Government to sell more bonds

The Government is increasing the amount of money it is raising from the sale of bonds in the present financial year by $1 billion and is signalling the sale of more longer-dated bonds.

The New Zealand Debt Management Office (NZDMO), which manages the issuance of government bonds, said it had already completed $4.1 billion of the $4.5 billion bond sale programme for the 2008/09 year and had decided to increase the size of the programme to $5.5 billion.

This means the Government will borrow more via the sale of domestic bonds in the present fin-ancial year than previously signalled.

Traders said they expect the size of the bond programme to rise substantially next year and the year after as the Government runs bigger budget deficits.

The Government signalled a move to a new benchmark 10-year bond for the local debt market and the possibility of a new 15-year bond.

The NZDMO said it would offer a bond maturing on May 15, 2021, in its next bond tender on Thursday.

The coupon, or interest rate the bond pays, will be announced tomorrow.

- NZPA