AUCTION PREVIEW: ACGB Apr-26 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$500mn of the 4.25% 21 April 2026 Bond, issue #TB142. The line was last sold on 18 March 2022 for A$1.0bn. The sale drew an average yield of 2.0959%, at a high yield of 2.1000% and was covered 2.6000x. There were 34 bidders, 16 of which were successful and 9 were allocated in full. Amount allotted at the highest yield as a percentage of amount bid at that yield was 7.2%.

• The time elapsed since the previous auction means that the previous metrics do not provide much comparable use.
• Yield levels are off cycle highs, but after the recent cheapening should still be high enough to promote smooth takedown.
• There isn’t much in the way out outright micro-RV appeal, although the fact that it has been the best part of a year since the bond was tapped should boost demand. Nearly A$1.4bn of the line is currently borrowed via the RBA’s SLF, which adds to this theme, pointing to clear demand for access to the line.
• The flatness of the wider curve is also a positive for demand, although the recent hawkish reassessment of the outlook for the RBA provides some counter on that front.
• Results due at 0000GMT/1100AEDT.