Funding Strategy

The funding strategy aims to support the overall objective of minimising the Crown’s borrowing costs over the long term with due consideration to risk.

For the New Zealand Government Bond market, meeting this objective is currently best achieved by taking a strategic, rather than short-term tactical approach to funding activities.

Delivery of funding activity is underpinned by the core principles of transparency, consistency and even-handedness and future actions are communicated in a timely manner.

The funding strategy aims to balance three key goals:

• considering the overall structure of the Crown’s balance sheet
• capturing and stimulating investor demand
• promoting well-functioning and liquid New Zealand Government Securities markets.

The sustainability of the New Zealand Government Bond market is supported by a Government commitment to maintain levels of NZGBs on issue at not less than 20 per cent of GDP over time.

• Nominal Bonds are the primary funding vehicle.
• Inflation-Indexed Bonds (IIBs) are an important part of the funding portfolio.
• Treasury Bills (T-Bills) provide flexibility in addressing short-term liquidity requirements.
  Read more about the wholesale funding strategy.
• Kiwi Bonds are an additional product that are offered directly to individual New Zealand investors.

New Zealand Debt Management also maintain foreign currency issuance programmes.  We have up-to-date Euro Medium Term Note (EMTN) documentation for longer-dated foreign currency issuance with a programme limit of US$ 8 billion, as well as Euro Commercial Paper (ECP) documentation for short-dated foreign currency issuance with a programme limit of US$ 15 billion.  We have not issued under our EMTN documentation since 2004, but do maintain a small amount of ECP on issue.  Month-end balances for issuance under these programmes are available in the “Data” section of our website.

Consideration is also given to ensuring credit, market, operational and liquidity risks are well managed within the Crown’s risk appetite. Read more about risk management.

Bond portfolio as at 30 June 2021 - market outstandings

Note: In addition there is NZD 7.600 billion in Treasury Bills outstanding.