The forecast 2019/20 New Zealand Government Bond (NZGB) programme is now set at NZ$25 billion. This represents revised assessments of funding requirements due to additional fiscal impacts of COVID-19. This is NZ$12 billion higher than the forecast NZGB programme, updated on 17 March 2020. NZ$8 billion of NZGB issuance has already been undertaken in the fiscal year to date. Due to the rapidly evolving COVID-19 situation, further updates may be required as new information becomes available.
New Zealand Debt Management (NZDM) remains committed to its three core principles of transparency, consistency and even-handedness. However, the current circumstances require a more flexible approach relative to established issuance practices.
Issuance plans for the June Quarter 2020 are as follows:
- Tender schedules will be released for each month in advance. The April schedule is as shown. Formal confirmations of each tender occurs on announcement dates.
- Subject to market conditions, it is expected that a syndicated tap of the 15 May 2031 nominal bond will be undertaken in the week beginning 6 April 2020. If this occurs, the scheduled tenders for that week will be cancelled.
- Weekly tenders contain multiple bond maturities. Tenders will be governed by the official Operating Rules and Guidelines. The preference will be to fill tenders according to volumes announced in the tender schedule, to the extent possible.
- Subject to market conditions, it is expected that an additional syndication will be undertaken before 30 June 2020, to launch a new, or tap an existing, nominal bond line.
- There are no plans to issue inflation-indexed bonds in the June Quarter 2020. Inflation-indexed bonds remain an important part of the bond portfolio.
- Treasury Bills on issue are forecast to be NZ$7 billion at 30 June 2020. This is NZ$3 billion higher than forecasts updated at 17 March 2020.
Market conditions will be monitored closely, and factored into future issuance plans, to ensure the efficient functioning of the NZGB market.
Updates of future years’ forecast borrowing programmes will be released alongside Budget 2020. It is anticipated that increases to programmes for future years will be necessary relative to those published at the Half Year Economic and Fiscal Update 2019.
RBNZ’s Large Scale Asset Purchase Programme
New Zealand Debt Management and the Reserve Bank are committed to collaborating closely to ensure the efficient functioning of the NZGB market.
On 23 March 2020, the Reserve Bank announced it will be undertaking a $30bn Large Scale Asset Purchases (LSAP) programme of NZGBs in the secondary market over a 12 month period. Implementation of decisions on the speed and composition of purchases have been delegated to Reserve Bank staff, with the objective of keeping yields on NZGBs low and supporting market functioning.
The Reserve Bank is working closely with New Zealand Debt Management when planning operations under the LSAP programme to achieve these objectives.
Kim Martin | Acting Director, Capital Markets
Tel: +64 4 890 7274
Matthew Collin | Head of Portfolio Management
Tel: +64 4 917 6015