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Recent developments

Recent developments

New Zealand Debt Management (NZDM) is a function within the Treasury[1] and is responsible for managing the Crown's net cash flows and liquidity position. This document covers recent developments in the New Zealand Government Securities (NZGS) Market and sets out the latest Funding Strategy for the 2020/21 year.

New Zealand's COVID-19 developments

The first COVID-19 case in New Zealand was confirmed in late February 2020, with increasing cases thereafter. As the number of confirmed cases increased, the New Zealand Government introduced border restrictions and implemented a four level alert system. The alert levels specify the public health and social measures taken to address the pandemic.

New Zealand is currently at Alert Level 1 (L1). This means that the country is operating business as usual but the international borders are largely closed.

The Alert Level 4 (L4) lockdown, where most businesses were unable to operate, led to a significant contraction in economic activity. March quarter 2020 GDP growth fell 1.6 per cent quarter-on-quarter, reflecting initial restrictions on activity.

To cushion the impact to the economy, the Government announced significant fiscal stimulus - an initial NZ$12.1 billion package announced on 17 March and the NZ$50 billion COVID-19 Response and Recovery Fund (CRRF) announced at the Budget on 14 May. Stimulus packages include a wage subsidy scheme, business support packages, a trades training package, and funding for education, health and other social sectors. Approximately NZ$20 billion of the CRRF remains as an unallocated contingency.

New Zealand's credit ratings are unchanged. Since the onset of COVID-19, both S&P Global Ratings and Moody's Investor Services have reaffirmed New Zealand's long-term local currency credit ratings at AA+ (positive outlook) and Aaa (stable outlook) respectively.

Figure 1: Number of daily confirmed COVID-19 cases in New Zealand

Chart shows number of new daily confirmed COVID-19 cases in New Zealand from 16 February to 30 June.

Source: Ministry of Health/the Treasury

Alert Level Description

Alert Level 1 (L1) Prepare - The disease is contained in New Zealand

Alert Level 2 (L2) Reduce - The disease is contained, but the risk of community transmission remains

Alert Level 3 (L3) Restrict - High risk the disease is not contained

Alert Level 4 (L4) Lockdown - Likely the disease is not contained

Border Restrictions (BR) Border restrictions imposed

The impact of COVID-19 on the Crown's fiscal outlook is unprecedented. The Budget Economic and Fiscal Update (BEFU) 2020 showed substantial increases to the forecast borrowing programme, of NZ$152 billion, relative to that forecast at the Half Year Economic and Fiscal Update (HYEFU) 2019.

Changes to NZGS forecasts in response to COVID-19 Developments
Year ending 30 June (face value, NZ$ billion) 2020 2021 2022 2023 2024 Total
Gross NZGB issuance            
BEFU 2020 29 60 40 35 30 194
HYEFU 2019 10 10 8 8 6 42
Change in issuance 19 50 32 27 24 152
T-Bills on issue            
BEFU 2020 10 10 10 10 10 n/a
HYEFU 2019 3 4 4 4 2 n/a
Change in T-Bills on issue 7 6 6 6 8 n/a

Source: The Treasury

To execute the borrowing programme, NZDM have made significant changes to the Funding Strategy for 2020/21. The following developments have occurred:

  • Individual nominal bond line caps were lifted from NZ$12 billion to NZ$18 billion.
  • Tender schedules are now published a month, rather than a quarter, in advance.
  • Weekly tenders now include multiple bonds rather than one bond.
  • NZ$1 billion to NZ$2 billion of inflation-indexed bonds are forecast to be issued in 2020/21, subject to market conditions.
  • Tap syndications of existing bond maturities now complement the use of syndications to issue new bond lines.
  • Continued focus on core New Zealand Dollar (NZD) funding instruments, but with a small volume of short-dated European Commercial Paper (ECP)[2] on issue, and documentation for long-dated European Medium Term Note (EMTN)[3] issuance maintained.
  • Additional communication channels have been created, including the monthly Investor Update and virtual investor meetings.


  1. [1] The Treasury is the Government's lead economic and financial adviser. The Treasury provide advice to the Government on its overarching economic framework, on its fiscal strategy and on achieving value for money from its investments.
  2. [2] ECP is an unsecured, short-term debt instrument that is denominated in a currency differing from the domestic currency of the market where it is issued.
  3. [3] EMTN is a medium-term debt instrument that is denominated in a currency differing from the domestic currency of the market where it is issued.
Last updated: 
Friday, 24 July 2020