The New Zealand Debt Management Office, the government's debt manager, is set to auction NZ$900 million worth of government bonds on Friday, the largest tender since late September 2011.
NZ$300 million each of 2017, 2019 and 2023 bonds will be tendered. Recent tenders had been in the NZ$200-300 million range.
Christian Hawkesby, head of fixed income at Harbour Asset Management said he believed the announcement reflected strong potential demand for NZ government bonds, given their attractiveness relative to Australian government bonds.
"For most of 2012, yields on Australian and NZ 10 year government bonds had been at broadly similar levels. But through April, yields on NZ 10 year bonds have widened to 30-40 basis points above Australia. This has helped put them back on the radar of global investors," Hawkesby said.