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AUCTION PREVIEW: ACGB Apr-33 Supply Due

AUSSIE BONDS

The Australian Office of Financial Management (AOFM) will today sell A$700mn of the 2.75% 21 November 2028 Bond, issue #TB152. The line was last sold on 14 February 2022 for A$500mn. The sale drew an average yield of 1.9903%, at a high yield of 1.9925% and was covered 3.1100x. There were 41 bidders, 19 of which were successful, and 12 were allocated in full. The amount allotted at the highest yield as a percentage of the amount bid at that yield was 40.3%.

  • This bond is infrequently tapped, which means that the previous auction results won’t offer much in the way of comparable inference.
  • The recent uptick in outright yields should result in a baseline level of demand, although ongoing market volatility and the hiatus of most international investors re: ACGBs will likely limit the cover ratio.
  • The bond looks relatively fairly valued in a micro-RV sense.
  • The recent cheapening has pulled this belly of the curve away from YtD richest levels against on fly structures vs. 2s and 10s, but it still doesn’t offer much in the way of compelling value at current levels.
  • All in, we expect smooth enough digestion of the auction, although don’t expect anything in the way of overwhelming demand, given the above headwinds.
  • Results are due at 0200BST/1100AEST.
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The Australian Office of Financial Management (AOFM) will today sell A$700mn of the 2.75% 21 November 2028 Bond, issue #TB152. The line was last sold on 14 February 2022 for A$500mn. The sale drew an average yield of 1.9903%, at a high yield of 1.9925% and was covered 3.1100x. There were 41 bidders, 19 of which were successful, and 12 were allocated in full. The amount allotted at the highest yield as a percentage of the amount bid at that yield was 40.3%.

  • This bond is infrequently tapped, which means that the previous auction results won’t offer much in the way of comparable inference.
  • The recent uptick in outright yields should result in a baseline level of demand, although ongoing market volatility and the hiatus of most international investors re: ACGBs will likely limit the cover ratio.
  • The bond looks relatively fairly valued in a micro-RV sense.
  • The recent cheapening has pulled this belly of the curve away from YtD richest levels against on fly structures vs. 2s and 10s, but it still doesn’t offer much in the way of compelling value at current levels.
  • All in, we expect smooth enough digestion of the auction, although don’t expect anything in the way of overwhelming demand, given the above headwinds.
  • Results are due at 0200BST/1100AEST.