Tender target lifted

Press, 9 November 1984, Page 16

Tender target lifted

By MICHAEL HANNAH in Wellington The Government has increased its target in the latest tender of Government stock from S3OOM to S4OOM to draw in a recent inflow of offshore funds.

According to private market sources, as much as SSOOM, most of it in Australian currency, has flowed into the economy in recent weeks attracted by the current high interest rates. The Minister of Finance, Mr Douglas, said yesterday that the recent inflow of private capital had increased domestic liquidity and led to an increase in the tender size.

The move comes at a time when the Government has also increased the proportion of funds trading banks must invest. in Government stock from 21.5 per cent last month to 26 per cent in November. Mr Douglas said the tender,. to be held on November 15, had previously been expected to be for about S3OOM, to fit in with the previously announced intention to sell about $1 billion in the last four tenders of 1984. Three stocks are included in the latest tender, one of SIOOM for three years, a shorter term than appeared in the last tender, one of SISOM for five years and six months; and one

of SISOM for seven years and six months. All carry a coupon rate of 14 per cent. The decision to seek S4OOM in the next tender was a result of the high interest paid on the last tender, the Leader of the Opposition, Sir Robert Muldoon, said yesterday, the Press Association reports. “No western style country is paying Government stock . rates in excess of 17 per cent, and foreign money will inevitably continue to flow in,” Sir Robert said. Every dollar has to be mopped up by the same tender process as it adds to the money supply and thus the situation becomes self-perpetu-ating.”