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 21 October 2022 for A$700mn. The sale drew an average yield of 3.6070%, at a high yield of 3.6100% and was covered 3.8500x. There were 46 bidders, 13 of which were successful and 8 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 40.7%.

• The more than palatable DV01 on offer at today’s auction (A$160K), coupled with the stabilisation away from cycle cheaps in recent weeks, should result in smooth takedown of the auction, even with less of an outright yield attraction evident vs. a few short weeks ago.
• The flatness of the curve and a moderation in RBA tightening expectations should also help takedown.
• The line is the second most borrowed bond in the RBA’s SLF at present, providing evidence of demand for access to the bond, which should support takedown further.
• Note that the line is no longer the benchmark 3-Year bond and will fall out of the YM futures basket on the roll into the H3 contract.
• All in all, we expect smooth takedown.
• Results due at 0000GMT/1100AEDT.