NZDMO adds $1 bln to bond programme in 2015/16 year
By Paul McBeth
May 21 (BusinessDesk) - The New Zealand Debt Management Office will increase borrowing by an extra $1 billion in the 2016 financial year, a period where the Treasury anticipates a bigger cash deficit as capital spending is expected to exceed cash flows.
The DMO will issue $37 billion of bonds between the 2014/15 and 2018/19 financial years for a net issuance of $4.3 billion, it said in a statement. That includes an extra $1 billion in the 2015/16 year, when the office will raise $8 billion and repay $1.2 billion of maturing debt, for a net issuance of $6.8 billion.
That will help cover a spike in the government's forecast residual cash deficit of $4.2 billion in the 2016 year, up from a shortfall of $2.7 billion in 2015, and higher than the December forecast of $3.5 billion. The Treasury pushed out the expected return to cash surplus into the 2019 year, when it sees a positive balance of $1.7 billion.
The government's capital spending programme of $23.4 billion over the next four years on physical assets such as school buildings, advances such as student loans and to provide funds for capital expenditure is expected to exceed operating cash flows, peaking in the 2016 year at $6.2 billion. The cash shortfall of $6.9 billion over the period will be funded through additional borrowing and in reductions of financial assets, the Treasury said.
The DMO's programme includes a new April 14, 2033 nominal bond expected to be launched through a syndicate in the first half of the 2016 year, while an inflation-indexed bond of up to $2 billion will also be issued that year.
Treasury bills are expected to average $4 billion over the forecast period.
The Treasury sees lower net crown debt at $61.7 billion, or 25.7 percent of gross domestic product, in 2015, before peaking in nominal terms at $67.2 billion, or 24.4 percent of GDP, in 2018.