The results from the latest inflation-indexed bond offer by the Treasury's Debt Management Office have been released.
In their preview of today's auction, Westpac has outlined their expectations for inflation and see it beginning to rise after the September numbers due out next week. Westpac believes inflation has reached its cyclical bottom. They note the breakeven inflation point for the 2035 issue is attractive compared to other maturities. The breakeven inflation rate is a market-based measure of expected inflation. It is the difference between the yield of a nominal bond and an inflation-linked bond of the same maturity.
The relative real yield offered on NZ bonds is higher than global counterparts and this also makes this tender attractive.
| 2.50% - 20 September 2035 | Today #584 | Previous #581 | Previous #579 | Previous #576 | Previous #570 | Previous #567 |
| Series offered | tender Oct. 13, 2016 | tender Sept. 8, 2016 | tender Aug. 12, 2016 | tender Jul. 14, 2016 | tender May. 12, 2016 |
tender Apr. 14, 2016 |
| Total Amount Offered ($mln) | 100 | 100 | 100 | 100 | 100 | 100 |
| Total Amount Allocated ($mln) | 100 | 100 | 100 | 100 | 100 | 100 |
| Total Number of Bids Received | 51 | 35 | 47 | 42 | 50 | 43 |
| Total Amount of Bids Received ($mln) | 308 | 317 | 224 | 147 | 257 | 293 |
| Total Number of Successful Bids | 15 | 12 | 21 | 20 | 27 | 5 |
| Highest Yield Accepted (%) | 1.920 | 1.685 | 1.585 | 1.865 | 1.910 | 2.140 |
| Lowest Yield Accepted (%) | 1.880 | 1.660 | 1.535 | 1.825 | 1.885 | 2.140 |
| Highest Yield Rejected (%) | 2.010 | 1.800 | 1.645 | 1.990 | 2.100 | 2.320 |
| Lowest Yield Rejected (%) | 1.920 | 1.685 | 1.585 | 1.870 | 1.910 | 2.140 |
| Weighted Average Accepted Yield (%) | 1.9016 | 1.6738 | 1.5696 | 1.8460 | 1.8968 | 2.1400 |
| Weighted Average Rejected Yield (%) | 1.9495 | 1.7142 | 1.6189 | 1.9055 | 1.9824 | 2.1902 |
| Amount Allotted at Highest Accepted Yield as Percentage of Amount Bid at that Yield* | 50.0 | 70.0 | 86.7 | 100 | 27.8 | 66.7 |
| Coverage Ratio | 3.80 | 3.17 | 2.24 | 1.47 | 2.57 | 2.93 |
*Individual allotments may vary due to rounding.
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