19 August 2020
Martin Taylor Via Email:
[FYI request #13367 email]
Thank you for your request of 22 July 2020 under the Official Information Act 1982 (OIA). You
requested the following:
“With reference to newly-issued NZ Govt bonds purchased to date on the secondary
market under the LSAP programme, can you advise the cost (actual or estimated) of
purchasing the bonds from the secondary market compared to purchasing those bonds
at face value directly from Treasury?
For the purpose of clarifying my request, I am looking for the “margin” accruing to
financial intermediaries that is incurred from purchasing bonds on the secondary
market rather than directly from the Treasury.”
We cannot advise the cost of purchasing bonds from the secondary market compared to
purchasing those bonds at face value directly from Treasury because our Large Scale Asset
Purchases have not occurred at the same time as New Zealand Debt Management (NZDM)
bond tenders. This means we do not have comparable data with which to construct an
NZDM issue certain bond lines each week on a Thursday, and the Reserve Bank of New
Zealand (RBNZ) tends to purchase these bond lines in the secondary market the Monday
prior. However, the interest rates at which NZDM issue and the RBNZ purchase are not directly
comparable because movements in market interest rates can be substantial between these
dates. We typically do not purchase newly syndicated Government Bonds until a period of time
after the syndication.
Your request is therefore refused under section 18(g) of the OIA as the requested information
is not held by the Reserve Bank, and we have no grounds for believing the information is
held by another department or Minister of the Crown or organisation, or by a local
connected more closely with the functions of another department or Minister of the
Crown or organisation or of a local authority.
2 The Terrace, PO Box 2498, Wellington 6140, New Zealand
Telephone 64 4 472 2029 Online at www.rbnz.govt.nz
There is publicly available information relating to Government bond sales and the LSAP
programme which may be of interest to you. Information on the RBNZ's asset purchases,
purchase dates, and weighted average successful yields are available in the RBNZ D3 table,
which you can access here: https://www.rbnz.govt.nz/statistics/d3. Information on New
Zealand Debt Management's tender offerings, dates, and weighted average accepted yields
are available on their website: https://debtmanagement.treasury.govt.nz/government
securities/nominal-bonds. Please note that the comparison of these rates cannot be treated
as "margins" accruing to financial intermediaries, because the transactions occur on different
dates and market interest rates will have moved in the interval.
The Official Information Act allows charges to be imposed for the preparation of information
that we send in response to requests. The Reserve Bank is resourced to meet disclosure
obligations for a reasonable level of requests and generally will not impose charges for small,
simple or infrequent requests. Where the request is for information that requires substantial
collation, research and preparation work, and is chargeable. In this case we have not imposed
a charge as no new information is being released.
You have the right to seek an investigation and review by the Ombudsman of this decision.
Information about how to make a complaint is available at www.ombudsman.parliament.nz or
by Freephone 0800 802 602.
Manager, Balance Sheet Design
Reserve Bank of New Zealand I Te Potea Matua