by Craig Simpson
The New Zealand Debt Management Office (NZDMO) has today announced it is launching a new 3.0% 20 September 2030 inflation-indexed bond by way of syndication.
The syndicate of institutions delegated to handle this issue was announced on October 2, and comprises Deutsche Bank AG, New Zealand Branch; The Hongkong and Shanghai Banking Corporation Limited and Westpac Banking Corporation (acting through its New Zealand Branch).
The new issue of inflation indexed bonds will total between $1 billion to $2 billion, with an initial price guidance of 27 to 33 basis points over the existing 20 September 2025 inflation-indexed bond.
Allotments of this issue are in $1 million parcels with additional increments to be in multiples of $1 million.
Pricing for the new bonds is expected to be finalised on Wednesday, October 9, 2013.
As a result of the announcement today, the inflation index bond tender set down for October 17, will no longer go ahead nor will there be any further issuance of 2030 inflation-indexed bonds prior to January 2014.
The next tender of $200 million worth of 2025 inflation indexed bonds is set down for November 7.
Westpac are expecting demand to be strong for these new bonds as real yields are well above comparable issues in Australia, US and UK; a recent Australian syndicated issues attracted demand above expectations; the inflation linked NZ govt bonds will be included in the Barlclays World Government Inflation-Linked Index following a December rejig of the constituents; and since July's offering of 2025's tender performance has improved.
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