BusinessDesk: Maturing NZ government bonds will see $7.6 bln looking for home

BusinessDesk: Maturing NZ government bonds will see $7.6 bln looking for home

A flood of government money is due in New Zealand with the maturity of the Nov. 15 government bonds, of which there are some $7.6 billion in the market out of a total on issue of $8.78 billion.

The AA+ rated bonds were issued in 1999 and paid a coupon of 6%.

Not all the money may flow back into government debt, with yields near record lows and better returns in prospect from corporate issues and even equities.

The 10-year government bond recently traded at a yield of 4.21%, the lowest in at least two decades.

New Zealand Post Group, the state-owned postal service, sold $150 million of bonds under its medium-term note programme, paying annual interest of 5.225%.

Kiwi Income Property Trust, the biggest listed property investor, has a dividend yield of 9.09% based on its payments over the past 12 months.


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C'mon guys get with the plan.

Yes, NZDMO declares there is NZD 7.602 billion of the 6.00%,15/11/11's publicly traded.

But for some perverse reason it ignores the fact the RBNZ has hoovered up NZD 2.942259 billion of this issue to conduct open market operation liquidity injections.

We now have a net public redemption of just NZD 4.65974 billion tomorrow for this issue. 

And to finish the story the RBNZ will drain NZD 4.531 billion of prior liquidity injections including the monetised 11's on the same day.  Not much of a party really.

But there is some liquidity joy on the horizon as the publicly traded portion of the 11's and 21's pay a combined coupon of NZD 446.2998 the same time  

Opps: forgot the index note coupon of NZD 33.6693.

And the NZD 500 million NZDMO government T bill tender tomorrow - net settles for same amount Wednesday.

 So in effect the market traded debt is extinguished as the foreign portion (probably about 60% of total) of the 11's was probably funded by local Bank credit lines which will net out and close. And the coupon is sucked up by the tbills.