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Victory Nickel and Nuinsco Announce Conversion of Loan to Direct Interest in Net Cash Flows

TORONTO, ONTARIO–(Marketwired – Apr 22, 2014) – Victory Nickel Inc. (“Victory Nickel” or the “Company”) (NI.TO) and Nuinsco Resources Limited (“Nuinsco”) (NWI.TO) today jointly announced that Nuinsco has opted to convert its outstanding loan to Victory Nickel (the “Loan”) into a participating interest in net cash flows from Victory Nickel’s frac sand business. Victory Nickel recently completed the construction of a 500,000 ton per annum frac sand processing facility in Seven Persons, Alberta (the “7P Plant”). Nuinsco has also relinquished its security interest over the assets of Victory Nickel.

Under the terms of the loan agreement (see news release of March 26, 2013), Nuinsco has the right to convert the outstanding balance of the Loan into a participating interest (the “Conversion”) whereby Nuinsco is entitled to receive a share of net cash flows earned from Victory Nickel’s frac sand business. Nuinsco’s participation is capped at $7,667,124 provided Victory Nickel completes Phase 2 of its three- phase business plan, otherwise Nuinsco is entitled to a maximum of $10,222,831. Victory Nickel will recover its capital investment in the 7P Plant and working capital prior to being required to share cash flow with Nuinsco. As a result of the Conversion, the outstanding amount of the Loan is considered paid in full.

“Conversion of this loan is an indication of Nuinsco’s confidence in our business plan and now leaves Victory Nickel with no secured debt,” said Victory Nickel’s CEO René Galipeau. “Victory Nickel and its subsidiary Victory Silica Ltd. (“Victory Silica”) have now implemented Phase 1 of a three-phased plan with the objective of producing in excess of 1,500,000 tons of premium-quality frac sand per year in Canada. Frac sand sales have begun and we are in the process of building inventory of finished frac sand at the 7P Plant where we have 22,000 tons of dry storage capacity. We are now working with our Wisconsin-based partner to implement Phase 2 which is designed to enhance margins and increase security of supply and quality control.”

“The Loan has had a very positive impact on both companies. It has allowed Victory Nickel to enter the frac sand business and begin generating cash flow by financing construction of the 500,000 ton per year 7P Plant and the Conversion provides Nuinsco with a potential cash flow stream to fund its exploration activities while minimizing the Company’s reliance on uncertain equity markets,” said Nuinsco’s Chief Executive Officer Paul Jones. “In addition, Nuinsco’s shareholdings of Victory Nickel, which increased significantly last year when the Company backstopped Victory Nickel’s rights offering to an amount of $1,207,584 at a cost of $0.024 per unit, offer upside potential from both the success of the frac sand operation as well as from the value of the Minago Nickel project and Victory Nickel’s other properties in a rising nickel price environment.”

About Victory Silica Ltd.

Victory Silica is a wholly-owned subsidiary of the Company and is charged with a phased plan to establish the Company in the frac sand market. In Phase 1, the Company has begun sales of premium quality midwestern white frac sand from the 7P Plant in Seven Persons, Alberta near Medicine Hat by shipping partially-processed sand purchased in Wisconsin to the 7P Plant for final processing and distribution. The 7P Plant is well located in an area populated with fracking companies, its potential customers, and is within only a few hours’ trucking distance of major oil or gas play well sites. Phase 2, which includes the construction of a sand concentrator in Wisconsin, is expected to reduce costs and assure security of sand supply through the control of a frac sand mine in Wisconsin. In Phase 3, Victory Silica has identified a site in Winnipeg, Manitoba, where it plans to build a larger frac sand plant to process and distribute both imported and domestic sands, including sand mined as a co-product of development of a nickel mine at the Company’s 100%-owned Minago project in Manitoba. With margins expected to be in excess of $25 per ton of frac sand sold, the Company should generate sufficient cash flow in Phases 1 and 2 to provide the financial flexibility to expand its activities by developing a second plant as Phase 3 of its growth plan.

