The latest three and six month New Zealand Treasury Bill tenders experienced a lack of demand on Tuesday, with the total on offer of NZ$400 million receiving only NZ$156 million of bids with only NZ$56 million of these accepted. The three month bill tender of NZ$100 million attracted only NZ$56 million of bids, with NZ$6 million of these accepted at between 2.64% and 2.69%. The unsuccessful NZ$50 million of bids were at a rate of 2.73%. The NZ$300 million six month bill tender attracted only NZ$100 million worth of bids, with only NZ$50 million accepted at 2.78%. The unsuccessful bids were at 2.83%. Philip Combes, NZ Debt Management Office Treasurer, said the result could be an initial sign that an interim saturation point for NZ Treasury Bills had been reached, following the rise in the number of bills issued over the last year from around NZ$1.5-NZ$2 billion 12 months ago to around NZ$8.5-NZ$9 billion now. "Next week could well be different," Combes said. "It could just be an indication that a lot has been supplied over the last 12 months." Combes said there had been a lot of bill issues given the short term market in New Zealand was very liquid at the moment and that there had been a lot more interest in the offers than was the case two years ago. Reserve Bank Governor Alan Bollard has indicated that the Official Cash Rate would remain at or below 2.5% until the latter part of 2010. Combes did not think that the lack of bids indicated a market expectation that rates would be rising sooner than Bollard had indicated. "Interestingly, for some time interest has been stronger for the six month offers than the three month offers," he said. "If there was concern about the future direction of the OCR then you would expect that to flip the other way." Combes said traditionally the NZDMO would pull back the amount of bills offered next week to tailor supply back to the lower demand for the bills, but that decision would be made the Monday morning before the tender.
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