NZ Government Bonds

[peat]

its unlikely they sit on too much cash as it just wouldnt be sensible from a long term perspective and yet.... maybe they do as part of their flexibility strategy.
I suspect JK is talkin the market to some extent... certainly wouldnt want to admit to having to make big forced sales

[Alan3285]

its unlikely they sit on too much cash as it just wouldnt be sensible from a long term perspective and yet.... maybe they do as part of their flexibility strategy.
I suspect JK is talkin the market to some extent... certainly wouldnt want to admit to having to make big forced sales

Indeed.

Even if they do have re-insurance, they'll still cary some amount of risk, and if they don't have cash, it will mean liquidating assets at some point (even if they just borrowed short term, it would still mean liquidation of assets somewhere down the line).

Looks to me that bond prices have to be under *some* pressure despite what JK is saying.

Alan.

[peat]

New Zealand's government authorised the Earthquake Commission to sell stocks and bonds to raise more money to deal with the claims. The commission's Natural Disaster Fund had $4.4 billion in bonds, stocks and bank bills at the start of September, Finance Minister Bill English said

[Alan3285]

New Zealand's government authorised the Earthquake Commission to sell stocks and bonds to raise more money to deal with the claims. The commission's Natural Disaster Fund had $4.4 billion in bonds, stocks and bank bills at the start of September, Finance Minister Bill English said

What a shock.

Boom Boom.

[Dubdee]

The government does not issue perpetuals, just fixed term bonds and treasury bills. Of the bonds most are fixed rate with the exception of one series of CPI linked which trade on a real yield basis.

Preference shares are generaly highly subordianted and stand next to equity. Have a look at the situation of pref holders in Strategic and South Canterbury. Zilch back for them. So its not only the return on but also the return of your money thats important.

[Alan3285]

Wouldn't this be the NZ Dollar? ...... (Tongue in cheek remark about the heavy footprint the govt has on the NZ economy.)

{Grin}

Zero coupon, and open ended.

Nice.

Alan.

[Dubdee]

I think the NZ Government bond programme is misconceived.


The preponderance of offshore investors means that no tax is collected by the NZ revenue from Non residents investors and their buying is responsble for the appreciating NZ dollar trashing our export and manufacturing returns

[CJ]

I think the NZ Government bond programme is misconceived.


The preponderance of offshore investors means that no tax is collected by the NZ revenue from Non residents investors and their buying is responsble for the appreciating NZ dollar trashing our export and manufacturing returns

What about NRWT or would they all qualify for AIL?

[Dubdee]

There is no NRWT charged and AIL is paid by the Cown ( to itself of course) so not one cent of tax is collected from non residents.

No wonder 70% is held by non residnts and that they set the pricing.

I have wrttien to bill English on the subject as he was quoted in a finance mag as not understanding why NZ residents didnt buy NZGS. Because we cant compete yield wise with those offshore as we all pay tax on the returns.

Just putting aside the consequences on the exchange rate of this programme

[CJ]

There is no NRWT charged and AIL is paid by the Cown ( to itself of course) so not one cent of tax is collected from non residents.

So NRWT is factored into the price which explains why residents dont like it.