Friday, 21 September 2007


Now had my bought NZD sold JPY carry trade a month.
Did it at 79.50 see here
Not looking too bad at 85:30 today!
Still think this cross heads back to 90.00, and the NZD/USD will have a go at 0.8000 again.
Watch this space!

Here’s where all the finance company deposits are flying to:

Dutch bank Rabobank Nederland [RABN.UL] said it would nearly double the amount of its Tier 1 perpetual securities issue to NZ$900 million ($643 million) due to strong demand.

It said the margin on the securities had been set at 76 basis points over the one- year swap rate, following a tender among institutional investors last Friday. The issue -- increased from an initial NZ$400 million -- is the largest ever for a non-governmental organisation in the New Zealand market, the company said.

The increase comes amid adverse global credit conditions, which saw New Zealand's Yellow Pages Group scrap a NZ$100 million bond issue earlier in the month.

The strong demand has been partly attributed to nervousness about investing in local finance companies, five of which have shut their doors in the past four weeks as small investors have stopped lending or demanded their money back.

Still in demand

Offshore investors love us… Do you want proof?

Here it is -Offshore holdings of NZ govt debt rose in Aug.

The proportion of non-resident holdings of New Zealand government securities rose to 67.6 percent at the end of August, from 63.4 % a month earlier, the Reserve Bank of New Zealand said. Offshore holdings of bonds increased to 73% from 69.8% while offshore holdings of Treasury bills rose 12.6% from 8%.

And here's another:

EBRD to sell NZ$522 mln Uridashi bond

The European Bank for Reconstruction and Development [DBRD.UL] will sell a NZ$522 million ($369.9 million) Uridashi bond, Daiwa Securities said
The bonds, to be issued on Oct. 3, will carry a 6.85% coupon. The sales period runs from Sept. 21 to Sept. 26, with a maturity date of Sept. 24, 2009. The EBRD is rated triple A by Moody's Investors Service, Standard & Poor's and Fitch.

Friday, 7 September 2007

More Offshore Investment

Offshore investors continue to be attracted to New Zealand. Here’s another investor story:

SYDNEY, Sept 6 (Reuters) - The Nordic Investment Bank (NIB) has priced its NZ400 million ($276 million) 3-year Kauri bond debut, a joint lead said on Thursday. A Kauri bond is a bond sold by a foreign issuer in New Zealand.

NIB is owned by Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden. It gives priority to funding investments that boost economic co-operation between these countries.

Hard to see the NZD/USD staying down with money still coming in at this rate. Word on the street is that a large US bank was selling NZDs on behalf of a hedge fund over the last few days. All done now though.

Still see major currencies range-trading as the sub-prime fall out works it’s way through the markets.

NZD should see some support coming through as markets re-focus on the Monetary Policy Statement from the Reserve Bank next week.

Thursday, 6 September 2007

Offshore investment continues

SYDNEY, Sept 5 (Reuters) - Queensland Treasury Corporation (QTC) has launched NZ$375 million ($264 million) in 10-year Kauri bonds, its first such issue.

The bond has a maturity of Sept. 18, 2017 and carries a coupon rate of 7.125 percent a year. It was priced to yield 7.18 percent, 97 basis points over the benchmark 2017 New Zealand government bond and 27 basis points under New Zealand dollar swap. The lead managers were ANZ Institutional, Deutsche Bank AG and RBC Capital Markets. QTC is rated triple-A by the main rating agencies.

QTC said the issue was well received, with 77 percent going to offshore investors. This issue brings the total amount of QTC debt on issue to more than A$34 billion. The State funding body has an estimated borrowing program of A$7.6 billion for the 2007-2008 financial year.

Sunday, 2 September 2007


The battle is over in the sub prime markets. Now we are seeing the aftermath, as the wounded report and the dead go into bankruptcy.

This story from Reuters:

"NEW YORK, Aug 29 (Reuters) - Basis Yield Alpha Fund, a hedge fund specializing in corporate and structured credit, on Wednesday filed for bankruptcy protection in the United States amid mounting losses from U.S. subprime mortgage assets, court papers show.

The Cayman Islands-registered fund, run by the Australian firm Basis Capital, listed more than $100 million of assets and more than $100 million of liabilities in its filing with the U.S. bankruptcy court in Manhattan. The fund firm managed nearly $1 billion earlier this year.

In court papers, Basis Yield said it had in June begun to suffer a "significant devaluation" in its asset portfolio, following market volatility related to U.S. subprime lending defaults. It said the devaluation led to margin calls, which it was unable to meet, and the issuance of several default notices by counterparties seeking to close out trades or seize assets.

Basis said JP Morgan Chase Bank NA, Goldman Sachs International, Citigroup Global Markets Limited, Morgan Stanley, Lehman Brothers International (Europe) and Merrill Lynch International all issued default notices. Basis Yield said it has disputed many of these notices.

Earlier in the month, the hedge fund firm told investors that losses at one of its portfolios had lost more than 80 percent in assets. Basis is among a growing number of hedge funds to have be plagued by the credit market turmoil. In July, Sowood Capital lost $1.5 billion and was forced to close down."

Markets have calmed though this week.

In the first weeks of the fiasco, markets failed. We had no way of pricing some of these instruments secured by now suspect sub prime assets. To the point that French bank Paribas suspended redemptions from 3 of their funds.

Now at least we are seeing the extent of the losses. We know there are casualties. We are starting to see the extent of the losses. The markets priced in the end of the world as we know it. Now it is becoming clearer and it is better than terrible.

Still bad, but at least we can measure it. Markets love certainty….hence relative calm is returning.