About Frac Sand

Frac sand is a proppant used in the oil and gas business as a part of the hydraulic fracturing process – a means of increasing flow to the wellhead. Frac sand must have particular characteristics including achieving certain levels of crush resistance, sphericity and roundness, and it is therefore a relatively rare commodity. Vast quantities of frac sand are consumed, and more is needed all the time, as shale gas and oil plays in Canada and the US rise to prominence.

About Nuinsco Resources Limited

Nuinsco is a growth-oriented, multi-commodity mineral exploration company that is focused on world-class mineralized belts in Canada and internationally. In addition to its property holdings in Ontario, Saskatchewan and Turkey, Nuinsco owns common shares in Chalice Gold Mines (CXN.TO) and Victory Nickel Inc. (NI.TO), and a 50% interest in CBay Minerals Inc. (50% Nuinsco, 50% Ocean Partners Investments Limited), a private company that is a dominant player in Quebec’s Chibougamau mining camp with assets including a permitted mill and tailings facility, eight past- producing copper/gold mines, three potential near-term copper producers and a 96,000 acre land position. Shares of Nuinsco trade on the Toronto Stock Exchange under the symbol NWI.

About Victory Nickel

Victory Nickel Inc. is a Canadian company with four sulphide nickel deposits containing significant NI 43- 101-compliant nickel resources and a significant frac sand resource at its Minago project. Victory Nickel is focused on becoming a mid-tier nickel producer by developing its existing properties, Minago, Mel and Lynn Lake in Manitoba, and Lac Rocher in northwestern Québec, and by evaluating opportunities to expand its nickel asset base. Through a wholly-owned subsidiary, Victory Silica Ltd., Victory Nickel is establishing a presence in the frac sand market prior to commencing frac sand production and sales from Minago.

Please visit the Company’s website at www.victorynickel.ca. Should you wish to receive Company news via email, please email cathy@chfir.com and specify “Victory Nickel” in the subject line.

Forward-Looking Information: This news release contains forward-looking information. All statements, other than statements of historic fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future constitute forward-looking information. This forward-looking information reflects the current expectations or beliefs of the Company based on information currently available to the Company. Forward-looking information is subject to a number of risks and uncertainties that may cause the actual results of the Company to differ materially from those discussed in the forward-looking information, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things: uncertainty of estimates of capital and operating costs, production estimates and estimated economic return; the possibility that actual circumstances will differ from estimates and assumptions; uncertainties relating to the availability and costs of financing needed in the future; failure to establish estimated mineral resources; fluctuations in commodity prices and currency exchange rates; inflation; recoveries being less than those indicated by the testwork carried out to date (there can be no assurance that recoveries in small scale laboratory tests will be duplicated in large tests under on-site conditions or during production); changes in equity markets; operating performance of facilities; environmental and safety risks; delays in obtaining or failure to obtain necessary permits and approvals from government authorities; unavailability of plant, equipment or labour; inability to retain key management and personnel; changes to regulations or policies affecting the Company’s activities; the uncertainties involved in interpreting geological data; and the other risks disclosed under the heading “Risk Factors” and elsewhere in the Company’s annual information form dated March 31, 2014 filed on SEDAR at www.sedar.com. Forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.

FinanceInvestment & Company Information
Contact:

Victory Nickel Inc.

Rene Galipeau

416.363.8527

416.626.0890

admin@victorynickel.ca
www.victorynickel.ca

CHF Investor Relations

Cathy Hume

416.868.1079

416.868.6198

cathy@chfir.com

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Numericable's bond increase hits loan market

By Claire Ruckin

LONDON (Reuters) – French cable company Numericable’s decision to halve the size of a planned loan backing its acquisition of French telecom SFR to 2.8 billion euros (2.30 billion pounds) and boost its bonds to 8.4 billion euros is a blow for the leveraged loan market.

Numericable slashed the size of a covenant-lite term loan from a planned 5.6 billion euros and increased its bonds from an original 6.04 billion euros on Monday after overwhelming demand from bond investors.

Bonds are currently cheaper than loans for Numericable, which was able to adjust its debt package to get the best terms after huge demand from bond investors.

“All in, the bonds are coming in cheaper than the loans so it is obvious why the borrower would opt for the bonds,” a loan investor said.

More than 50 billion euros was pledged for Numericable’s 11.2 billion euros of bonds and loans and 25 billion euros was raised for holding company Altice’s 4.15 billion euros of bonds, bankers said.

