Govt offering $1b in bonds today

Photo / Mark Mitchell

New Zealand's Debt Management Office (DMO) will today offer $1 billion in government bonds to the market - its biggest ever offering - thanks to strong demand.

The bond tender, the results of which are due out at 2.15 p.m., follows closely on the heels of two other big tenders, on January 13 and March 24, of $950 million each.

"If this is successful, it will be the largest one," Andrew Turner, head of portfolio management at the DM0, told the Herald.

"We have been responding to demand for bonds, particularly over the last two or three months, so the larger tenders that we have had are just a reflection of the feedback from the market," he said.

The DMO is offering $200 million of April 2013 bonds, with a coupon rate of 6.50 per cent, and $800 million of March 2019 bonds.

Australia and New Zealand have enjoyed strong demand for government bonds, in part reflecting the difficulties of some European governments in raising funds.

The bond tender programme for 2010/11 has been revised up three times from the original $12.5 billion outlined in the last budget. The programme was increased to $13.5 billion on December 14, last year, then to $15 billion on March 30, before being expanded to $16.5 billion on April 12.

The DMO has raised $14.4 billion so far this financial year.

The government's bond tender programme for 2011/12 will be announced with the budget on May 19.