Kauri Bond

Kauri Bonds are bonds denominated in New Zealand dollars and placed by foreign issuers in New Zealand’s domestic market.

"Kauri" is the name of one of the biggest trees in New Zealand.

The Kauri bond market is a relatively new market in New Zealand. The first issue occurred in 2004. Kauri bonds became popular with issuers and investors who preferred such debt instruments as Eurokiwi and Uridashi bonds, which became increasingly unwanted once the Kauri market was shaped. Similar markets exist almost all over the world: Bulldog (UK), Panda (China), Kangaroo (Australia), just to mention a few.

Issuers prefer Kauri bonds mainly for two reasons, the first is portfolio diversification, the second is the high yield in New Zealand, which in turn attracts investors.

Kauri bond features:

• issuer is not a resident of New Zealand;
• issue currency is the New Zealand dollar;
• placement is regulated by the laws of New Zealand;
• may be freely purchased by non-residents of New Zealand.
• as a rule, this type of bond is Plain vanilla, that is, the most basic version of the bond. Most often, coupons are paid quarterly or semi-annually.

Example: Nederlandse Waterschapsbank, 3.125% 1mar2027, NZD – a social bond issued in March 2022.