Supporting information:

Series description: Government finance

Government bonds

New Zealand Government bonds are denominated in New Zealand dollars. There are two categories of New Zealand Government bonds. The first category has a fixed interest coupon paid semi-annually in arrears. The bonds are redeemable at par on maturity. The other category is inflation-indexed bonds (IIB).

Inflation-indexed bonds

New Zealand Government inflation-indexed bonds (IIB) are denominated in New Zealand dollars with a fixed coupon paid quarterly in arrears. On maturity, the principal and the indexed component of the indexed bonds are redeemable. The index component means in respect to Indexed bonds maturing on 15 February 2016, the incremental adjustment, from 15 November 1995, to the principal due to the CPI index adjustment.

Treasury bills

New Zealand Government Treasury bills are denominated in NZ dollars, are sold at a discount to the nominal value and carry no coupon. The bills are redeemable at par at maturity. Treasury bills are normally issued with a maturity date between one month and one year. Treasury bills offered in the OMO are classified as seasonal Treasury bills as they are issued to manage liquidity flows.

State Owned Enterprises (SOEs)

Net surplus/deficit attributable to State Owned Enterprises and Crown entities.

The State Owned Enterprises are required to operate on the basis of principles and procedures in the State Owned Enterprises Act 1986. Under the Act, the Boards of SOEs have complete autonomy on operational matters, such as how resources are used, pricing and marketing of output. Under the Act, SOEs have no responsibility for continuing non-commercial operations and the Government is required to negotiate an explicit contract if it wishes an SOE to carry out such activities.

Boards of directors drawn from the private sector have been formed to manage SOEs. Each Board is required to present to the shareholding ministers a statement of corporate intent and an outline of business objectives, defining the nature and scope of activities and performance targets. These are closely monitored and SOEs are expected to achieve performance targets and pay dividends on a basis comparable to their private sector competitors. The shareholding ministers may determine the levels of the dividends.

The SOEs borrow in their own names and on their own credit, in most cases without a guarantee or other form of credit support from the Government. SOEs have been informed that Government policy requires that they disclaim in loan documentation the existence of such guarantees or credit supports.

The list of current SOEs are:
Agriquality New Zealand Limited
Airways Corporation of New Zealand Limited
Asure New Zealand Limited
Electricity Corporation of New Zealand Limited
Genesis Power Limited
Government Property Services Limited
Land Corporation Limited
Meridan Energy Limited
Meteorological Service of New Zealand Limited
Mighty River Power Limited
New Zealand Post Limited
New Zealand Railways Corporation
Solid Energy New Zealand Limited
Television New Zealand Limited
Terralink New Zealand Limited
Timberlands West Coast Limited
Trans Power New Zealand Limited

Crown entities

Crown entities are bodies established by law in which the Government has a controlling interest through ownership mechanisms. Crown entities form part of the Crown reporting entity, but are not part of the "core" Crown.

Financial and trading enterprises

Includes Public Trustee and Housing Corporation of New Zealand.

Insurance companies

Includes life insurance offices and insurance offices.

Other financial institutions

Includes organisations previously classified as savings institutions, finance corporations and investment companies and all other financial institutions.

Date

The date on which the Open Market Operation (OMO) is held. It is also the settlement date (value date of the exchange of cash and securities).

Transaction

The type of transactions that are offered in the OMO are; injecting funds through reverse repo and/or purchase Government bonds, and withdrawing funds by repo and/or selling seasonal Treasury bills.

Maturity

The date as specified in the tender when the maturing transactions are to be repaid.

Total volume offered

The total amount that could be accepted in the operation.

Volume offered per maturity

More than one date can be offered in an operation. A limit will be set for each day. The RBNZ may accept bids for one or all of the dates, but the total amount accepted will not be more than the total amount required and announced in the operation.

Volume bid

The total amount bid for the particular maturity date by all bidders.

Total amount transacted

The total amount accepted by the RBNZ for the particular maturity date.

Range of bids received

The range of bids received, this includes successful and unsuccessful bids.

Range of successful bids

The range of successful bids, from the minimum to the maximum rate.

Weighted average successful bids
Weighted average interest rates, weighted by volume per rate.

Purchase Government bonds
The RBNZ can on occasion offer to purchase Government bonds. The bond for which an offer to purchase is made is normally the next maturing Government bond and generally has a maturity date within six months from the date of the OMO.

