BUSH I don’t envisage an immediate change in the relevance of foreign-currency issuance and our benchmark lines will more than likely remain the cornerstone of our funding programme for the foreseeable future. We are open to issuing foreign-currency denominated bonds if market opportunities are compelling. There are no ideological obstacles to other products, but they need to be competitive with respect to our core product – which is our benchmark, domestic currency bond lines.

There are obviously some currencies where pricing dynamics are more volatile than others. The possibility that one of these could become attractive at a point in time is arguably higher than mainstream currencies. For core currencies like euros and US dollars we have not seen anything that indicates these could be competitive in the near term.

JOHN Foreign-currency issuance is becoming a bigger part of our long-term plans, and in January this year we debuted in the euro market with a €500 million (US$535 million) benchmark. This is because the New Zealand capital markets are small – certainly where yields are at now there is not a lot of retail demand.

It is mainly institutional interest we see, and this investor group already has reasonable holdings of Auckland Council paper. The size of Auckland Council relative to the other councils also means we are limited in what we can issue through the New Zealand Local Government Funding Agency (LGFA).

COLLINS We would not entirely rule out foreign-currency issuance. For instance, we plan to maintain our EMTN programme, at a small cost, to ensure we have international-market access.

The issue is that the basis swap between the US dollar and the Australian dollar is somewhere between 30 and 90 basis points depending on the maturity and time of reference, and most other currencies arbitrage back to the US dollar.

Due to this impediment we have not issued in foreign currencies recently because we have not wanted to pay up beyond our domestic curve to do so. But we still watch and track offshore issuance options and we keep our access lines open should things change.

We do issue ECP when there is an opportunity to borrow in this market more cheaply than in our domestic market. These opportunities still exist but are less frequent nowadays.

Some of the investors that buy EMTN paper also buy ECP. By issuing ECP our name is kept on the register for these investors. So if conditions change and we want to issue in foreign currencies in EMTN format we believe we would be in a position to do so.

TRIGONA New South Wales Treasury Corporation’s most recent foreign-currency issuance was a renminbi bond issued in November 2014, though we continue to source the majority of our funding through our benchmark Australian dollar bond programme. We are open to all issuance avenues and will respond to demand.

In the last few months we have had some interest from investors in foreign-currency issuance in the long-dated part of the curve. Volume in these privately placed transactions tends to be reasonably limited and we try to accommodate wherever possible.

WHITFORD The swapped-back level to Australian dollars is not particularly favourable at this point. Unless it was something very large and very competitive we would not do anything that takes away from our domestic benchmark lines.

KENNEDY We issue ECP for short-term funding purposes but we do not issue any other foreign-currency bonds, even in private placements. This is because the cost of establishing the facilities doesn’t justify the eventual outcome and, with a relatively modest funding programme, there is little advantage to the additional diversification. A potential marginal cost benefit, if there is one, does not justify the loss of liquidity in our benchmark bond lines.

BUTCHER If we issued in foreign currencies it would reduce the amount that we can issue in New Zealand dollars and would likely to be a more expensive form of funding.

Five years ago, I would have expected demand for any issuer to wane after around NZ$5 billion (US$3.6 billion) outstanding. We are now heading towards NZ$10 billion and we don’t have any capacity concerns.

There are several new drivers of demand. The most important for us is KiwiSaver flows. Domestic KiwiSaver managers receive regular inflows to their portfolios and the New Zealand Local Government Funding Agency (LGFA) has benefited by having effectively become a proxy for New Zealand government bonds. We see KiwiSaver managers adding to their positions and by us having a liquid curve they can take duration and curve positions in LGFA bonds.

Offshore investors are also driving demand. Around 26 per cent of LGFA bonds are held offshore, which is close to NZ$2 billion in total. Five years ago, I would not have expected there to be this level of holding of our bonds offshore.

Domestic capacity is additionally boosted by ongoing demand from bank liquids books, with the LGFA benefiting as a high-yielding, high-quality liquid asset. With these various pools of investors, we don’t think we are reaching full capacity yet and we expect investor demand to continue.