The New Zealand Debt Management Office (NZDMO) announced today details of the Government's 2010/11 domestic debt programme. The NZDMO intends to issue up to $12.5 billion of bonds in 2010/11.
Total issuance over the forecast period is $2 billion lower than previously announced in the December 2009 Half-Year Update, due to improvements in the fiscal outlook. Budget 2010 includes forecast bond programmes of $10.5 billion in 2011/12, $10 billion in 2012/13 and $6 billion in 2013/14.
The NZDMO is actively considering reintroducing inflation-indexed bonds. Issuance of these bonds during 2010/11 would form part of the $12.5 billion debt programme.
"In recent months we have discussed inflation-indexed issuance with investors and intermediaries and the feedback from that led us to the view that there is enough potential interest to continue our work," said NZDMO Treasurer, Philip Combes.
"Our preference is to establish a new benchmark inflation-indexed bond and we are currently considering the most cost-effective issuance method."
Besides potentially providing cost-effective funding for the government, long-term inflation-indexed bonds expand the range of debt instruments available to investors and provide a pricing benchmark for infrastructure projects.
Further announcements will be made closer to the date of issuance.
New Nominal Bond
The NZDMO intends to introduce a new nominal bond early in 2010/11. The new bond will most likely have a March 2019 maturity.
Measures to Further Improve Bond Market Liquidity
The NZDMO remains committed to further improvements in bond market liquidity and will be consulting with the market in coming months on the following initiatives:
Secondary market participation by the NZDMO;
Bond switches; and
Bond repurchase agreements.
The NZDMO expects to continue issuing a combination of three, six and twelve-month treasury bills. Issuance volumes and tender composition will depend on investor demand and the NZDMO's short-term funding requirements.
Philip Combes | Treasurer
Tel: +64 4 917 6133
Andrew Turner | Head of Portfolio Management
Tel: +64 4 917 6071