AUCTION‌ ‌PREVIEW:‌ ACGB Jun '31 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$1.0bn of the 1.50% 21 June 2031 Bond, issue #TB157. The line was last sold on 18 August 2021 for A$800mn. The sale drew an average yield of 1.0895%, at a high yield of 1.0900% and was covered 3.5938x. There were 45 bidders, 14 of which were successful and 5 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 70.0%.

• The Tsy-driven cheapening and steepening in play today obviously presents a more attractive entry point for prospective bidders, which will build on the well-defined supportive measures evident at ACGB auctions in recent times (record domestic liquidity, international relative value appeal and negative RBA purchase-adjusted net supply).
• The question re: the ultimate strength of the auction will be whether or not the cheapening witnessed deters aggressive bidding. The previously outlined supportive factors and the fact that the yield on the line hovers around multi-month highs should result in the smooth passage of supply.
• Results due at 0200BST/1100AEST.