AUCTION PREVIEW: ACGB Apr '25 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$700mn of the 3.25% 21 April 2025 Bond, issue #TB139. The line was last sold on 19 June 2020 for A$2.0bn. The sale drew an average yield of 0.3707%, at a high yield of 0.3725% and was covered 5.0900x. There were 51 bidders, 11 of which were successful and 5 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 47.5%.

• At first glance the small auction size (in addition to a very limited DV01) and rolldown on offer is a positive for the line, however, some background speculation re: RBA ACGB purchase tapering has crept in recent days. While it is the 3-Year yield target component of RBA policy that is central to the rolldown narrative, this chatter still has the potential to dissuade some from bidding as aggressively as they otherwise would have.
• Still, most desks look for firm auction results owing to the two major supportive factors outlined above, while the record levels of surplus cash parked in E/S accounts at the RBA will be looking for a home, which should also support takedown.
• Results due at 0000GMT/1100AEDT.