DMO lifts bond issuance by $1 billion in year to June 2022

Thursday 14th December 2017

The New Zealand Debt Management Office has lifted its issuance programme by $1 billion through June 2022 compared to its prior forecasts and reiterated plans to launch a new April 20, 2029 bond in the first half of 2018.

The 2017/18 programme is set at $7 billion, which is in unchanged from the forecasts published in the Pre-Election Economic and Fiscal Update. The new issuance will come in the year to June 2021. As a result, the office will raise $7 billion every year through June 2022, bringing total issuance to $35 billion.

Maturities and repurchases will total $35.3 billion. A repurchase programme of the March 15, 2019 nominal bond is planned for the current financial year. Up to $5.0 billion of bonds are planned to be repurchased prior to June 2018, subject to portfolio requirements and market conditions, it said.

The aim is to maintain New Zealand government bonds on issue at not less than 20 percent of gross domestic product over time. As of November 2017, there were $76.6 billion bonds on issue. They currently stand at 25.2 percent but will be at 20.2 percent at 2021 before rising to 21. 4 percent in 2022.

The DMO had originally planned to launch the new April 2029 bond prior to Dec. 31 this year but postponed it saying the government is flush with cash and it wanted to give market participants an opportunity to evaluate any new information that may be contained in the half-year fiscal update.

The bond is now planned to be launched by syndication between Jan. 1, 2018 and June 30, subject to market conditions, it said.

(BusinessDesk)

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