NZ GB's in healthy demand still - Westpac

Analysts at Westpac explained that demand for NZGBs remains healthy, witness the slight rise in swap spreads this week, as well as the strong tender for the 2025 nominal.

Key Quotes:

"The bid-cover ratio was 4.8 - well above the average for most lines (limited history for the 2025, this being only the second tender since its syndication launch). And the tail was a modest 1bp. There were 56 bids in total, 14 successful, indication decent breadth."

"The 2023 remains cheap to a fitted curve (on a z-scored basis), being only 1bp below versus the three-month average of 4.5bp below."

"The 2023 has been cheap on this z-scored basis for several weeks."

"The mid-curve lines - the 2020 and the 2021 - have richened slightly further, setting up for a possible flattener at some point (we’ll take our lead from US yields).

Short duration bonds are slightly cheap but will probably remain so given the negative roll and carry which is likely to persist for some time during this RBNZ easing cycle."