Interest in corporate debt reigniting

Economists have pared back their expectations for central bank Governor Alan Bollard's tightening track  this has reignited interest in corporate debt, with a flurry of small issuance in recent weeks, including Goodman Property Trust's private placement, Greenstone Energy, TrustPower, and Manukau City Council.

"There's an acceptance that the Reserve Bank looks to be on hold, and corporate bond deals are offering some value," he said. "With risk off, more investors are looking at income assets."

Debt issuance is way down in 2010, based on securities that trade on the NZX, with some $1.2 billion raised in the year through August, compared to $3.02 billion a year earlier, when interest rates were at record-low levels.

Hassell said corporate debt was looking more attractive than government debt, even with companies already tidying up their books in response to the global financial crisis, while many sovereigns were still in the process of doing so.