NZGBS: Closed Little Changed, NZ-AU 10Y Narrowed Significantly

NZGBs closed little changed. Yields closed flat to 1bp lower and 5-7bps stronger than morning levels across benchmarks.

• The NZGB 10-year also outperformed its ACGB counterpart, with the NZ-AU 10-year differential narrowing by 9bps to 45bps.
• A successful issue of the new May-35 bond via syndication likely supported the move away from session cheaps.
• The NZ Treasury issued NZ$4.5bn of the line, just shy of the transaction cap of NZ$5bn, at 6bps over the 15 May 2034 nominal green bond (yield to maturity of 4.7775%). Initial price guidance was 4-8bps over the May-34 bond.
• Swap rates closed 3-6bps higher, with the 2s10s curve steeper and implied swap spreads significantly wider.
• RBNZ dated OIS pricing closed flat to 1bp softer across meetings. A cumulative 70bps of easing is priced by year-end.
• Tomorrow, the local calendar sees CoreLogic House Prices, Building Permits and ANZ Commodity Price data. The Government will also present its 8-month Financial Statements.
• Given today’s May-35 bond issuance, the weekly bond auction scheduled for tomorrow has been cancelled.