AUCTION PREVIEW: ACGB Apr-33 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$700mn of the 4.50% 21 April 2033 Bond, issue #TB140. The line was last sold on 21 September 2022 for A$800mn. The sale drew an average yield of 3.7270%, at a high yield of 3.7300% and was covered 2.4562x. There were 39 bidders, 23 of which were successful and 15 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 27.8%.

• The recent stabilisation in global core FI markets should promote more assurance in bidding at ACGB auctions, even with outright yields a little less attractive.
• Still, the flatness of the curve and ongoing uncertainty re: the RBA’s terminal rate provide some impediments to demand.
• In micro-RV terms, the line looks relatively fair vs. surrounding tenors.
• All in, we expect smooth digestion, also aided by the fact that the AOFM is edging towards its Christmas & new year issuance break.
• Results due at 0000GMT/1100AEDT.