Market participants said bond issues are seen as a significant gauge of the appetite for New Zealand sovereign debt.
Syndication, where a group of institutions are called on to secure support for an issue, allows for significantly larger sums of money to be raised than the standard tender process can offer.
The big sums involved are designed to kick-start liquidity for the new issue, after which funds for that maturity are raised in the normal way through the weekly tenders.
In this instance, the Treasury said it would not issue any 2031s before January 2020 - enough time to allow the market to settle.
"In terms of funding the Government, this is a significant transaction," said one bond market insider.
Bank of New Zealand, Commonwealth Bank of Australia, UBS AG, Australia Branch and Westpac Banking Corp are joint-lead managers for the issue.
In May, in conjunction with the Budget, the Treasury updated the forecast 2019/20 New Zealand Government Bond programme to $10b - $2b higher than forecast at the half-year 2018 fiscal update.
ANZ Bank - which is not part of the syndication panel - said New Zealand government debt is low by global standards.
The bank said it would be in the Treasury's best interests to raise at least $1.5b.
"Given the volume of issuance to date, a deal size of approximately $1.5b will bring it back on track to achieve its target for Q3 2019," ANZ said in a research note.
"This will ensure the NZ Treasury remain on track to meet their target debt to GDP level of 20 per cent - especially in an environment where we are seeing large government bonds occur," it said.
Results of the offer are due out tomorrow.