Stock tendering to go ahead

Press, 22 June 1983, Page 31

Stock tendering to go ahead

PA Wellington The Government has decided to go ahead with a tender system for the sale of Government stock, the Minister of Finance, Mr Muldoon, announced. At present the Government fixes interest rates for its Government security issues, and the private sector then decides how much it wishes to buy at those rates. Under a tender system, the Government would fix the quantity of securities to be issued in a given period, and the market effectively would determine the interest rates needed to achieve that level of sales. Mr Muldoon said in a statement the tender system would probably replace the present issues of ordinary stock as soon as the detailed administrative arrangements can be made, prob-

ably about three months. It had been decided to defer proceedings with a Treasury Bill tender at this stage. There were a number of practical difficulties in this area that reouired further time to resolve. “Proceeding with a stock tender should enable us to achieve our monetary objectives more precisely,” said Mr Muldoon, “and it will be rible for the Government achieve its borrowing requirements in a more stable and predictable way.” However, it did not mean that ordinary savings stock type issues would disappear altogether — “there will continue to be a role for these, particularly for the individual investor, alongside a tender.” Details of how the stock tender will work will be announced by the Reserve Bank soon.