AUCTION PREVIEW: ACGB Apr-26 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$1.0bn of the 4.25% 21 April 2026 Bond, issue #TB142. The line was last sold on 15 October 2021 for A$1.0bn. The sale drew an average yield of 0.8669%, at a high yield of 0.8675% and was covered 7.5200x. There were 46 bidders, 9 of which were successful and 2 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 60.7%.

• The positioning in the belly of the curve leaves the space susceptible to swings in RBA market pricing, which puts the bond at risk if the RBA does move more quickly when it comes to lift off and subsequent hikes (to a degree, although already aggressive market pricing provides some buffer). Still, the limited duration on offer, existing cheapness in the belly of the curve and some light borrowing interest via the RBA’s SLF (A$452mn at last count) should facilitate a smooth auction. Market vol. could limit the cover, but to the detriment of the auction, given the aforementioned factors. Expected another comfortable through mid round of pricing.
• Results due at 0000GMT/1100AEDT.