RV analysis of the new NZGB Apr-29
The NZ DMO is expected to issue a new NZGB Apr-29 before year-end. Our fair value analysis suggests a current yield of 3.06-3.07% and a spread to Apr-27 of +17-18bp. At this stage, timing of the issue is unknown, but recent cheapening of longer dated NZGBs suggests some speculation the bond is coming soon. If the Apr-29 is issued in the near future, we don’t expect significant further cheapening in NZGBs against swap. Demand for a new Apr-29 is likely to be reasonably solid.