Govt to borrow $1 billion extra as budget woes deepen

The New Zealand Government's Debt Management Office has announced today it will borrow an extra $1 billion in the next 8 weeks, taking the total borrowed in 2008/09 to a maximum of NZ$5.5 billion.

The announcement comes as the economic recession goes on for longer and deeper than the government's forecasts in December, reducing tax revenues and increasing the likely deficit that has to be funded by borrowing.

The NZDMO said it had already borrowed NZ$4.1 billion of its current NZ$4.5 billion programme announced in December.

"To allow for continued regular issuance of around NZ$150 million per week for the remainder of the fiscal year, the 2008/09 domestic bond programme has been increased by NZ$1 billion to a maximum of NZ$5.5 billion," the NZDMO said.

The 2009/10 borrowing programme will be announced on May 28 in conjunction with the budget.

Also, the NZDMO announced it would launch a new long bond maturing on May 15, 2021. The bond would be launched at the next bond tender this Wednesday.

"Feedback from consultations with market participants supports the introduction of a new longer-maturity bond. The new bond will, over time, re-establish the ten-year point on the government bond curve," the NZDMO said.

It also announced all bond tenders would now be held later in the day "to make tenders more accessible to Asian-based investors."


-INTEREST.CO.NZ