The big surge in the Government's borrowing costs predicted following last week's credit rating downgrade has not materialised.
The weekly auction of long-term debt on Thursday was the first major test of the Government's borrowing programme since the 30 September downgrades.
Standard and Poor's lowered New Zealand's rating one notch from AA+ to AA, saying the country's' external debt is set to worsen, while Fitch Ratings downgraded the credit rating by one notch to AA, citing the country's rising debt and persistent and widening current account deficits.
More than $700 million worth of bids were received for $200 million of long-term bonds at the tender on Thursday.
Interest rates rose by an average of 0.1 percentage points - a far cry from the one to two points the Treasury has previously warned of and the Labour and Green parties have predicted.
Labour says a bigger increase is still likely while the Greens say it's an indictment on the Government that its borrowing costs are rising when interest rates on Australian government debt have fallen in the past week.
The interest rate on $400 million of short-term debt earlier in the week also only rose by a modest amount.
Westpac currency strategist Imre Speizer says after an initial move higher following the downgrades, yields on New Zealand Government stock in the secondary market have barely changed.
Mr Speizer says the interest rate on Thursday's issue by the Government was lower than that in the secondary market for the same bonds.
He attributes the lack of a reaction from investors to the relatively large number of downgrades for highly rated governments since the start of the global financial crisis.