Strong demand for NZ inflation indexed bonds

Investors offered to buy more than six times the amount of inflation-indexed bonds on offer in the New Zealand Debt Management Office's first sale of the securities this year.

The government sold $200 million of the September 2025 bonds, which are adjusted for movements in the consumer price index, at a weighted average yield of 1.5014 percent. It received 64 bids totalling $1.3 billion, a coverage ratio of 6.51 times.

The resumption of sales of so-called linkers was announced last year with an initial sale of $2.5 billion of the debt in October via a syndicate of ANZ New Zealand, Deutsche Bank and UBS, with HSBC and the Royal Bank of Scotland as co-managers. That sale garnered $4 billion of bids.

The DMO plans to sell as much of $6 billion of the debt and inflation index bonds are expected to reach 10 percent to 20 percent of total government bonds outstanding.

Inflation-indexed bonds were originally introduced in 1996, with the sale of February 15, 2016, bonds. The DMO suspended issues of that issue in 1999.

(BusinessDesk)

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