AUCTION PREVIEW: A Lighter Supply Schedule May Support Demand

The Australian Office of Financial Management (AOFM) will today sell A$2.0bn of the 1.00% 21 December 2030 Bond, issue #TB160. The line was last sold on 19 August 2020 for A$1.7bn. The sale drew an average yield of 0.9116%, at a high yield of 0.9125% and was covered 4.6941x. There were 45 bidders, 11 of which were successful and 3 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 95.7%.

• The relatively limited amount of ACGBs on offer from the AOFM this week (likely facilitated by last week's mammoth ACGB '26 syndication) coupled with speculation surrounding further loosening from the RBA will likely support demand at today's auction. The carry and roll narrative remains attractive, with offshore investors still keen to hoover up ACGBs. The 2-week break in 10-Year issuance that has been observed should lend further support to the auction, with the one particularly weak tap of the line in its short history discounted as a one-off by most. The fact that so much of the FY issuance task has already been completed, coupled with the prospect of further RBA easing has allowed EFPs to move off of tights, with bonds outperforming swap in recent times.
• Results due at 0200BST/1100AEST.