NZGBs Cheaper To Start, China Matters Dominate

News of meaningful support for the Chinese property market has applied some modest pressure to start the week, with the major NZGB yields sitting 1.5-3.0bp higher across the curve. Swap rates have also edged higher, leaving the major swap spreads incrementally wider on the day.

• NZDM has announced “the launch of a new 4.25% coupon 15 May 2034 nominal green bond. As previously announced, the Treasury expects to issue at least NZ$2.0 billion of the 15 May 2034 nominal green bond and the transaction will be capped at NZ$3.0 billion. Initial price guidance is 5 to 8 basis points over the 14 April 2033 nominal bond.” It will price on Tuesday 15 November (the initial notice sent out by the Treasury had a pricing date of 22 November).
• RBNZ dated OIS now prices a peak OCR of ~5.10%, incrementally higher on the day, aided by the China property market stimulus headlines.
• Local data has seen a firming in the services PMI print. BNZ noted that “the latest NZ PSI and PMI results chime with the narrative of spending shifting back to services, away from durables. However, they also highlight a divergence to what’s been going on globally, with respect to services industries.”