Series description: Government finance
Most securities reported are wholesale market instruments: New Zealand Government bonds (with the exception of the Feb 2016 bonds which are inflation-indexed bonds), Treasury bills, Corporate bonds, Reserve Bank bills, Commercial paper or Registered certificates of deposit (RCDs).
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, Reserve Bank bills, bills of exchange, commercial paper (including eurocommercial paper), certificates of deposit, debentures, convertible notes, and medium term notes issued by private placement.
There three main categories of government securities, each of which have several sub-categories. The three main categories are:
Wholesale government securities are issued for terms of greater than one year and carry a coupon payment. Wholesale securities are initially sold, normally by tender, to financial institutions.
Treasury bills are securities issued for terms of less than one year and do not carry a coupon payment. Treasury bills are initially sold at a discount to the nominal value to financial institutions, normally by tender.
Retail government securities are issued over the counter for terms of two or four years starting from the date of purchase and carry a coupon payment.
Types of Government securities currently on issue are:
Government bonds which are denominated in New Zealand dollars, issued for terms greater than one year, and have a fixed interest coupon paid semi-annually in arrears.
Inflation-indexed bonds (IIB) are denominated in New Zealand dollars with a fixed coupon paid quarterly in arrears. The outstanding Indexed Bonds are scheduled to mature on 15 February, 2016. On maturity, the principal and the indexed component of the -bonds are redeemable. The index component refers to the incremental CPI adjustment, from 15 November 1995, to the principal due date.
Treasury bills are denominated in NZ dollars sold at a discount to the nominal value and carry no coupon. The bills are redeemable at par on maturity. Treasury bill tenders are generally held by NZDMO, on a weekly basis. Two maturities of regular Treasury bills are offered in each tender with roughly three and six 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 *.
Other types of securities currently on issue are:
Reserve Bank bills (D3 RB bills tender)
Reserve Bank bills are denominated in New Zealand dollars, sold at a discount to par and carry no coupon. The bills can be discounted back to the RBNZ when they are within 28 days of maturity. The bills are redeemable at par on maturity. The Reserve Bank stopped issuing bills in February 1999 but re-introduced these in November 2008.
Commercial paper (De)
Refers to private sector (including financial corporations), short-term (usually less than one year) discounted debt instruments.
Corporate bonds (De)
Refers to New Zealand dollar denominated debt instruments, recorded on a New Zealand register, that are issued by private sector entities (including financial corporations). Issuers can be both New Zealand residents (domestic) and non-residents (Kauris).
Domestic corporate bonds (De)
Refers to issues of New Zealand dollar denominated debt recorded on a New Zealand register by New Zealand incorporated entities.
Non-domestic corporate bonds (De)
Refers to issues of New Zealand dollar denominated debt issued by a non-resident incorporated entity and recorded on a New Zealand register (such issues are sometimes referred to as "Kauri" bonds).
Registered certificates of deposits (RCDs) (De)
Refers to issues of discounted, short-term (less than one year) debt securities, the majority of which are issued by banks. RCDs have largely taken the place of individual bank bills.
Repurchases and reverse repurchases (D9) (D3 OMO) (D3 TAF)
Arrangements under which one party sells a security at a specified price to another party with an agreement that the security will be repurchased at a fixed price on a specified future date. The party which sells the security upon entering the arrangement is said to be "Repurchasing" the security. The party which buys the security upon entering the arrangement is said to be "Reverse repurchasing" the security.
Maturity (D1, D3, D9, Da, Db, Dc, D12, and DISCONTINUED tables D4, D5, and D11) The date the final repayment for a security or loan is expected to be made. Maturity data may be presented in slightly different ways depending on the particular form of the security.
Discount (D4, D5 - DISCONTINUED)
The discount is the difference between the present value and the nominal value of a security.
Present value (D1, D2, D3, D0, D6, D7, Db, Dc, De, D12 and DISCONTINUED tables D4, D5, and D11)
The present value refers to the current market value of a security.
Nominal value (D1, D2, D3, D0, D6, D7, Db, Dc, De, D12 and DISCONTINUED tables D4, D5, and D11)
The nominal value of a security represents the amount to be repaid at maturity. The nominal value is recorded on the face of the document recording the entitlement, generally a certificate or bond. It is also referred to as the “face value”.
Coupon (D11 - Discontinued)
A coupon represents the regular interest payment on a security (such as a bond). Coupon payments are typically annual or semi-annual.
Date first Issued (D11 - Discontinued)
The first date on which stock related to the particular security was first issued.
Loan Prefix (Db and Discontinued table D11)
A code allocated to a particular security.
