Reserve Bank to begin Large Scale Asset Purchases

  Release date: 23 March 2020

Starting 25 March 2020, the Reserve Bank will be undertaking Large Scale Asset Purchases (LSAPs) of New Zealand Government bonds in the secondary market, consistent with the decision of the Monetary Policy Committee made on 22 March 2020.

The total programme size will be NZD30 billion over a 12 month period.

Within this programme size, the Reserve Bank reserves the right to alter the composition and volume of purchases at its discretion. The Bank will initially purchase NZD750 million bonds each week. This will be reviewed regularly to ensure the efficiency and efficacy of the programme.

Purchases will occur via an auction process, similar to operations already run by the Reserve Bank.

The detailed operating guidelines for the LSAP programme can be found in the link below.

Every Friday at 2pm, the Bank will announce its intended auction schedule for the week ahead via Refinitiv (RBNZ04), Bloomberg (GPGX 1549 3 2) and on the Domestic Markets section of the Reserve Bank website. The programme allocation for the week starting 23 March can be found on the Bank’s website.

Auctions will be offered on Monday, Wednesday and Friday at 11:00am. A pre-auction announcement will be made at 10:00am on the day of the auction confirming the details of the auction. Auction details will be announced on Refinitiv (RBNZ03) and Bloomberg (GPGX 1549 3 1).

All nominal New Zealand Government bonds are eligible for purchase under the LSAP programme. The programme excludes inflation-indexed bonds at this time.

The operating rules and guidelines applying to participation in the auction will be the same as the Reserve Bank’s Open Market Operations. These details, including application for participation in operations, can be found on the Reserve Bank's website.

Offers can be submitted by eligible counterparties between 11:00am and 11:30am and it is expected that results will be announced at approximately 11:45am (or as soon as possible thereafter). Total aggregate purchases will be made available via the Reserve Bank’s statistical releases at the end of the month.

The Reserve Bank will also continue to support bond market functioning as previously announced. The Bank stands ready to lend government bonds through our existing Bond Lending Facility on a reverse enquiry basis.

The Reserve Bank will continue to collaborate closely with New Zealand Debt Management within the New Zealand Treasury to ensure the efficient functioning of the New Zealand Government bond market.

The attached schedule is indicative only. The Reserve Bank reserves the right to alter the composition and volume of purchases at each tender to meet the policy objectives of the LSAP programme. The objectives of the programme are to keep interest rates on government bonds low and to support market functioning.

List of approved Legal Entities in Yieldbroker

  • ANZ Bank New Zealand Limited
  • Bank of New Zealand
  • Citibank N.A.
  • Citigroup Global Markets Limited
  • Commonwealth Bank of Australia
  • Deutsche Bank AG
  • The Hong Kong and Shanghai Banking Corporation Limited
  • JP Morgan Securities Australia Limited
  • Morgan Stanley & Co International plc
  • Rabobank New Zealand Limited
  • The Toronto Dominion Bank
  • UBS AG
  • Westpac New Zealand Limited
  • Westpac Banking Corporation

Media Contact:
Oliver Bates
Manager, External Stakeholders
DDI: +64 4 474 8627
Email: [email protected]

For further operational information contact:
Dean Hill
Manager, Financial Markets
[email protected]