The Kauri is New Zealand's mightiest tree, but it takes a long time to reach its full potential. So it is with the Kauri bond market, which emerged with debut issues by Merrill Lynch and Telstra Corporation in 2004, followed by only stuttering growth. However, the pace has begun to pick up in 2006 and 2007, both in terms of the number and size of issues, and the interest by international issuers in readying their programmes for Kauri issuance.

Kauri characteristics

A Kauri is a bond denominated in New Zealand dollars issued by an offshore entity. Distinguishing Kauri bonds from their purely offshore counterparts (Global Kiwis, Uridashi bonds and Eurokiwis) is that they can be settled both domestically and offshore. They are cousins of the Australian Kangaroo and Canadian Maple bond markets.

Kauri bonds are issued either off Euro medium-term note (EMTN) programmes or Australian medium-term...