NZX has announced the introduction of the NZX Kauri Bond Indices today, a new set of indices for debt market participants.
The NZX Debt Indices are widely used by investors to benchmark the performance of fixed interest investments.
Kauri Bonds are debt securities issued in New Zealand dollars, by non-resident issuers. They are typically aimed at the institutional investor and are not traded on NZX’s markets. The Kauri Bond Indices, developed in conjunction with ANZ, create benchmarks for the rapidly growing Kauri Bond market.
ANZ Head of Markets, John Body said, “Demand has come from domestic bank liquidity managers, institutional fund managers and international investors, totaling in excess of NZ$5.5 billion. 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 will complement NZX’s other Debt Indices, including the NZX Government Bond Indices, NZX Corporate Bond Indices, NZX Bank Bill Indices and NZX Swap Indices.
Issuance of Kauri Bonds surged last year after the RBNZ expanded the range of securities it accepts for local banks transacting through the Overnight Reverse Repo Facility in July 2007. The new rules meant that a limited amount of Supranational, Sovereign/Semi-Government and Agency issuers (SSAs) were accepted.
In the last year the NZDX Market has grown 24%, with NZDX market capitalisation at $11.02 billion at the end of Q1 2008, compared with $8.89 billion at the end of Q1 2007.
NZX’s Head of Market Products, Geoff Brown said, “NZX is delighted to work with ANZ, a major participant in the NZDX Market, to develop this set of indices. 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 tradeable securities for the New Zealand investing public.”
Details of the criteria for inclusion in the Kauri Bond Indices are made available on the NZX website at the following link: http://www.nzx.com/nzxmarket/nzdx/bond_bank_indices/kauri_bond_indices
