AUCTION PREVIEW: ACGB Apr-33 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$1.5bn of the 4.50% 21 April 2033 Bond, issue #TB140. The line was last sold on 17 September 2021 for A$1.5bn. The sale drew an average yield of 1.3394%, at a high yield of 1.3425% and was covered 3.8760x. There were 46 bidders, 20 of which were successful and 10 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 8.1%.

• The recent volatility/cheapening may constrain dealers a little, limiting the overall strength of the auction. However, the combination of the recent cheapening of ACGBs vs. U.S. Tsys, the line's inclusion in the XMH2 basket, domestic banking liquidity levels and the negative RBA-purchase adjusted net supply dynamic will likely result in a smooth enough auction.
• The relatively high coupon will also bolster demand, which should offset some of the DV01 on offer (note that current bond pricing takes the cash that is due to be raised closed to the AOFM's A$2bn/week "norm").
• Results due at 0100BST/1100AEDT.