AUCTION PREVIEW: ACGB Apr-25 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$1.0bn of the 3.25% 21 April 2025 Bond, issue #TB139. The line was last sold on 18 February 2022 for A$1.0bn. The sale drew an average yield of 1.5843%, at a high yield of 1.5850% and was covered 5.5050x. There were 46 bidders, 17 of which were successful and 6 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 50.7%.

• The digestible DV01 on offer (A$277K) coupled with the recent stabilisation of core global FI markets (which is bolstered by the attractive carry and roll of the line) and hedgability of the line via YM futures should result in smooth digestion of the auction, at a minimum. Anyone looking to implement 3-/10-Year steepener positions may also look to establish a long leg via the auction, although the fresh RBA tightening cycle may limit demand on this front.
• Short covering may also support bidding, with plenty of demand for access to the line evident in the RBA’s SLF (~A$3.6bn lent out at the last count). This provides some bias towards a stronger than average auction when it comes to our assessment.