AUCTION PREVIEW: ACGB Jun-35 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$800mn of the 2.75% 21 June 2035 bond, issue #TB145. The line was last sold on 8 March 2023 for A$500mn. The sale drew an average yield of 3.8184%, at a high yield of 3.8200% and was covered 4.5200x. There were 42 bidders, 10 of which were successful and 5 were allocated in full. Amount allotted at the highest yield as a percentage of amount bid at that yield was 58.8%.

• Event risk (headlined by yesterday’s RBA meeting) and the holiday-shortened nature of this week mean that this auction represents the only round of ACGB supply during the current week.
• While the line screens relatively cheaply on a micro-RV basis the impending syndication of a new ACGB Dec-34 (scheduled at some point in the current quarter) and need to build the line “up to size” may mean that this persists.
• Still, the relatively palatable total DV01 on offer this week (A$769K) , recent readjustment in RBA terminal rate view and continued jitters surrounding the global banking sphere should mean that the recent run of firm pricing and comfortable cover extends at today’s ACGB auction, even after the recent richening and with the wider curve operating in a flat manner.
• Results due at 0200BST/1100AEST.