Bloomberg News

N.Z. Sells NZ$2.5 Billion Inflation Debt, 1st Since 1999

October 24, 2012

New Zealand sold NZ$2.5 billion ($2.03 billion) of inflation-linked notes, its first sale of such debt since 1999 and the nation’s biggest-ever single offering.

Investors bid for more than NZ$4 billion of the 2 percent bonds maturing Sept. 20, 2025, the New Zealand Debt Management Office said today in a statement. The sale was the first New Zealand has carried out using syndication, Brendon Doyle, treasurer of the Wellington-based NZDMO, said by phone.

“The sale was a resounding success,” said Fergus McDonald, the Auckland-based head of bonds and currencies at Tyndall Investment Management New Zealand Ltd., which oversees about NZ$3.4 billion in assets. “It’s a benefit for New Zealand because it lengthens the debt profile of the country. For investors, it’s offered quite a healthy real rate of return.”

New Zealand’s 10-year yield fell four basis points to 3.56 percent today in Wellington. The nation’s notes have handed investors a 4.5 percent return this year, while its existing 2016 debt indexed to consumer-price gains climbed 0.4 percent, according to data from Bank of America Merrill Lynch.

The yield on the 4.5 percent inflation-linked security due February 2016 lost two basis points to 1.35 percent. It closed at 1.37 percent yesterday, the highest since August 2011.

“We expect that the inflation-indexed bond market will continue to grow and that it will become a core part of the New Zealand government’s funding programs,” Doyle said in an e- mailed statement.

To contact the reporters on this story: Garfield Reynolds in Sydney at greynolds1@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net


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