ACGB Nov-31 Supply Well Received

Today’s ACGB Nov-31 auction saw the weighted average yield price 0.85bp through prevailing mids (per Yieldbroker), while the cover ratio printed at a more than solid 4.48x. This was a firm auction by recent standards. The former was supported by well-known background dynamics (negative RBA-adjusted net supply, international relative value appeal and record levels of excess liquidity in the domestic banking system), while the latter was likely boosted by the fact that this is the final AOFM ACGB auction of calendar ’21. A quick reminder that this line showed up as borrowed via the RBA’s SLF earlier this week (~A$220mn), although this retreated back to A$0 as of Tuesday. A widening collateral shortage may have boosted demand. Elsewhere, the Christmas issuance hiatus will result in a deepening of the negative RBA purchase-adjusted dynamic (see auction preview bullet for more on that). This may have provided another source of demand at the auction.