by Rob Hosking
There was some comment at the time that this would mean only other government agencies such as the New Zealand Superannuation Fund and the Accident Compensation Corporation’s fund, would be interested in buying such bonds.
The Debt Management Office Treasurer Phil Combes says demand for longer maturing bonds would have been too low and shorter term bonds will be issued.
That shift in approach is a positive one for the local fixed term market, says AMP Capital’s chief strategist Leo Krippner.
“That should improve the liquidity in the New Zealand bond market, and would certainly be welcome,” he told Good Returns.
Late last week Reserve Bank governor Alan Bollard made this very point, saying the reduced need for the New Zealand government to borrow money has shrunken the bond market, and that, plus the fact that most New Zealand bonds are held by offshore investors, many of whom are not active traders, mean there has been little opportunity for investors.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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