Money At Work: Kiwi Bonds

Friday 10th February 2006

What's it called and what sort of a savings product is it?
Kiwi Bonds are a fixed interest investment at the lower end of the risk scale.

Who is the company behind it?
New Zealand Inc! Kiwi Bonds are issued by Her Majesty the Queen in the right of New Zealand through the New Zealand Debt Management Office of the Treasury.

Who is the target market?
These are the sort of fixed interest investment which should form the foundation of an income portfolio. They appeal to people who want little risk.

What return does it offer?
Current rates are range from 5% to 5.75% pa for amounts between $1,000 and $4,999 and 5.50% to 6.25% pa for amounts of $5,000 to $250,000.

When was it launched?
Kiwi Bonds have been around for years. The current offer is issue number 72.

What other products are they like or do they compete with?
Because they are low-risk investments they compete with bank term deposits.

Is it long term, short term or medium term?
Current maturities on offer are from six months to four years.

What is the unique selling point?
These are essentially the safest fixed interest investment in the market as they are issued by the Crown and carry the highest possible rating from Standard and Poor’s (AAA).

How strong a stomach do you need for it? (in other words, what's the risk profile?)
The risk is nearly non-existent. The only problem would be if the government goes bust and defaults on its Kiwi Bond obligations. Even an opposition politician wouldn’t suggest that is likely to happen.

What's the hitch?
There isn’t really a hitch. The rates are at the lower end of the market, but that is what you would expect with such a low risk investment.

Comments from our readers

No comments yet