Investors that are able to invest in both loans and bonds preferred the fixed-rate bonds which were offered with call protection that penalise companies for refinancing early.

“If you believe the company can deleverage significantly over the next 12 to 18 months then you get more upside buying the bonds than the loans,” a leveraged banker said.

The euro-denominated term loan B was cut to 1.75 billion euros from a planned 2.6 billion euros at launch. The US dollar denominated term loan B was also slashed to 1 billion euro equivalent from a planned 3 billion euro equivalent.

The loan will price at the wide end of guidance at 375 basis points (bps) from initial guidance of 350—375bps and will be offered with a 75bps Libor/Euribor floor and a discount of 99-99.5.

LOAN DISAPPOINTMENT

The loan had a disappointing syndication in Europe. Up to 1.25 billion euros of existing fund investors rolled into the deal, but only 500 million euros of new money was raised.

Banks were unable to roll into the covenant lite deal. Covenant lite loans are common in the US and have been accepted by European institutional investors, but remain difficult for banks as they offer investors little protection.

The weak response from cash-rich European investors is surprising, bankers said, as investors have had few opportunities to join large liquid deals this year.

One possible explanation is that the new-money element of the loan will not fund immediately and will pay a ticking fee unlike the bonds which start earning income immediately, along with the existing loans that are being refinanced.

“It is pretty disappointing that the deal hasn’t taken a lot of liquidity out of the European loan market. The European loan market is hot but the bond market is much, much hotter,” a second leveraged banker said.

The size of the bonds and loans could be adjusted again before closing. High demand for the bonds is causing pricing to tighten, which is making the loan look more attractive again.

Numericable’s loan and bond debt package was underwritten by a group of nine banks. Joint global co-ordinators Deutsche Bank, Goldman Sachs and JP Morgan were joined by Barclays, BNP Paribas, Credit Agricole, Credit Suisse, ING and Morgan Stanley.

Numericable was not immediately available to comment.

(Additional reporting by Natalie Wright and Mariana Santibanez in New York.; Editing by Tessa Walsh)

BondsFinanceNumericable

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Leveraged Loan Funds See Cash Outflow; 95-Week Win Streak Snapped

For the first time since June 2013 retail-cash outflows were logged from bank loan mutual funds and exchange-traded funds as $249 million was pulled in the week ended April 16, according to Lipper.

To be sure, the outflow was not unexpected and inflows over the previous four weeks had dwindled steadily to just positive $48 million last week, a 75-week low. For the record, as outflows go, this week’s was also the largest since October 2011.

More broadly, the leveraged loan asset class is clearly cooling off, at least a bit. Growth in assets under management among loan mutual funds slowed to a 1.5-year low of $2.2 billion in March, according to Lipper FMI and fund filings, from $2.9 billion in February and $4.3 billion in January. (However, AUM across the category did reach a record $175.1 billion during the month.)

With this weeks fund flow result the four-week trailing average slumps to positive $46 million, from positive $190 million last week, and $321 million in the week prior. Of this week’s total total outflow, 9% was tied to the ETF segment.

The streak of retail cash inflows into loan funds ran 95 weeks, for a total of $66.7 billion over that span, by the weekly reporters only.

Year-to-date inflows total $6.7 billion, of which $1.06 billion is ETF-related, or 16% of the sum. In the comparable year-ago period, inflows were $14.1 billion, with 12% tied to ETFs.

The change due to market conditions was negative $190 million. Total assets stood at $109.1 billion at the end of the observation period, with ETFs comprising $8.4 billion of the total, or approximately 8%. – Jon Hemingway

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Idaho payday loan interest rates tops in nation, new reform law won't …

Here’s a link to my full story at spokesman.com on Idaho having the highest interest rates in the nation for payday loans, at 582 percent, and how payday loan reform legislation passed by this year’s Legislature won’t change that. Washington’s average percentage rate for payday loans is 192 percent, because of additional restrictions that state places on payday lending businesses. Idaho is one of just seven states with no limits on interest charges or fees.

