Interest in local government bonds increasing

Speaking at yesterday's Meet the Managers forum in Auckland hosted by Heathcote Investment Partners, McEntee said both the demand for and the supply of bonds issued by local government entities is likely to increase significantly in the next few years.

He said local government bonds are an attractive investment because they offer higher returns than central government bonds (Forsyth Barr's local government bond fund is returning about 7.5%) but are relatively risk-free.

There has been no history of local government debt defaults in New Zealand, McEntee said.

"I looked for ages for a default and I couldn't find any so eventually I gave up, I think there was one in Thames during the Great Depression and Waiheke got into a bit of trouble during the 70s so it merged with the Auckland City Council."