NZX debt market shows flickers of revival

Cash market trades on the NZX jumped 44% in February from a year earlier.

 While still dominated by equities, the debt market shows signs of reviving after a moribund few years.

Total trades rose to 149,073 last month, of which equity transactions increased 44% to 146,365 for a 4.8% increase in value traded to $3.3 billion, the stock market operator says.

Debt trades rose 48% to 2708, while value traded jumped 81% to $128 million.

The debt market got a shot in the arm last year when the New Zealand Local Government Funding Agency listed all six existing series of its bonds, representing a total $5.56 billion, while low interest rates around the world have encouraged companies to revisit the bond market to attract cheap funding.

There was $130 million of new capital raised through debt listings in February, the first new capital to be listed on the NZX this year. A further $98 million of secondary capital was raised in the month, of which $56 million was through debt.

The number of listed debt securities was up 6% from a year earlier at 88, while equities were down 0.6% at 171.

The value of debt listed on the stock market was $19.9 billion, or 8.2% of gross domestic product, in February, up 51% from a year earlier. The value of all equity was $108.6 billion, or 45% of GDP, up 7.1% from February 2015.

Trading typically picks up in February after a muted period during the summer holiday, and with company reporting season coming in the latter half of the month.

The average daily value traded on the exchange was $169 million, 1.1% higher than a year earlier, and up from $114 million in January.

The S&P/NZX 50 index rose 1% in February to 6231, and was 6% up from a year earlier.

NZX's SuperLife expanded its funds under management by 11% to $1.42 billion in February from a year earlier, helping drive the Smartshares division's funds under management up 179% to $1.5 billion.

In soft commodities, lots traded of derivatives were down 18% at 10,851 in February from a year earlier, while open interest was up 69% at 26,457. Tonnage of grain traded was up 1.7% to 350,230 in the season to date.

NZX shares last traded at $1.02, and have dropped 4.7% this year.

(BusinessDesk)