Bonds with less than six months to maturity are priced on the same basis as Treasury bills, adjusted for the final coupon payment.

Reserve Bank bills

Reserve Bank bills were denominated in New Zealand dollars, were sold at a discount to par and carried no coupon. The bills could be discounted back to the RBNZ when they were within 28 days of maturity. The bills were redeemable at par on maturity. There are no Reserve Bank bills on issue. The last Reserve Bank bill tender was held on 4 February 1999 and the last Reserve Bank bill matured on 9 April 1999.

Discount

The discount is the difference between the present value and the nominal value.

Nominal value

The nominal value appears on the face of a document recording the entitlement, generally a certificate or bond. It is the amount to be repaid at maturity.

Coupon

Regular interest payment on a security (such as a bond). Coupon payments are typically annual or semi-annual.

Tender number

Government bond tenders and Treasury bill tenders are numbered.

Date held

The date when the tender is held. This is not the settlement date where cash is exchanged for the security.

Term to maturity date

The number of days from the settlement date to the maturity date.

Bond maturity offered

The maturity date of the bond or bonds on offer in the tender.

Total amount offered

The total amount NZDMO is willing to accept for that particular maturity date.

Total bids submitted

The total amount bid for the particular maturity date by all bidders.

Total successful bids

The total amount accepted by NZDMO for the particular maturity date.

Over subscriptions accepted

Sometimes the amounted accepted for a maturity may be more than that originally offered. This is subject to the provision that the total amount of bids accepted in all maturities does not exceed the total amount offered in the tender.

Weighted average yield of successful bids

Weighted average interest rate, weighted by volume per rate.

Range of yields on successful bids

The range of successful bids, from the lowest to the highest accepted rate.

Range of yields on unsuccessful bids

The range of unsuccessful bids, from the lowest accepted rate to the highest bid received. The lowest rate of the unsuccessful bids can be the same as the highest rate of the successful bids if successful bids have been pro-rated at the highest successful rate.

Weighted average yield of unsuccessful bids

Weighted average interest rates, weighted by volume per rate.

Treasury bill tenders

Treasury bill tenders are generally held on a weekly basis. Three maturities of regular Treasury bills are offered in each tender with roughly three, six and twelve month maturities. However, from time to time the RBNZ will also offer seasonal Treasury bills in the tenders. Seasonal Treasury bills are issued for liquidity management purposes and generally have a maturity of less than three months. Seasonal Treasury bills sold in tenders are noted by *.

Government bond tenders

The bond tender programme for the forthcoming financial year is generally announced at the time that the Government announces its budget for the forthcoming year.

Banking day

Monday to Friday excluding public holidays.

Interest bearing securities

These are written promissory agreements, whether marketable or not, in which one party promises to pay a stated sum on demand or on a specified date to the legal holder of the document. They may also involve a promise to pay stated interest at specified intervals over the term of the bond. Alternatively, they may be issued and traded at discount from their nominal value.

These include: Government bonds, Treasury bills, bills of exchange, commercial paper (including eurocommercial paper), certificates of deposit, debentures, convertible notes, and medium term notes issued by private placement.

Local authorities

These include city councils, borough councils, harbour boards and electric power boards.

Other government

This includes local authorities, state owned enterprises and other New Zealand enterprises majority owned by the Government.

Private sector

This includes New Zealand companies, financial institutions and producer boards. These are organisations other than the Treasury, RBNZ and "Other government".

Government bonds nominal value

The nominal value of bonds held for non-residents recorded by bond maturity.

Government bonds nominal value as a percentage of the total value of the loans

Non-resident holdings as a percentage of the total bonds on issue. This includes the bonds held by the RBNZ and the Earthquake Commission.

Government bonds nominal value as a percentage of net amount in market

The non-resident holdings as a percentage of the Government bonds available in the market. The bonds available in the market do not include the bonds held by the RBNZ and the Earthquake Commission.

Treasury bills nominal value

The nominal value of Treasury bills held for non-residents by bond maturity.

Treasury bills nominal value as a percentage of net amount in market

The non-resident holdings as a percentage of the Government bonds available in the market. The bonds available in the market do not include any Treasury bills held from time to time by the RBNZ and the Earthquake Commission.

Non-Repo trades

This category captures secondary market trading where a permanent change of ownership has resulted.