Amount in market (D6, D7, Db, Dc, and Discontinued table D11)
The total nominal value a security issued and that is available for trading in the secondary market. In the case of Government securities, this value excludes holdings of the RBNZ and Earthquake Commission which do not hold them for trading purposes.
Mondays through Fridays, excluding public holidays.
Securities held outright by the owner either directly or through an agent.
Settlement date (D3 TAF) (D3 RB bills tender, D12)
The date counterparty buys the government bond from the Bank.
State Owned Enterprises (SOEs) (D2, Dd)
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.
Airways Corporation of New Zealand Ltd
Electricity Corporation of New Zealand Residual Ltd
Genesis Power Ltd
Kordia Group Ltd
Landcorp Farming Ltd
Meridian Energy Ltd
Meteorological Service of New Zealand Ltd
Mighty River Power Ltd
New Zealand Post Ltd
New Zealand Railways Corporation (ONTRACK)
Quotable Value Ltd
Solid Energy New Zealand Ltd
Timberlands West Coast Ltd
Transpower New Zealand Ltd
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. New Zealand Fast Forward Fund Limited is a crown entity.
Reserve Bank of New Zealand (RBNZ) (D2, D6, and Discontinued table D11)
Refers to the Reserve Bank of New Zealand, New Zealand’s central bank.
Earthquake Commission (EQC) (D2, D6, and Discontinued table D11)
The EQC is New Zealand’s primary provider of natural disaster insurance to residential property owners. It insures against damage caused by earthquake, natural landslip, volcanic eruption, hydrothermal activity, tsunami; in the case of residential land, a storm or flood; or fire caused by any of these.
Financial and trading enterprises (D2)
Refers to the Public Trustee and Housing Corporation of New Zealand.
Refers to life insurance offices and insurance offices.
Other financial institutions (D2)
Includes organisations previously classified as savings institutions, finance corporations and investment companies and all other financial institutions.
Local authorities (D2, Dd)
These include city councils, borough councils, harbour boards and electric power boards.
Other government (Dd)
This includes local authorities trading enterprises (LATEs), and other New Zealand enterprises majority owned by the Government.
This includes New Zealand companies, financial corporations and producer boards. These are organisations other than the Treasury, RBNZ and “Other government”.
Treasury bill tenders (D5 – Discontinued in September 2009)
Treasury bill tenders are run by the NZDMO and are generally held on a weekly basis. The government can offer three different maturities (three, six and twelve months) of regular Treasury bills in each tender. 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 (D4 - Discontinued in September 2009)
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. Government bond tenders are run by the NZDMO and are generally held on a weekly basis. The government offers bonds of differing maturities in each tender. From time to time, the government will hold unscheduled tenders to sell or repurchase government bonds (TAP and Reverse TAP tenders).
Open market operations (D3 OMO)
The Open Market Operation (OMO) is used to manage the level of liquidity in the New Zealand financial system. These operations are announced daily via electronic media. The announcement indicates whether the RBNZ will inject or withdraw funds (using reverse repurchase transactions or repurchase transactions). Operations are conducted as tenders and registered bidders telephone their bids to the RBNZ.
Prior to 11 December 2007 eligible securities were limited to Government bonds, Treasury bills and Reserve Bank bills (RBB). The Reserve Bank discontinued issuing RBB in 1999 but re-introduced them in November 2008.
Beginning on 11 December, 2007, Kauri bonds have been accepted for use in the Bank’s Domestic Market Operations. The range of acceptable securities was expanded further in June 2008. Refer to the eligible securities and haircuts page for a full list of eligible securities.
Term Auction facility (D3 TAF)
Beginning in November 2008, in conjunction with the re-introduction of RBB, the Reserve Bank introduced a Term Auction Facility (TAF). The TAF operates in a similar manner to the OMO and is used to inject liquidity into the banking system. A TAF auction is held each Wednesday morning. RBB tenders are also held weekly on Wednesday afternoons, and used to withdraw liquidity from the banking system.
Reserve Bank bill tender (D3 RB bills tender)
Short-term discount securities issued by the Reserve Bank. The Bank ceased issuing Reserve Bank bills on 5 February 1999. All Reserve Bank bills and related advances to The Treasury were repaid by 9 April 1999. Reserve Bank Bills were re-introduced in November 2008 to assist in managing the liquidity of the banking system. The RBB tenders are held weekly, on Wednesday afternoon, to withdraw liquidity from the banking system.
Tender related Terminology
Total volume/ amount offered ( (D3 OMO) (D3 TAF) (D3 RB bills tender)
The total nominal amount being offered in the tender.
