AUCTION PREVIEW: ACGB Apr-24 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$1.0bn of the 0.25% 21 November 2024 Bond, issue #TB159. The line was last sold on 25 October 2021 for A$1.0bn. The sale drew an average yield of 0.7229%, at a high yield of 0.7250% and was covered 6.6150x. There were 40 bidders, 15 of which were successful and 6 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 40.0%.

• Outright yields are a touch (~9bp) shy of the YtD peak printed back in late October.
• In the background, the well-documented supportive trifecta of record levels of surplus liquidity in the banking system, international appeal and the negative RBA purchase-adjusted net supply dynamic should provide smooth enough underwriting.
• The elevated level of borrowing of this line via the RBA's SLF points to solid demand at auction, even with the anchor point of the RBA's now defunct YCT measure cast off. Those that believe that the market is pricing too aggressive a path when it comes RBA hikes may also look to pick up some inventory at today's auction, especially with the ACGB Apr-24/Nov-24 spread sitting around the 30bp mark (granted it was much steeper when the market was challenging the RBA's YCT in late October).
• Results due at 0000GMT/1100AEDT.