Miserly quake bonds fail to excite investors

ALAN WOOD

Last updated 05:00 25/07/2012

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The investment market has labelled the 2.75 per cent interest rate attached to the Earthquake Kiwi Bonds as "pretty miserable".

Treasury has acknowledged the low interest rate attached to the bonds, saying demand from investors has slackened.

So far around $28 million has been invested in the bonds, which are a drop in the bucket of the total Government needs of $5.5 billion pledged to help quake repairs in Christchurch and Canterbury.

The total cost of the rebuild has been put at $20-$30b.

When the earthquake bonds were first announced at the time of the Government's May 2011 Budget they offered an interest rate of 4 per cent per annum.

Since then the interest rate has changed twice, with the latest change in December 2011 bringing the interest rate for retail investors down to 2.75 per cent, reflecting a fall in wholesale interest rates during that time.

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