The Reserve Bank of New Zealand provided an update to its liquidity policy review on 5 December, with the banking system regulator now set to include level two liquid assets and a substantial committed liquidity facility in the forthcoming regime. The reserve bank has confirmed that securities issued by New Zealand Local Government Funding Agency and by “highly rated” Kauri borrowers will be included as level two liquid assets.

The 2023 Commonwealth Bank of Australia Global Markets Conference brought international investors to Australia at a fascinating juncture for the local economy and the fixed-income asset class. While the general view remains that the central bank hiking cycle is close to played out, the market is also coming to terms with the real consequences of a higher for longer environment. Australia is not fully insulated against cold global winds but it also has reasons for optimism.

New Zealand’s capital market faced several headwinds in 2023 but managed to navigate a course to issuance consistent with recent years. A late year regulatory update could suggest smoother sailing ahead for at least one key sector, though deal flow from 2023 provides few hints at a radical change in supply or demand patterns.

The KangaNews New Zealand Debt Capital Market Summit took place in Auckland in September, at a critical juncture for all of the local political, economic, market and environmental transition stories. Conversations at the conference were more wide-ranging than ever, with contributions from the political, business and markets sectors at a moment when the agenda for the coming years is being formed in real time.

The Reserve Bank of New Zealand’s liquidity policy review could fundamentally reshape the way bank liquidity books – some of the country’s most important fixed-income investors, especially in the high-grade space – allocate their money. A worst-case outcome could weaken funding opportunities, the overall health of the New Zealand capital market and even the cost of credit across the economy.

New Zealand’s liquidity policy review has already had an impact on the debt market and could cause a long-lasting shakeup of issuance norms. In June, KangaNews spoke to Kate Le Quesne, director, prudential policy at the Reserve Bank of New Zealand in Wellington, to discuss the regulator’s current thinking.

Participants in the New Zealand securitisation market believe the asset class has an increasing role to play in the local credit landscape on the back of growing momentum in recent years. Economic and regulatory challenges are likely to put a ceiling on near-term growth but there is a baseline level of confidence in asset quality and the risk-return equation of structured finance.

High inflation continues to require a policy response that is squeezing New Zealand economic outcomes, but the Reserve Bank of New Zealand’s May 2023 Financial Stability Report suggests a baseline level of confidence in the foundations. The reserve bank is also sufficiently comfortable with local credit standards to have unwound a key macroprudential measure.

KangaNews hosted its annual Women in New Zealand Capital Markets roundtable discussion on 24 March, in the immediate wake of local climate events and global banking risk that put the market on high alert. Participants discussed the impact of a changing world and how New Zealand is responding to a raft of challenges.

Like every other global jurisdiction, the New Zealand capital market is digesting the implications of resurgent volatility and global economic developments – while local policy tightening continues to lead the world pack. There was a lot to discuss at the ANZ-KangaNews New Zealand Capital Market Forum, which took place in Wellington on 23 March.