Repo/all other

This category is intended to capture repurchase agreements, in-house transactions, the take-up of new issue bonds, and any other transactions that are not appropriately categorised as "Non-repo".

Bond type

All bonds are ordinary New Zealand Government bonds, with the exception of the Feb 2016 bonds, which are inflation-indexed bonds.

Cash at beginning of month

The cash at the beginning of the month is the opening cash balance of the Exchange Settlement Accounts (ESA). For further information on the ESA system, please refer to the Reserve Bank of New Zealand Bulletin, March 1998, (vol 61, no 1) and the Reserve Bank of New Zealand Bulletin, December 1999, (vol 62, no 4.)

Government cash influence

The Government cash influence is the Government revenue (taxes provided through Inland Revenue Department and Customs), less government expenditure, less interest paid on Government bonds and Treasury bills.

Currency in circulation

The currency in circulation is the net amount of notes and coin issued by the RBNZ, and notes and coins surplus to various trading banks' requirements and subsequently returned to the RBNZ.

Other (RBNZ transactions)

Various transactions that affect accounts held with the RBNZ. These transactions are normally quite small in dollar terms.

Bonds issued

The Government issues bonds to help fund their borrowing requirements through Government bond tenders.

Bond maturities

The repayment by the Government of a bond that has reached its maturity date. Most years there will be a bond maturing which had previously been issued through a number of
Government bond tenders.

Regular Treasury bills issued

The Government issues Treasury bills as part of the overall trading programme through Treasury bill tenders.

Regular Treasury bill maturities

The repayment by the Government of a tranche of Treasury bills that has reached its maturity date. These bills have previously been issued through a number of Treasury bill tenders.

Other (Government debt transactions)

The net amount of miscellaneous Government debt transactions.

Foreign exchange

Foreign exchange deals transacted by the New Zealand Government and the RBNZ.

Net reverse repos

The net amount of reverse repos, transacted by the RBNZ to help manage the Government's daily liquidity flows.

Net repos

The net amount of repos, transacted by the RBNZ to help manage the Government's daily liquidity flows.

Net FX swaps

The net amount of foreign exchange swap transactions (whether buying or selling the NZD) transacted by the RBNZ to help manage the Government's daily liquidity flows.

Net seasonal Treasury bills

The net amount of seasonal Treasury bills, transacted by the RBNZ to help manage the Government's daily liquidity flows.

Net overnight reverse repo facility

The net amount of overnight reverse repos transacted by RBNZ with other parties. The RBNZ will be willing to enter into overnight reverse repos on demand, with those parties who have entered into a Master Repurchase Agreement with the RBNZ. Currently the interest rate on these transactions is 25 basis points above the Official Cash Rate (OCR). The OCR is an interest rate set by the RBNZ to implement monetary policy, so as to maintain price stability.

Net auto-repo rollover

The net amount (borrowings less repayments) of auto-repo. Settlement account holders can enter into automated intra-day borrowing with the RBNZ. This borrowing can be rolled overnight, but at an interest rate of 30 basis points above the OCR.

Average settlement cash

Average daily balance of the exchange settlement accounts.

Settlement cash balances

The surplus cash held at the Bank in Exchange Settlement Account System (ESAS) accounts at the end of a banking day.

Overnight reverse repo facility

A counterparty that has signed a Master Securities Repurchase Agreement sells government securities to the Bank in exchange for cash on an overnight basis. The counterparty agrees to buy the securities back at a stipulated price the next banking day. Currently the interest rate on these transactions is 25 basis points above the Official Cash Rate (OCR).

Autorepo rollover facility

A counterparty that has signed a Master Intra-day Securities Repurchase Agreement can borrow cash from the Bank and repay the cash intra-day (within the 24 hour banking day). If the intra-day transaction is not repaid at the end of the business day, it automatically rolls over into an inter-day transaction at a rate of 30 basis points above the Official Cash Rate (OCR).

Bond lending facility

An on demand facility where counterparties that have signed the Master Inter-day Repurchase Agreement can borrow government bonds from the Bank for a period of overnight to 7 days.

Transaction date

The date the transaction is created.

Amount

Total amount in NZD millions.

Bond

The government bond a particular counterparty wants to buy from the Bank.

Settlement date

The date a counterparty buys the government bond from the Bank.

Maturity date

The date the government bond is sold back to the Bank.