NZU update

Posted: 03 Oct 2022

NZUs finished up last week on Carbon Match around $79, some $6.50 lower than the Q3 auction clearing price of $85.40.

Many have asked, why has the NZU price gone down? We can only note a confluence of factors:

The holding costs are way up from a few months ago on the back of interest rate hikes. For reference, in August 2021, the OCR was 0.25%. In August 2022, the OCR was up to 3%. In general, as cost of funding rises, the appetite to sit on units weakens. Last year, in a lower interest rate, but generally strengthening carbon price, environment we saw land owners happy to debt fund new opportunities. Now, selling NZUs might have more appeal, if that's an option.