Government bonds NZ: rates, issuers and how to buy them

Kiwi Bonds are the retail tier. You apply directly to New Zealand Debt Management, the minimum is $1,000, terms run from six months to four years, and there is no broker and no market price to worry about. They are also the lowest-yielding option, because you are paying for absolute simplicity and a direct Crown obligation.

New Zealand Government Bonds (NZGBs) are the wholesale benchmark. They are not sold to the public directly; retail investors buy existing lines on the secondary market through a sharebroker, usually from $10,000. Because you buy at market price rather than face value, your return is the yield to maturity, not the coupon printed on the bond.

Kāinga Ora carries an explicit Crown guarantee, so its credit risk is effectively sovereign, but it pays a small margin over an equivalent NZGB. That margin is the reward for slightly thinner liquidity rather than for taking real credit risk.

The Local Government Funding Agency and individual councils such as Auckland Council sit one notch further out. LGFA is jointly guaranteed by its member councils and rated in line with the Crown; council debt is serviced from rates revenue, which is about as predictable as revenue gets.

Kiwi Bonds and NZGBs are direct obligations of the New Zealand Crown, and Kāinga Ora bonds carry an explicit Crown guarantee. In credit terms that is the strongest promise available in New Zealand dollars — the Crown can tax and it issues its own currency.

What is not guaranteed is the price. If you buy a listed government bond and sell it before maturity, you get whatever the market will pay that day. When long-term interest rates rise, the price of an existing fixed-coupon bond falls, and a ten-year bond falls further than a two-year one. Held to maturity you receive face value; sold early you take the market's number.

Council and LGFA bonds are not Crown-guaranteed. They are strong credits, but the guarantee behind them is a pool of councils, not the government.