Todays’s tender of Treasury bills by the Debt Management Office could hardly be characterised as a resounding success.
$350 million was being offered in 3, 6 and 12 month bills and the DMO only filled $305 million and only got that much by accepting more than it was looking for in the 6 months, resulting in a relatively wide range of 7 bp on successful bids in that maturity.
"An early consequence of the SCF receivership announcement together with the amended government deposit guarantee rules is a failed NZ Government T Bill tender", said Stephen Hume who follows the bond markets at www.omo.co.nz
21 Comments
And four years interest free.
Business as Usual never sounded more illusional
Sorry Bernard, forgot you wanted it in song today:
No you won't believe in If anymore
It's an illusion
It's an illusion
No you won't believe in If anymore
If is for children
If is for children
Building daydreams
So the 2 billion minus the foreign handout, will head for the banks and the banks will turn on the credit sausage machine to produce about 18 billion in credit ready for the spring offensive on the idiot Kiwis. Throw in Kiwibanks govt underwritten foreign borrowings and hey presto we have us a few months of cheap credit driven splurging madness right up to the election. Who thought the govt gave a rat's about property being seriously unaffordable?
This amounts to QE....no ifs and no buts. A two billion dollar injection into the south island economy. Mostly paid for by Aucklanders! haha.
Hey don't blame me...you're the one paying interest to them. Imagine a world where people had to save if they wanted stuff like houses...the price of property would be... oh about 1920 levels. people could afford a place. I blame the borrowers for all the mayhem.
Here's your homework Iain...mind you learn it all by heart. http://en.wikipedia.org/wiki/Thorium
What a great dish-of-ointment : Splendid message / But why NO CAPS-LOCK ON ! SHOUT MY FRIEND , and they WILL LISTEN .
And failing that , YOU'LL ANNOY OLD HICKEY : That's a measure of SUCCESS AROUND HERE !
SHOUT TO THE WORLD : " I'M MAD AS HELL , & KNOT GONNA TAKE IT ANY MORE ." ...................................... yeah , then break out the GUMMY BEARS .............
"WOW" the AUDIENCE ! .............. WAKEY WAKEY PLEBIAN FOOLS ...............
The tone of this article is misleading. Unless you have an understanding of reserve accounting and fiscal finance its probably confusing at best.
All this does (like any other govt debt auction) is convey signals to the RB and Treasury re the Treasury market. It does not mean the govt is unable to raise funds.
Similar to how a loan from a bank creates the deposit to be borrowed back (either directly, from another bank or via the RB), govt spending creates the 'non-borrowed' reserves to be mopped up with Treasuries. Notwithstanding RB market operations.
Paradoxically, the govt will have more to 'borrow' the more it spends. As the Treasury is not directly part of the banking system, thus a transfer of funds from the Treasury into the banking system raises the level of reserves able to be 'borrowed'
There can be any number of reasons for an auction to 'fail' almost all of which are technical, none fundamental. The RB sees this and works it into its market operations.
And, NZ (and all other debtor nations) dont so much borrow from overseas, as foreign domiciled entities choose to hold NZD denominated obligations. (Two sides to every coin).
As we have all seen in recent months - when the going gets tough - bondholders interest payments get cut. As such, bondholds are not prices setters, but price takers.
The NZ govt can never be forced to pay higher premiums unless the RB conducts its operations in such a way as to support higher rates, say to support a stronger dollar perhaps.
Primary bond dealers sell junk rated securities to kids year 5 - 13 . Secondary bond dealers sell higher grade corporate debt to high school children ................ Yessssssssssss , Iain ?
Hey , how's the book going , " The Complete History of the Labour Party in NZ " , got alotta forward orders ?
I think he's punnishing himself Gummy Bear H.... for having helped those who created the credit with interest attached ....and then he went and made it all real by using the credit to buy a property that he could have saved up for and now he knows the real problem is not the boogie man who creates credit with interest attached...but that fools rush in and borrow it. Oh the pain the pain of it all. The more fools there were...the higher the prices went....the more they borrowed.
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