Toshin fund launch, uridashis may underpin kiwi dollar vs yen

Monday 20th July 2009

The New Zealand dollar may find favour among Japanese retail investors as a so-called Toshin prepares to invest the equivalent of NZ$50 billion this week, with some likely denominated in the kiwi, helping offset a surge in uridashi and eurokiwi maturities this month.

The yield advantage in New Zealand will probably see the so-called Japanese housewives support the kiwi dollar, said Sue Trinh, senior currency strategist at RBC Capital Markets in Sydney. That may help counter the impact of some $4.7 billion worth of uridashi and eurokiwi bonds maturing in July.

“Toshin fund investment trusts for retail investors and uridashis are in the pipeline and should underpin the kiwi versus the yen this week,” Trinh said.

The yield on New Zealand two-year government bonds gained 3 basis points to 3.81%, while Japanese securities of the same length were unchanged at 0.26%. The kiwi has gained 0.9% to 61.23 yen in trading today.

Adding further support to the yen cross is the upcoming issuance of a $200.5 million uridashi bond by Toyota Motor Credit Corp. on July 29. TMCC is planning to issue up to one trillion yen worth of the debt over the next two years, with the New Zealand and Australia currencies likely to be the major beneficiaries.

After Toyota’s last shelf registration, where it earmarked future investment opportunities, it sold $7.3 billion and A$5.6 billion worth of uridashi bonds.

Rabobank Nederland NV is also following up its $419 million uridashi in June with an as-yet-unspecified amount tagged for Aug. 17, according to Reuters.

Investors have rolled over about 26% of their funds in eurokiwi bonds and 40% of uridashi bonds in the past six months, according to Danica Hampton, currency strategist at Bank of New Zealand.

“After the minimal disruption caused by last week’s concentration of eurokiwi maturities it seems the majority of investors are happy to maintain at least some of their exposure to New Zealand at this stage,” Hampton said. “We’ll watch for further developments in these markets as we eye the end of month concentration of maturities.”

Philip Borkin, economist at ANZ National Bank, said it appears as though European and Japanese retail investors have turned to other New Zealand assets on the maturity of their eurokiwi and uridashi bonds.

Businesswire.co.nz

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