RBNZ - Tuesday OMO to accept Corporate and Asset Backed securities

Date: 13 January 2009

The Reserve Bank today announced it will hold an Open Market Operation (OMO) each Tuesday where just Corporate and Asset-Backed eligible securities will be acceptable as collateral on a two name basis. This follows the Reserve Bank's announcement on 12 December 2008 that it was extending the range of securities that are acceptable in its Domestic Market Operations. The new securities are eligible for the Reserve Bank's Overnight and Term Reverse Repo Facility, and for its other liquidity operations at the Reserve Bank's discretion. Tuesday's OMO will give the market certainty around the ability to use Corporate and Asset-Backed securities to obtain liquidity at a time when markets remain disrupted. Details of Tuesday's OMO are:

  • The OMO will operate in a similar manner to the Reserve Bank's regular OMOs and will be used to inject cash into the banking system using eligible Corporate and Asset-Backed securities, which are listed on the Reserve Bank's website at Eligible Securities and Haircuts for Domestic Markets Operations.
  • The OMO will be held at 9.30am each Tuesday morning and will typically offer up to $250 million dollars for terms out to approximately 3 months. The Reserve Bank reserves the right to alter both the volume and maturity dates at its discretion.
  • The operation of this facility and the rules and guidelines applying to it will be the same as for the regular OMO. These details can be found on the Reserve Bank's website at Operating Rules and Guidelines for the Domestic Markets section.
  • Bids will be accepted between 9.30am and 9.45am and it is expected that results will be announced at approximately 10.00am.
  • Settlement will occur on a same-day basis.

This Tuesday OMO is seen as temporary, to be kept in place while global markets remain unsettled. The Reserve Bank will review this operation after one year.

The Term Auction Facility (TAF) and Reserve Bank bill tenders are unaffected by this announcement, although the list of eligible securities for the TAF will change slightly with the removal of AAA corporate paper.

For further operational information please contact: 
Te Okeroa
Manager, Market Operations
Te.Okeroa@rbnz.govt.nz