NZ government bond yields slip to record low
The yield on New Zealand's benchmark 10-year government bond fell to a record low as investors worldwide look for safer places to park their cash.
BUSINESSDESK: The yield on New Zealand's benchmark 10-year government bond fell to a record low as investors worldwide look for safer places to park their cash amid fears Europe's sovereign debt crisis may escalate.
The yield fell 20 basis points to 3.45%, having shed almost 1 percentage point from its peak at 4.36% in late March.
The yield is now lower than the 3.87% level plumbed in the depths of the global financial crisis in early 2009, according to Reuters data.
A highly indebted Spanish banking sector and the prospect of Greece being forced out of the eurozone stoked demand for US Treasuries, with the yield on the US benchmark 10-year note falling one basis point to a record low 1.61%.
"The expectation is for a coordinated effort by central banks to push yields lower," said Imre Speizer, market strategist at Westpac Banking. "Maybe 1.65% in the US is going to 1.3% or 1% - that sort of expectation is what is driving yields."
New Zealand businesses expect the yield on 10-year government bonds to be about 4.1% at the end of March next year, according to the Reserve Bank's survey of expectations, published last week.
The record-low yield comes the same day New Zealand's Debt Management Office sold $100 million of bonds maturing in 2023, which was more than five times overbid.
The auction attracted 39 bids worth $519 million, and the bonds were sold at an average yield of 3.45%.
Mr Speizer said the yield on the 2023 bond traded at a record low 3.42% yesterday after the "big bid in the tender".
Paul McBeth
Fri, 01 Jun 2012
Fri, 01 Jun 2012
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NZ government bond yields slip to record low
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