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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessACGB May-32 Supply Due
The Australian Office of Financial Management (AOFM) will today sell A$1.5bn of the 1.25% 21 May 2032 Bond, issue #TB158. The line was last sold on 13 October 2021 for A$1.0bn. The sale drew an average yield of 1.7305%, at a high yield of 1.7325% and was covered 5.9000x. There were 48 bidders, 18 of which were successful and 10 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 27.9%.
- There is a A$500mn uptick in ACGB issuance this week (A$2.5bn notional on offer vs. the typical A$2.0bn seen in recent weeks/months). There are several potential explainers for this move (although they would require more space than we have here to discuss thoroughly); lockdown-related cash flow dynamics have resulted in the need for a little more cash, the need to offer a little more of ACGB May-32 to keep the free float/liquidity at an acceptable level, potential adjustments to the issuance profile which could result in a borrow more now to cut issuance back vs. projections later in the FY, or to adjust for the recent ACGB borrowing from the AOFM & RBA (which could suggest that Friday's ACGB Nov-24 auction is the driver behind the uptick in weekly issuance).
- The recent cheapening of the ACGB space has been followed by a little more market stability in recent sessions, which should help facilitate takedown at today's auction.
- While the line isn't a benchmark 10-Year (it's a little longer), we note that the 5-/10-/15-Year butterfly has moved away from its recent trough, but still operates far closer to the bottom of the range witnessed since the Mar '20 vol. than the top i.e. 10s operate towards the richer end of the recent range on that structure.
- Hedgability of the line via XM futures, the trifecta of record levels of excess liquidity, negative RBA purchase-adjusted net supply and international relative value, as well as the continued outperformance of bonds vs. swaps should underscore demand (even though 10-Year swap spreads have moved to the highest level seen since '19).
- Results due at 0100GMT/1100AEDT.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.