The Reserve bank is currently conducting a full review of their market liquidity management procedures and policies. Last year, in response to the initial sub prime precipitated credit crisis in August, the RBNZ approved additional securities for REPO ' ing which included supranational foreign issuers (Kauri issues) and, as a temporary market stop-gap, Bank Bills.

APRM have been actively lobbying the RBNZ to include Local Government debt securities as well (CP, fixed rate bonds and FRN ' s) This is on the basis that they currently risk-weight all Local Government debt, secured by way of a charge over rates, at 20% for the bank's capital adequacy weighting calculations. APRM believes that adding these securities not only reduces the RBNZ ' s credit risk concentration away from Australian and international banks, but it is also a "shot in the arm" for the local debt/capital markets. The move to include Local Government debt securities would be good for New Zealand investors (retail and wholesale) and positive for local government funding costs as well.

With the New Zealand Government not issuing any net new Government bonds (only issuing to replace maturing bonds) and the secondary bond market barely trading, the local debt market needs a new high quality alternative. Local Government debt securities are well set to fulfill a market benchmark role alongside the bank swaps market.