Bull run on bonds: yields well down
By
RICHARD BOULTON
New Zealand Government bond yields began the week on a steady to marginally lower trend. By mid-week local investors had decided that shorter term rates and bond (stock) yields had peaked and were likely to go lower.
This co-incided with offshore recommendations for North American funds and investors to switch from sAust bonds to SNZ bonds because of the perceived currency risk of the Australian dollar weakening, particularly against the United States dollar.
. The bull run gained momentum at the end of the week, and the benchmark 10% 15/11/93 stock closed the week down almost 0.2% at 12.95% in the wholesale market, the first time it has closed clearly below 13% for several months.
The drop in yields was more pronounced at the long end (i.e. longer dated maturities) and the Electricorp bonds were also down 0.2%. Another factor allowing rates to fall has been speculation that the Government’s borrowing programme to be announced on Budget night next Thursday may be lower than had been expected Despite these lower yields, Government bonds remain attractive fixed interest instruments
The Telebonds issued by Telecom are now looking comparatively more attractive, particularly the four-year maturity at 13.3%.
A closing range of yields for investors to buy Government bonds in the retail market was:
15/9/91: 13.13%, 15/7/92, 13.0%. 15/11/93: 12.90%, 15/10/ 94, 12.99%. 15/10/96: 12.82%.
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Press, 22 July 1989, Page 28
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231Bull run on bonds: yields well down Press, 22 July 1989, Page 28
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