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New Zealand Stock Exchange launches Kauri Bond Indices

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The New Zealand Stock Exchange has launched the NZX Kauri Bond Indices, a new set of indices covering debt securities issued in New Zealand dollars by non-resident issuers.

The New Zealand Stock Exchange has launched the NZX Kauri Bond Indices, a new set of indices covering debt securities issued in New Zealand dollars by non-resident issuers. They are typically aimed at the institutional investor and are not traded on the exchange’s markets.

Issuance of Kauri bonds surged last year after the Reserve Bank of New Zealand expanded the range of securities it accepts for local banks transacting through the Overnight Reverse Repo Facility. The new rules meant that a limited amount of supranational, sovereign/semi-government and agency issuers (SSAs) were accepted.

The Kauri Bond Indices have been developed in conjunction with ANZ, one of the country’s largest banks. ‘Demand has come from domestic bank liquidity managers, institutional fund managers and international investors, totalling more than NZD5.5bn,’ says ANZ head of markets John Body. ‘The introduction of a Kauri SSA index is in response to feedback from investors and is an important development for the market.’

The NZX Kauri Bond Indices complement the exchange’s other debt indices, which are widely used by investors to benchmark the performance of fixed-interest investments and include the NZX Government Bond Indices, NZX Corporate Bond Indices, NZX Bank Bill Indices and NZX Swap Indices.

In the past year the NZDX, the exchange’s trading market for debt securities, has grown by 24 per cent, with the total market capitalisation rising to NZD11.02bn at the end of March from NZD8.89bn a year earlier.

‘NZX is delighted to work with ANZ, a major participant in the NZDX Market, to develop this set of indices,’ says the New Zealand Stock Exchange’s head of market products, Geoff Brown.

‘We have seen strong growth in both retail and institutional investor appetite for listed fixed-interest instruments, with the market offering a broader range of tradable securities for the New Zealand investing public.’

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