By Gareth Vaughan
Strong interest in the Government debt manager's new AAA rated long-term bond has sparked total bids of NZ$1.947 billion for just NZ$300 million worth of government bonds offered for sale, or cover of more than six times, in the New Zealand Debt Management Office's latest bond tender.
A total of NZ$942 million worth of bids were submitted for the newly introduced bond. Initially announced in the Budget, it has an April 15, 2023 maturity date. Just NZ$100 million worth of the bonds were offered for sale. A total of 39 bids were submitted with just five successful. Offering a 5.50% per annum coupon, the successful bidders will receive less, between 5.24% and 5.27%. The 2023 bond carries an AAA credit rating from both Moody's Investors Service and Standard & Poor's.
Announcing details of the new bond earlier this week the NZDMO said demand for longer maturity government bonds had been strong in recent months, supporting the introduction of a bond maturing in April 2023. See ANZ's assessment of fair value for the new bond.
"Over time, the new 2023 bond will become the next 10-year benchmark bond. It will also assist with the pricing of a new September 2025 inflation-indexed bond," the NZDMO said.
Some of the strong demand has been coming from China's big sovereign wealth fund, the China Investment Corporation, which interest.co.nz was recently told has 1.5% of its money assigned for New Zealand investments.
the NZDMO is issuing NZ$20 billion of debt in this 2010/11 June 30 end financial year as it soaks up strong investor demand and raises money to help rebuild Christchurch after the devastating February 22 earthquake. The NZ$20 billion is equivalent to NZ$4,500 for every man, woman and child, or 10% of the country's Gross Domestic Product (GDP).
Of the other two bonds on offer in today's tender, a total of NZ$425 million from 11 bidders was submitted for the April 15, 2013 bond and NZ$580 million from 15 bidders for the April 15, 2015 bond. See full details of today's tender results here.