio to the politicians was to look further into having debentures rated by firms such as PIR - but that pitch falls well short of the reality of this business.
I read this story that provides an example of how an investor was taken in by the alleged comfort of an investment grade rating - only to see the receivers march in within the week.
I interviewed the founder and managing director of PIR, Richard Cruickshank, for a Eureka Report story and found little comfort in the present ratings system.
For a start, there is no requirement for debenture issuers to be rated. Wise investors are supposed to smell a rat if a product doesn't carry an "investment grade" rating - but most punters don't know that and are swayed by advertising campaigns instead.
Secondly, if a firm receives a sub-investment grading, that fact is not published. It's as if it was never rated. Richard Cruickshank says there were legal difficulties in publishing negative reports i.e. the ratings companies are scared of being sued.
Thirdly, companies can shop around among ratings firms to find more lenient researchers. This is compounded by the inherent conflict in the debenture issuers paying for the rating. If your income depends on giving favourable ratings, well, it is possible to be a little compromised. Over the years I have seen far too many dubious investment rating reports.
Fourthly, the ratings companies are a long way short of being auditors. In defending PIR's Bridgecorp rating, Cruickshank said it's not their job to do full due diligence and that they rely heavily on the stated strategy of the offer document. "We're not public servants," he said.
Even at the top end of the ratings agency business - Moody's and Standard and Poor's - there is regular criticism of how arm's length they might be in judging some products.
And finally, however bad some rated products might turn out to be, many of the unrated must be real shockers. Cruickshank told me he wouldn't even take fees from "quite a few" developers to start researching their offering, such was the dubious nature of their operation.
He wouldn't specify how many ratings result in sub-investment grade, but again said there were "quite a few". That doesn't inspire much confidence in high-yield debentures, does it?
And the really bad part is that these four high-profile collapses have occurred when times are far from hard, when interest rates have risen only a little and could not be called particularly high.
Heavens help this multi-billion sector if the Reserve Bank ever feels the need to really crank up rates.