Rates round-up: May 28
Inflation-indexed bonds on the way; Government bond yields fall; Belgrave director pleads guilty
Monday, May 28th 2012, 6:00AM
by Niko Kloeten
Inflation-indexed bonds are set to make a comeback, with the New Zealand Debt Management Office planning to issue up to $4 billion worth over the next couple of years.
The NZDMO, which issues government bonds as well as Treasury bills, is planning to issue up to $2 billion of inflation-indexed bonds in each of the 2012/2013 and 2013/2014 years.
It is expecting to borrow a total of $45.5 billion over the forecast period ending June 2016, $3 billion less than what was outlined by the NZDMO at the Pre-election Economic and Fiscal Update (PREFU) in October last year.
"The increase in the 2011/12 bond programme will provide operational flexibility to issue additional bonds should there be an increase in demand prior to the end of the fiscal year," the NZDMO said.
"Any such additional issuance, together with the increase in the 2012/13 bond programme, will be used to reduce Treasury bill outstandings from $9 billion to $5 billion."
Government bond yields fall
Meanwhile, yields on New Zealand Government bonds have continued to fall. Last week's issue of $100 million of bonds due in 2023 attracted $220 million of bids, with an average successful yield of 3.54%.
This was down from 3.66% the previous week and 3.75% the one before that. The auction for $100 million of bonds maturing in 2019 attracted $289 million of bids with a weighted average successful yield of 3.11%.
Belgrave Finance director pleads guilty
In the latest in a growing list of finance company convictions, former Belgrave Finance director Shane Buckley has pleaded guilty to 25 charges.
Buckley was charged by the Financial Markets Authority and the Serious Fraud Office, in a joint prosecution under the Securities Act, Crimes Act, and the Companies Act.
The charges relate to Mr Buckley's breach of the Securities Act by making untrue statements in documents offering securities to the public, and breach of the Companies Act by making a false or misleading statement to the Belgrave trustee.
Other charges brought by the SFO under the Crimes Act are for theft by a person in a special relationship and for false statements made by a promoter.
Belgrave provided loans for commercial and residential property development. Funds for lending were sourced primarily from the issue of securities to the public in the form of debenture stock and convertible capital notes.
Belgrave was placed into receivership in May 2008 owing about $22 million to around 1,000 investors.
The company was placed into liquidation in April 2010, the 20th finance company to collapse in two years.
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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