This year’s legislation was highly controversial, with numerous groups opposing it for not going far enough to reform the business in Idaho, and major payday lenders backing it as a “progressive” move to protect consumers. But many of the lawmakers who voted against the bill thought it went too far. Said Sen. Todd Lakey, R-Nampa, “I don’t think it’s government’s role to protect people from themselves.”

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Fitch Affirms SLM Private Education Loan Trust 2013-B

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Fitch Affirms SLM Student Loan Trust 2003-2

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NEW YORK–(BUSINESS WIRE)–

Fitch Ratings affirms the ratings of the senior notes at ‘AAAsf’ and the subordinate notes at ‘BBBsf’ issued by SLM Student Loan Trust 2003-2. The Rating Outlook remains Stable for all notes.

KEY RATING DRIVERS

High Collateral Quality: The collateral consists of 100% Federal Family Education Loan Program (FFELP) loans. The credit quality of the trust collateral is high, in Fitch’s opinion, based on the guarantees provided by the transaction’s eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. Fitch affirmed the U.S. sovereign rating on March 24, 2014 at ‘AAA’ with a Stable Outlook.

Sufficient Credit Enhancement (CE): CE is provided by overcollateralization (OC; the excess of trust’s asset balance over bond balance), and excess spread, and for the senior notes, subordination of the Class B notes. Current senior and total parity is 108.05% (7.45% CE). The trust has been releasing cash given that the trust has maintained its cash release level of 100% total parity.

Adequate Liquidity Support: Liquidity support is provided by a Debt Service Reserve Fund sized at the greater of 0.25% of the pool balance and $2,005,060.

Acceptable Servicing Capabilities: Sallie Mae, Inc. is responsible for the servicing of the trust. Fitch believes SLM Inc. to be an acceptable servicer of FFELP student loans.

RATING SENSITIVITIES

Since the FFELP student loan ABS relies on the U.S. government to reimburse defaults, ‘AAAsf’ FFELP ABS ratings will likely move in tandem with the ‘AAA’ U.S. sovereign rating. Aside from the U.S. sovereign rating, defaults and basis risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults and basis shock beyond Fitch’s published stresses could result in future downgrades. Likewise, a buildup of CE driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Fitch has taken the following rating actions:

SLM Student Loan Trust 2003-2:

–Class A-5 affirmed at ‘AAAsf’; Outlook Stable;

–Class A-6 affirmed at ‘AAAsf’; Outlook Stable;

–Class A-7 affirmed at ‘AAAsf’; Outlook Stable;

–Class A-8 affirmed at ‘AAAsf’; Outlook Stable;

–Class A-9 affirmed at ‘AAAsf’; Outlook Stable;

–Class B affirmed at ‘BBBsf’; Outlook Stable.

Additional information is available at ‘www.fitchratings.com‘.

Applicable Criteria and Related Research:

–’Global Structured Finance Rating Criteria’ (May 24, 2013);

–’Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria’ (May 17, 2013);

–’Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions’ (April 17, 2012).

Applicable Criteria and Related Research:

Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions — Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=676496

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria — Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708795

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=827341

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM‘. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Security Upgrades & DowngradesInvestment & Company InformationFitch RatingsFFELP
Contact:

Fitch Ratings, Inc.

Jared Smith

Analyst

+1-212-908-0371

Fitch Ratings, Inc.

One State Street Plaza

New York, NY 10004

or

Committee Chairperson

Tracy Wan

Senior Director

+1-212-908-9171

or

Media Relations:

Sandro Scenga, New York, +1 212-908-0278

sandro.scenga@fitchratings.com

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Loan fund investors pull cash with Fed rate hikes on hold

By Lynn Adler

NEW YORK (Reuters) – Retail investors yanked money out of bank loan funds in the latest week, breaking a nearly two-year streak of inflows, as the interest rate hikes buyers of these floating-rate products are counting on now appear likely later rather than sooner.

Federal Reserve Chair Janet Yellen’s reassurances that the Fed will prolong its near-zero interest rate strategy to stimulate the tepid U.S. jobs market and economy, after earlier indicating rate hikes could come more quickly than widely expected, doused the urgency to stock up on loans at current low yields.

Investors pulled about $249 million from bank loan mutual funds and exchange traded funds (ETFs) in the week ended April 16, after flocking into these products for 95 straight weeks, according to Lipper.

