Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


NZ bond auction falls short as market volatility deters bids

NZ bond auction falls $50M short as market volatility deters bidders

Aug. 11 (BusinessDesk) – The New Zealand Treasury only managed to sell $100 million of the $150 million of bonds offered today in the first sale since America lost its top credit rating, driving down yields on government debt.

The Treasury’s Debt Management Office attracted just $25 million of bids for the $100 million of 6% bonds maturing April 2015 it offered. It sold the $25 million at an average yield of 3.51%.

The department made up some of the shortfall by accepting $75 million of bids for it 5.5% bonds maturing April 2023, more than the $50 million on offer, which were sold at an average yield of 4.52%.

Government bonds have soared in the wake of the U.S. Congress’s protracted stoush over raising the debt ceiling and the subsequent rating downgrade by Standard and Poor’s to AA+.

In that time, Wall Street’s fear gauge, the Chicago Board Options Exchange Market Volatility Index, has climbed to its highest levels since early 2009, as markets reeled from the global financial crisis.

“Maybe some of the more recent offshore buyers of NZ bonds are being cautious at the moment,” said Andrew Michl, who helps manage $3 billion of fixed interest and cash at OnePath NZ. “People are waiting for things to settle down a bit. Let’s see where spreads settle down.”

America’s AA+ credit rating now matches New Zealand’s, which is on negative outlook with Standard & Poor’s.

Michl said the possibility of a downgrade of New Zealand’s rating is “still on the cards.”

Still, there is demand for the debt which will return as investors start feeling more confident about the direction of financial markets and the global economy. New Zealand debt allows investors to diversify away from the U.S. and Europe.

Investors will also be looking for a home for their holdings of November 2011 bonds when they mature this year.

“Our view is that they (interest rates) stay low for some extended period of time so we don’t see them as being expensive,” Michl said.

Just two weeks ago investors were preparing for local rates to increase after Reserve Bank Governor Alan Bollard said there was “little need” for his emergency cut in March to stay in place.

The government raised record $20 billion in the financial year ended June 30 to finance budget deficits and help pay for the damage caused by multiple earthquakes in Canterbury. This year’s sale programme is for $13.5 billion of debt.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Snail's Pace: Aucklanders Face Frustrating Commute Over Harbour Bridge

Journeys into Auckland's CBD took longer than usual as traffic banked up around the damaged Harbour Bridge. More>>


Statistics New Zealand: COVID-19 Sees Record 12.2 Percent Fall In New Zealand’s Economy

Gross domestic product (GDP) fell by 12.2 percent in the June 2020 quarter, the largest quarterly fall recorded since the current series began in 1987, as the COVID-19 restrictions in place through the quarter impacted economic activity, Stats NZ said ... More>>


Climate: Scientists Release ‘Blueprint’ To Save Critical Ecosystems And Stabilize The Earth’s Climate

A group of scientists and experts produced the first comprehensive global-scale analysis of terrestrial areas essential for biodiversity and climate resilience, totaling 50.4% of the Earth's land. The report was published in Science Advances ... More>>


MPI: Independent Review Launched Into Assurances For Safe Transport Of Livestock By Sea

The Ministry for Primary Industries (MPI) has launched an independent review of the assurances it receives for the safe transport of livestock by sea. MPI Director-General Ray Smith says Mike Heron QC has been appointed to lead the review, which is expected ... More>>


Computers: New Zealand PC Market Grows Nearly 40% Due To Work From Home Demand

COVID-19 had large impacts on demand for PCs as businesses prepared for lockdowns by purchasing notebooks to mobilise their workforce. In the second quarter of 2020, New Zealand's Traditional PC market experienced a 39.7% year-on-year (YoY) growth ... More>>


Ministry of Health: Public Transport Distancing Requirements Relaxed

Physical distancing requirements on public transport have been reviewed by the Ministry of Health to determine whether they are still required at Alert Level 2 (or below). The Ministry’s assessment is that mandatory face covering and individuals tracking ... More>>


NZHIA: New Zealand Hemp Industry Set To Generate $2 Billion Per Annum And Create 20,000 Jobs

A new report says a fully enabled hemp industry could generate $2 billion in income for New Zealand by 2030, while also creating thousands of new jobs. Written by industry strategist Dr Nick Marsh, the report has prompted calls from the New Zealand Hemp ... More>>


Stats NZ: One In 14 Employed People Report High Risk Of Losing Jobs

About one in 14 workers say they expect to lose their job or business by mid-2021, Stats NZ said today. A survey of employed people in the June 2020 quarter showed 7 percent felt there was a high or almost certain chance of losing their job or business ... More>>

ASB Quarterly Economic Forecast: NZ Economy Doing Better Than Expected, But Challenges Remain

August lockdown estimated to have shaved 8% off NZ’s weekly GDP, and 0.5% off annual GDP Economy now expected to shrink 5% (year-on-year) by end of 2020 Unemployment rate now expected to peak at 7.2% The latest ASB Quarterly Economic Forecast is less ... More>>


SAFE: Live Export Ship Carrying 5,800 New Zealand Cows Goes Missing In East China Sea

Livestock carrier Gulf Livestock 1 sent a distress signal at 4:45am NZT yesterday in the East China Sea. The area is affected by Typhoon Maysak. At 4pm a patrol plane spotted a lifeboat - with no people in it - and a man in lifejacket nearby. The ship ... More>>


FMA: Kiwisaver Fees Don't Match Performance

The Financial Markets Authority (FMA) today published an independent report into the passive and active investment management styles [i] used by KiwiSaver providers. The FMA commissioned MyFiduciary to test the extent that KiwiSaver providers were ... More>>