Take a look at this NZ Government bond tender result, published by the Treasury Debt Management office at 2:05pm today (Thursday).
Results of Inflation-Indexed Bond Tender 738
Series offered: | 2.50% 20 Sep 2040 |
Total Amount Offered ($million): | 50 |
Total Amount Allocated ($million): | 50 |
Total Number of Bids Received: | 27 |
Total Amount of Bids Received ($million): | 72.00 |
Total Number of Successful Bids: | 22 |
Highest Yield Accepted (%): | -0.0750 |
Lowest Yield Accepted (%): | -0.1650 |
Highest Yield Rejected (%): | -0.0550 |
Lowest Yield Rejected (%): | -0.0725 |
Weighted Average Accepted Yield (%): | -0.1032 |
Weighted Average Rejected Yield (%): | -0.0634 |
Amount Allotted at Highest Accepted Yield as Percentage of Amount Bid at that Yield*: | 100.0000 |
Coverage Ratio: | 1.4400 |
*Individual allotments may vary due to rounding
This is an inflation indexed bond, so yields are as above "plus CPI" at the time the coupon is paid.
The coupon is 2.50%, so $250 for evey $10,000 of these bonds held. But investors paid much more than that so that over the 20 year term of the bond they will yield CPI inflation less 0.1032%.
Twenty seven parties bid $72 miln for the $50 mln on offer and 22 of these bidders "were successful".
This is another canary that says negative rates are upon us. Today's closing swap rates will be interesting to watch.
37 Comments
Talking Heads ( that would be Adrian Orr and his 'experts' at the RBNZ) seem to have it sussed:
♪♪ Well we know where we're going
But we don't know where we've been
And we know what we're knowing
But we can't say what we've seen
And we're not little children
And we know what we want
And the future is certain
Give us time to work it out ♪♪
The Road to Nowhere - how apt.
I see your Road to Nowhere are I raise you a Talking Heads Once in a Lifetime
And you may ask yourself
How do I work this?
And you may ask yourself
Where is that large automobile?
And you may tell yourself
This is not my beautiful house!
And you may tell yourself
This is not my beautiful wife!
Letting the days go by, let the water hold me down
Letting the days go by, water flowing underground
Into the blue again after the money's gone
Once in a lifetime, water flowing underground
Same as it ever was
Same as it ever was ♪♪
I said the principal will be $100 in today's dollar buying power upon redemption if one bought said linker at $163.05 today. I also acknowledged, further down the page, the 2.5% annual coupon paid quarterly would also retain today's dollar value buying power over the term to redemption.
I thought it would be obvious the coupons are purchased in the discounted price of $163.05 and they would retain today's dollar purchasing power, ~ $49.8563 over the remaining time to redemption, for $100 par notes purchased today.
The nature of a bond is that with increased risk the return goes up. In the artificial world of Orr and Hawkesby the bank bonds or TD's getting riskier by the day with a risk of an OBR event and the return goes down. All the while Orr and Roberston keep saying be bold and take risks with deposit holders money but we wont bring in a deposit holder guarantee and if one does slip in we will limit it to 50k vs 250k per account holder in the USA and Australia.
Same have sent some to US in an account with federal guarantee but it only covers US250k. Also have spread it round from just being in ANZ to now have kiwi bank and asb. Purely in savings accounts not TD's that will not be able to be broken when the Sh#t hits the fan and Cindy and Robertson front the media explaining the need for ab OBR event to refloat a trading bank to be kind with the good news it only has impacted the 10% who have money and those with mortgage debt rest easy you will still have to pay it back.
If you go back in time as this is a recurring event to a time when new kings would come to power in England medieval days, the 1st order of duty for the new king was to wipe off all debts owed to the kingdom and start from zero. I can see this happening when there is a new government elected , not this election but next.
Funny, everyone who talks about "bubble" and "correction" never really explains what a correction means/would look like. I assume it means the financial sector is not bailed out, as before, so what then - nationalization I suppose. A bunch of broke sovereigns, taking over a bunch of broke banks.
I've decided I'm going to take out a hedge, that being a container load of Bic lighters.
I was almost ready to congratulate you for saying Btc there, but no :(
https://chrisgimmer.com/bitcoin-reserve-asset/ great summary of several articles.
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