English says world lenders likely to fund NZ's debt

Finance Minister Bill English is in New York talking to bankers and rating agencies about funding New Zealand's debt. File picture.

International money lenders are interested in funding the Government's $40 billion debt, Finance Minister Bill English said today.

Mr English has been in Tokyo and is currently in New York meeting with financial institutions, rating agencies and others.

One of the key purposes of the visits is to brief those who will be be funding the Government's deficits for the foreseeable future.

"We have been well received by those who buy New Zealand Government bonds. We have a good reputation and there is plenty of interest in taking them now we are doing more borrowing," said English.

"That has given us a bit of confidence that we will be able to borrow the $40 billion or so (over the next four years) we need at a reasonable cost."

New Zealand has in the past paid more than some other countries to finance its debt - mainly due to its size, but Mr English said the gap seemed to be closing a little because other countries' finances are in even worse shape.

New Zealand has to compete with other countries who are larger and funding even more extensive debt programmes, as well as other investment types such as businesses and property

Six months ago English was concerned that New Zealand might miss out if demand for borrowing outstripped lenders supply, but this no longer seemed to be the case.

"There seems to be plenty of appetite for our bonds. The money isn't going into commercial property and other investment classes."

Both Japan and United States appeared to be past the worst of the international credit crunch and following recession, but there was still a great deal of uncertainty about the future.

"In Japan and the United States, which are both big markets of ours, in both cases they are through the worse but they are unlikely to be growing.... for two years and not fast enough to help us.

The decade-old Democrat Party of Japan beat the long-ruling Liberal Democratic Party in a landslide in the recent election and this could be good for New Zealand.

"In Japan they are all waiting to see what the new Government does... they are keen to change things and people in Japan are expecting change, but they don't know what sort of change."

The new party has expressed an interest in free trade deals, whereas the Liberal Democrats had always been very cautious in that area.

"John's (Key) going there in a couple of months and will be raising the issue with the new Government."

English said international credit rating agencies had confirmed their current positive views on New Zealand's position.

"We aim to keep them well informed about our plans as there is a bit of scepticism government's will be able to control their spending and it will help New Zealand if we can present another budget with good expenditure control."

- NZPA