New Zealand’s 10-year government bond yield slipped 3 bps to 4.65% on Thursday, hovering near the four-month low hit on November 10. The move came amid strong auction demand following preliminary election results that eased worries about the country’s fiscal outlook.
The April 2037 bond sale drew bids worth 7.46 times the amount on offer, the highest bid-to-cover ratio for any maturity since February 2013. The auction followed early results indicating that the incumbent National Party had secured enough electorate seats to keep its three-party bloc narrowly in front.
The prospect of the conservative government remaining in power reduced fears of a significantly wider budget deficit under a new administration. Yields were further pressured by a cut in weekly auction sizes to NZ$350 million in November from NZ$450 million in October, as well as stronger demand from investors reinvesting large coupon payments.