Volume offered per maturity (D4, D5 - DISCONTINUED) (D3 OMO) (D3 TAF)
More than one maturity date can be offered in an operation. A volume limit will be set for each maturity offered. Bids may be accepted for one or all of the maturity dates, but the total amount accepted will normally not be more than the total volume offered.
Volume bid/ Total bids submitted (D3 and Discontinued tables D4 and D5)
The total amount bid for the particular maturity date by all bidders.
Total amount transacted/ Total successful bids (D3 and Discontinued tables D4 and D5)
The total amount accepted for the particular maturity date.
Range of bids received (D3 and Discontinued tables D4 and D5)
The range of bids received, this includes successful and unsuccessful bids.
Range of successful bids (D3 and Discontinued tables D4 and D5)
The range of successful bids, from the minimum to the maximum rate.
Weighted average successful bids (D3 and Discontinued tables D4 and D5)
Weighted average interest rates, weighted by volume per rate.
Tender number (Discontinued tables D4 and D5)
The official number of the tender recorded by the DMO.
Date held (D3 and Discontinued tables D4 and D5)
Refers to the date when the tender was held. This is not the settlement date where cash is exchanged for the security except for the RBNZ’s Open Market Operations where settlement occurs on the day of the tender.
Over subscriptions accepted (Discontinued tables D4 and D5)
Sometimes the amounted accepted for a maturity in a NZDMO tender 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.
Range of yields on unsuccessful bids (D3 and Discontinued tables D4 and D5)
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 (Discontinued tables D4 and D5)
Weighted average interest rates, weighted by volume per rate.
Descriptions of settlement cash
Cash at beginning of month (D10)
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 (D10)
The Government cash influence is the Government revenue (taxes provided through Inland Revenue Department and Customs), less government expenditure and interest paid on Government bonds and Treasury bills.
Reserve Bank Transactions (D10)
Includes Currency in circulation and various transactions that affect accounts held with the RBNZ. Currency in circulation refers to notes and coins issued by the RBNZ less those held in the vaults of registered banks.
Other (Government debt transactions) (D10)
The net amount of miscellaneous Government debt transactions.
Foreign exchange (D10)
Foreign exchange deals transacted by the New Zealand Government and the RBNZ.
Net reverse repos (D10)
The net amount of reverse repos, transacted by the RBNZ to help manage the Government’s daily liquidity flows.
Net repos (D10)
The net amount of repos, transacted by the RBNZ to help manage the Government’s daily liquidity flows.
Net FX swaps and Basis swaps (D10)
The net amount of foreign exchange swap transactions (whether buying or selling the NZD) transacted by the RBNZ to help manage the RBNZ’s and Government’s daily liquidity flows.
Net seasonal Treasury bills (D10)
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 (D10)
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. These transactions are done at a margin above the 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 (D10)
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. The auto-repo facility was discontinued in October 2006 following implementation of the new liquidity management regime.
Cash as at end of month (D10)
The surplus cash held at the bank in Exchange Settlement Account System (ESAS) accounts at the end of a banking day.
Average settlement cash (D10)
Average daily balance of the exchange settlement accounts.
Settlement cash balances (D10, D12)
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 (D10)
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 (D10)
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). The auto-repo facility was discontinued in October 2006 following implementation of the new liquidity management regime.
Net Bond lending facility (D10)
Bonds borrowed in the Bank’s bond lending facility
Descriptions of non-residents
The nominal value of bonds held for non-residents recorded by bond maturity.
Treasury Bills held for non-residents(D0, D7)
The nominal value of bills held for non-residents recorded by bond maturity
Total Government securities held for non-residents(D0)
The nominal value of bonds and bills held for non-residents recorded by bond maturity
Government bonds nominal value as a percentage of the net amount in the market (D6)
Government bonds held for non-residents, as a percentage of the Government bonds available in the market, excluding the bonds held by the RBNZ and the Earthquake Commission.
Government bonds nominal value as a percentage of the total value of the loans (D0)
Government bonds held for non-residents, as a percentage of the total bonds on issue. This includes the bonds held by the RBNZ and the Earthquake Commission.
Treasury bills held for non-resident holdings, as a percentage of total Treasury bills available in the market. The bills available in the market do not include any Treasury bills held from time to time by the RBNZ and the Earthquake Commission.
Total New Zealand government bond turnover (D9)
The nominal of value government securities traded in the secondary market over the period specified.
Non-Repo trades (D9)
This category captures secondary market trading where a permanent change of ownership has resulted.
Repo/all other (D9)
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”.