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What are the main types of bonds?

Last Updated: 07 Jul 2016

New Zealand Government bonds - The most actively traded (and the most liquid) bonds in New Zealand. The payment of the interest and the repayment of capital are guaranteed by the Government, making it the most secure form of investment in New Zealand.

Corporate bonds - Companies issue bonds to raise funds at fixed interest rates. The benefits of investing in corporate bonds include higher yield (dependent on security) over Government bonds, a degree of liquidity and a variety of investment terms and maturities.

Capital notes - Companies issue capital notes to raise funds at fixed interest rates to fund company liabilities. Capital notes are generally more risky than Government or corporate bonds, but the benefits include a much higher yield over Government bonds, some liquidity as most capital notes are listed on the New Zealand Stock Exchange, and a variety of investment terms and maturities.

Local authority bonds – Investors may be able to buy bonds in some of the larger councils, such as Auckland, Christchurch and Dunedin, although in Christchurch and Dunedin the minimum investment is $100,000. Smaller councils may also issue bonds from time to time.

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