AUCTION‌ ‌PREVIEW:‌ ‌ACGB Apr '25 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$800mn of the 3.25% 21 April 2025 Bond, issue #TB139. The line was last sold on 22 January 2021 for A$700mn. The sale drew an average yield of 0.2509%, at a high yield of 0.2525% and was covered 7.3857x. There were 37 bidders, 7 of which were successful and 2 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 69.4%.

• Outright yields have consolidated in recent weeks with the ACGB space stabilising away from recent cheaps after the late Feb-early Mar vol., aided by the pullback in U.S. Tsy yields and RBA adjustments re: conditions surrounding shorting 3-Year yield targeting eligible bonds.
• The familiar pattern of excess liquidity in the domestic banking system, attractive relative yield proposition for offshore investors and the RBA's ongoing ACGB purchasing scheme should support demand at tender, as should the more than digestible amount of DV01 on offer.
• It should once again be a case of how far the auction will price through mids, which has become the norm in recent times, given the above factors.
• Results due at 0200BST/1100AEST.