Govt stock tender system welcomed

Press, 2 September 1983, Page 8

Govt stock tender system welcomed

PA Auckland The first tender for Government stock is expected to involve between SSOM and SIOOM.

This was the general view at a seminar yesterday on the topic arranged by the merchant banker, Fay, Richwhite and Co.

A senior money market operator of the Reserve Bank, Mr Peter Woodhouse, agreed at the seminar that it was unlikely that the amount offered would exceed SIOOM, although this benchmark was open to correction, “by order,” within 24 hours. He also said that the main part of the maturities would be in shorter terms of 18 months or two years, with the remainder at four to five years.

Institutional fund managers said the tendering system was welcome because it offered some flexibility and should promote a more active market for fixed interest securities.

In addition, they said, the

Government would be able to exercise better control over the amount of stock to be issued and the frequency with which it was offered. It is understood tenders will be called about eight times a year, or every six weeks.

Mr Guy Williams, the Auckland money market manager for Fay, Richwhite, said the system was expected to give rise to a much more developed secondary market, especially for the private investor.

He said that competitive tenderers would have to be on their toes and keep continually in touch with the market. The non-competi-tive sector could become primarily for private investors, as seemed to have happened in Australia. Some fund managers said that in the present circumstances they would be looking for yields of between 9 and 10 per cent, but the initial hurdle was to gain confidence in the system.