Local government bonds attract huge interest

Overall the issue attracted bids of $1.32 billion, more than four times the amount being sold.

Both sets of bonds received strong interest, with $216 million being bidded for $50 million of bonds maturing in 2015 and $1.104 billion bidded on $250 million of bonds maturing in 2017.

The coupon rate for both bonds was 6.00%, with successful bids for the 2015 bonds having a range of 3.65% to 3.69% and a weighted average yield of 3.67%, while successful bids for the 2017 bonds had a range of 4.33% to 4.66% and a weighted average yield of 4.61%.

In its report on the inaugural bond LGFA bond issue, ANZ said the overall bid cover ratio of 4.4 (4.3 for 2015 bonds and 4.4 for 2017 bonds) was well above that achieved recently in New Zealand government bond issues, which have attracted an average bid cover ratio of 2.9 since 2009.