AUCTION PREVIEW: ACGB Apr-41 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$500mn of the 2.75% 21 May 2041 Bond, issue #TB156. The line was last sold on 15 February 2021 for A$400mn. The sale drew an average yield of 2.0511%, at a high yield of 2.0575% and was covered 2.8500x. There were 59 bidders, 24 of which were successful and 19 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 53.3%.

• This auction represents the “extra” A$500mn notional ACGB issuance on offer this week (vs. the “normal” A$2.0bn of ACGBs), with the proximity to Friday’s post-Sydney cheapening & the well-documented flattening of the curve set to provide some idiosyncratic headwinds when it comes to today’s supply.
• Still, we expect the auction to pass smoothly enough, even as we move towards the termination of the RBA’s outright ACGB bond purchases (the final scheduled operation will take place on Thursday), given the broader backdrop of ample domestic liquidity and interest on the back of the outright cheapening witnessed in recent weeks.
• Note that the previous auction of the line was some way back, so doesn’t provide much in the way of applicable comparables.
• Results due at 0000GMT/1100AEDT.