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 17 February 2023 for A$500mn. The sale drew an average yield of 3.4550%, at a high yield of 3.4600% and was covered 4.2200x. There were 35 bidders, 11 of which were successful and 6 were allocated in full. Amount allotted at the highest yield as a percentage of amount bid at that yield was 6.6%.

• The recent outright richening shouldn’t be too much of a deterrent when it comes to demand at today’s auction, with the RBA openly considering a pause in its hiking cycle at its April meeting and worry re: the global banking system still evident (albeit back from extremes).
• The DV01 on offer (A$149K) is also more than palatable.
• The flatness of the wider curve is a positive for demand at today’s auction, as is the line’s hedgability owing to its inclusion in the YM futures basket, as well as its 3-Year benchmark status.
• The coupon that the line offers is much more sizable than that which is received via the nearby ACGB Nov-25 (0.25%) & Sep-26 (0.50%).
• Expect another well-received round of ACGB supply.
• Results due at 0000GMT/1100AEDT.