“The door to sustained outflows is open now, and wider than it has been in a long time,” said Jeff Tjornehoj, head of Lipper Americas Research. “It’s all about sustained low interest rates and the need for protection against rising rates just doesn’t seem so strong anymore.”

Retail investors had been building new positions, or rebuilding post-financial crisis allocations to leveraged loans, seeking a hedge against the rising rates that accompany an expanding economy.

Those allocations are fairly full, especially now that rate hikes may be further down the road when the economy is on more solid footing, analysts and investors agree.

The pace of inflows had been tapering, from weekly peaks well above $1 billion through much of last year, to less than half of that in recent weeks. In the week ended April 9, loan funds drew in about $48 million, the smallest amount since July 4, 2012, Lipper data show.

“People were excited about loan funds because they feared 2014 would bring a spike in interest rates,” Tjornehoj said. Instead, “people rushed into Treasuries and corporates, and yields came down. That’s taken away a lot of the enthusiasm for loans.”

Bank of America Merrill Lynch analysts noted in a report that mutual funds and ETFs are reporting inflows to rate-sensitive emerging market bonds, “while inflows to high-yield loan funds, viewed as defensive against interest rates, have stopped.”

Biased toward borrowers

The U.S. leveraged loan market, thanks largely to the almost two years of unrelenting loan fund buying and sizeable demand from collateralized loan obligation funds, is biased toward borrowers.

Low-rated companies have in record numbers come to market to slash borrowing costs and take on debt with fewer investor protections. Now as the record refinancing spree subsides, leveraged buyouts and mergers and acquisitions are heating up, in what still remains largely an issuers’ market.

Buyers put up minimal resistance, eager for floating-rate exposure in loan products that offer seniority in the capital structure to high-yield bonds. So far in this cycle, investors are insulated by low defaults.

The U.S. leveraged loan default rate ended the first quarter at 1.4 percent, down from 2.2 percent in the prior quarter and from 3.0 percent a year earlier, according to Moody’s Investors Service.

“One would expect continued demand for an asset that offers relatively high yields, near-zero duration and a reasonably contained credit risk. Few areas of the capital markets deliver that mix,” said

Christopher Remington, institutional portfolio manager at Eaton Vance.

But any sustained retail loan fund outflows, based on investors being fully allocated and interest rates staying historically low for at least another year, will pressure yields up and lure in other investors, industry participants agree.

As most leveraged loans have Libor floors, the first 75 basis points of Fed rate hikes will not translate to higher loan yields, Remington noted. Still, loans benefit by being less vulnerable to rising rates than bond prices.

“What could drive continued inflows into loans? One factor would be the continued grinding lower of yields elsewhere,” he said. “Bond market volatility is another, as investors wake up to the realities of duration risk.”

While retail has become an increasing presence in the loan market over the past two years, most analysts and investors agree there are plenty of other investors prepared to step in if retail sharply withdraws.

“If there is a quick and significant outflow from retail loan funds, it shouldn’t surprise anyone to see loan prices fall. If and when they do, that’s when you see crossover buying start,” Remington said. “High-yield managers, multi-sector mandates and distressed debt funds will come flying in to pick up attractive values. When someone loses, someone else wins.”

Banks, insurance companies and hedge funds may also pick up the slack, Tjornehoj said.

Through early April, the total return for high-yield bond funds was about 3 percent, triple the return for loan funds.

(Editing By Leela Parker Deo and Jon Methven)

FinanceInvestment & Company Informationinterest ratemutual funds

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Idaho payday lenders lead nation in highest loan interest | Local …

SALT LAKE CITY (AP) – Idaho, Nevada and Utah have among the nation’s highest interest rates for payday loans, according to a report.

The study, released this week by the Pew Charitable Trusts, found their rates are so high mainly because they’re among only seven states that impose no legal limits on them.

Idaho payday lenders charge an average 582 percent annual interest on their loans to lead the nation, The Salt Lake Tribune reported.

That’s followed by South Dakota and Wisconsin, both 574 percent; Nevada, 521 percent; Delaware, 517 percent; and Utah, 474 percent.

