NZDM says total book size for $5 billion government bond issue exceeded $23.9 billion

New Zealand Debt Management (NZDM), the Treasury unit responsible for managing the Government’s debt and overall cash flows, says record investor interest of more than $23.9 billion was received for a government bond issue.

NZDM said Tuesday it issued $5 billion via a syndicated tap of a nominal government bond due to mature in May 2030. Total book size, at final price guidance, topped $23.9 billion.

"The bonds, which carry a coupon of 4.50%, were issued at a spread of 15 basis points over the 20 April 2029 nominal bond, at a yield to maturity of 4.1700%. Total book size, at final price guidance, exceeded NZ$23.9 billion," NZDM said.

"Settlement will occur on 30 October 2024 and there will be no further issuance of the bond prior to February 2025."

On Monday NZDM had said initial price guidance was 13 to 16 basis points over the 20 April 2029 nominal bond. It also said it expected to issue at least $3 billion of the 2030 bond, with the transaction to be capped at $5 billion.

A tap issue is a procedure that allows borrowers to sell bonds or other short-term debt instruments from past issues. ANZ Bank New Zealand, BNZ, ASB's parent Commonwealth Bank of Australia, and Westpac Banking Corporation New Zealand are the issue's joint-lead managers.

The previous record book size for a NZ government bond issue was $22.760 billion for the August issue of a bond maturing in 2036.

The May 2030 nominal bond was first issued in March 2023, with the total amount outstanding $8.025 billion prior to the tap.

*For more on NZDM and government bonds, listen to this episode of the Of Interest podcast with NZDM Director Kim Martin: New Zealand Debt Management's Kim Martin on how the Government borrows and repays debt.