Government confirms plan to sell Chorus debt, will invest in infrastructure

Finance Minister Nicola Willis. Photo / Mark Mitchell

The Government will sell the debt it holds in Chorus, Finance Minister Nicola Willis has confirmed.

She said the money raised from the sale will be “invested in capital projects such as schools, hospitals and roads“.

The Government said it did not have an equity stake in Chorus but it continues to own the debt that has not been repaid from the $1.33 billion in interest-free loans it gave to Chorus to help finance and accelerate the rollout of fibre broadband.

The Government is selling that debt, calling it a “monetisation”.

“The loan to Chorus is not due to be fully repaid until 2036 but it has served its purpose so, after testing the market, the Government has decided to get the present value of its money back sooner so it can be invested elsewhere,” Willis said.

“The alternative would be to wait another five to 10 years for Chorus to repay the Crown,’ she said.

The Government said the securities involved are not ordinary shares. They do not generate dividend revenue. Their early monetisation will not change the ownership of Chorus, nor change the services and assets it provides or owns.

The Herald has previously reported that Government funding for the broadband rollout was provided to Chorus through a vehicle called National Infrastructure Funding and Financing, or Niffco.

The Niffco securities have some equity-like attributes but do not come with the same rights and obligations as those of ordinary shares.

They are separate from Chorus’ NZX-listed shares and are more like zero-coupon bonds or, as one observer told the Herald, ”debt dressed up as equity”.

Materials released at Chorus’ latest annual result showed it had Niffco debt and equity with a face value of $1.165b – maturing from 2030 to 2036.

Willis had previously said the book value of the debt was $643 million, although this could be very different from the money the Government would realise from a sale. She would not indicate the figure she had received from the Government’s market soundings, noting it was commercially sensitive.

Labour leader Chris Hipkins said he wanted to know “how much value the Government would lose by dispensing with their interest early”.

“No investor’s going to buy it unless they’re going to extract some value out of it,” he said.

The sale could be a test case for National’s 2026 election campaign, which is likely going to involve a promise of asset sales, revenue from which would be reinvested in infrastructure.

Infrastructure Minister Chris Bishop said infrastructure from this sale would be ringfenced and redeployed into Budget 2026 to help fund other infrastructure.

“This is a pragmatic decision that will free up hundreds of millions for more urgent infrastructure needs,” Bishop said.

“The monetisation process will commence in early 2026 and, subject to market conditions, investor feedback and value-for-money considerations, is scheduled for completion in the second quarter of 2026,” he said.