CLARKE We identify possible execution windows well in advance when we are considering a syndication. This helps us to avoid event risk. When we believe the time is right to go, we try to take the earliest clean execution window available. In hindsight, we are pleased with the [early March] window we took to syndicate our new 2030 bond. If we had waited we might have had to consider delaying until market conditions stabilised.

NG Offshore demand is still very strong. The NZDM 2030 transaction was only 48 per cent domestic, for instance. LGFA [New Zealand Local Government Funding Agency] has a good distribution of domestic and offshore bond ownership, too, and we also continue to see offshore interest in the corporate space. It remains to be seen how things will play out in the sector without Kāinga Ora, but its offshore holdings were less significant than its peers.

DODDRELL It is interesting to think about whether we might see more offshore investors specifically in our corporate market. At present we do not, and the reality is that New Zealand dollar issuance volume is relatively low. When our corporates come to market they typically issue NZ$150­200 million (US$93.2-124.3 million). This has an impact on international investors’ willingness to analyse the credit.

For global investors that wish to gain exposure to New Zealand dollar fixed income, I imagine the motivating factors would be related to monetary and fiscal policy, economic conditions, and relative value to offshore markets. They can express such views easily through the deeper, more liquid NZGB [New Zealand government bond] programme. We would love to see more offshore investors in the New Zealand market but there are clearly constraints.

NG The point about small deal sizes is absolutely true – it is probably only NZDM, LGFA and SSA [supranational, sovereign and agency] Kauris that are worth many offshore investors doing the work on. The allocations they would get in other transactions are too small to justify dedicating an analyst to monitor the credit.

BOYLE We recently ran a nondeal roadshow through Asia for one of our local issuers. A pertinent comment one investor made, in relation to New Zealand’s recent inclusion in the WGBI, was that the inclusion caused them to dedicate a resource to the New Zealand market.

Given they now have a New Zealand dollar mandate, they will consider other New Zealand dollar products across the credit spectrum and also New Zealand issuers issuing in offshore markets. We expect this to contribute positively to the local market’s investor universe.

NG Some will participate on a relative value basis, and there are also Australian investors that manage New Zealand dollar funds.

RAYNER Before the pandemic, we were experiencing a trend decline in the share of nonresident holdings of NZGBs. This trend has subsequently reversed and it will be interesting to see how much further this increases or whether we start to see some stabilisation.

CLARKE Higher offshore demand is a positive development. Foreign holdings of NZGBs have increased by NZ$18 billion in the past 18 months and, at NZ$66 billion total, they are at their highest level ever – the previous record being set in May 2016.

There are plenty of possible reasons for this including relative value, inclusion in the WGBI – which has definitely brought a few participants into our market – and our high volume of issuance.

Several new names also participated in our inaugural 30-year nominal bond and green-bond syndicated transactions in recent years and, on our roadshows, we also met with several names that have not previously participated in our market.

Continuing to diversify our global investor base, whether by investor mandate or location, remains an ongoing goal of ours.