Among states with storefront payday lenders, the lowest average interest charged is Colorado at 129 percent, which matches its legal limit. The next lowest are Oregon at 156 percent and Maine at 217 percent.

Fifteen states either ban payday loans or cap interest rates at 36 percent. None of them has any storefront lenders.

Without a limit on interest rates, competition among lenders does not tend to lower rates much, according to the research.

Representatives of the Alexandria, Va.,-based Community Financial Services Association of America did not immediately respond to requests for comment Sunday.

The study also found the nation’s four largest payday loan companies charge similar rates to each other within any given state, usually at the maximum allowed by law. States with higher limits have more stores, but the rates remain higher and competition does not lower them much.

“This new research shows that payday loan markets are not competitive,” Nick Bourke, project director for Pew, told The Tribune

The study urges states to limit payments to “an affordable percentage of a borrower’s periodic income,” saying monthly payments above 5 percent of gross monthly income are unaffordable.

On average, a payday loan takes 36 percent of a person’s pre-tax paycheck, Bourke said.

“Customers simply cannot afford to pay that back and still afford their other financial obligations,” he said. “This is why you see people ending up borrowing the loans over and over again.”

___

Information from: The Salt Lake Tribune

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Idaho payday loan interest rates highest in the nation – Eye On Boise …

Idaho’s payday lenders charge the highest interest rate in the nation – an average 582 percent, according to a study from the Pew Charitable Trusts. The trusts found that Idaho, Nevada and Utah had the nation’s highest interest rates for payday loans; the three states are among seven that put no limits on those rates. Click below for a full report from the Salt Lake Tribune via the Associated Press; the Tribune reported that 15 states either ban payday loans or cap interest rates at 36 percent. The news comes after a payday loan reform bill that contains no caps on interest rates passed the Idaho Legislature this year amid much controversy; opponents said the bill, backed by major payday lenders, didn’t go far enough to reform the business in Idaho. SB 1314, which passed the House by just one vote, was signed into law by Gov. Butch Otter on March 26.

The new law, which takes effect July 1, limits borrowers taking out payday loans to an amount not to exceed 25 percent of their gross income, with the borrower to provide the proof of that; and requires lenders to offer borrowers who can’t repay their loans on time a once-a-year option for an extended payment plan without additional fees.

ID, NV, UT have among highest payday loan rates

SALT LAKE CITY (AP) — Idaho, Nevada and Utah have among the nation’s highest interest rates for payday loans, according to a report.

The study, released this week by the Pew Charitable Trusts, found their rates are so high mainly because they’re among only seven states that impose no legal limits on them.

Idaho payday lenders charge an average 582 percent annual interest on their loans to lead the nation, The Salt Lake Tribune reported (http://bit.ly/1fcSc3d ).

That’s followed by South Dakota and Wisconsin, both 574 percent; Nevada, 521 percent; Delaware, 517 percent; and Utah, 474 percent.

Among states with storefront payday lenders, the lowest average interest charged is Colorado at 129 percent, which matches its legal limit. The next lowest are Oregon at 156 percent and Maine at 217 percent.

Fifteen states either ban payday loans or cap interest rates at 36 percent. None of them has any storefront lenders.

Without a limit on interest rates, competition among lenders does not tend to lower rates much, according to the research.

Representatives of the Alexandria, Va.,-based Community Financial Services Association of America did not immediately respond to requests for comment Sunday.

The study also found the nation’s four largest payday loan companies charge similar rates to each other within any given state, usually at the maximum allowed by law. States with higher limits have more stores, but the rates remain higher and competition does not lower them much.

“This new research shows that payday loan markets are not competitive,” Nick Bourke, project director for Pew, told The Tribune.The study urges states to limit payments to “an affordable percentage of a borrower’s periodic income,” saying monthly payments above 5 percent of gross monthly income are unaffordable.

On average, a payday loan takes 36 percent of a person’s pre-tax paycheck, Bourke said.

“Customers simply cannot afford to pay that back and still afford their other financial obligations,” he said. “This is why you see people ending up borrowing the loans over and over again.”

___

Information from: The Salt Lake Tribune, http://www.sltrib.com

Copyright 2014 The Associated Press

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