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AUCTION PREVIEW: ACGB Jun-35 Supply Due

AUSSIE BONDS
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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 19 June 2024 for A$800mn. The sale drew an average yield of 4.1816%, at a high yield of 4.1775% and was covered 2.2125x. There were 28 bidders, 17 of which were successful and 13 were allocated in full. The amount allotted at the highest yield as a percentage of the bid at that yield was 64.7%.

  • This week's ACGB supply is around the recent average weekly issuance range, with A$700mn of the 4.75% 21 April 2027 bond due to be issued on Friday.
  • According to the June 2024 Issuance Program Update, the AOFM plans to: conduct 2 Treasury Bond tenders most weeks; and hold 1-2 Treasury Indexed Bond tenders each month. Issuance of Treasury Bonds in 2024-25 is expected to be around $90 billion. Around $2 billion will consist of Green Treasury Bond tenders.
  • The current outright yield for this line is around 5bps lower than the level observed at the 19 June auction and approximately 90bps lower than the cycle high of 5.01% set in early November. This could work to limit the bid at today's auction.
  • However, on the flip side, it is essential to acknowledge that sentiment towards longer-dated global bonds has turned more positive over recent weeks, exemplified by the US tsy 10-year yield sitting some 80bps below its April peak.
  • Additionally, the 3/10 cash curve has steepened by 5-10bps since the mid-June auction. In late June, the curve hit its flattest level since September last year.
  • It's also worth noting that the Jun-35 line is included in the XM basket.
  • Results are due at 0200 BST / 1100AEST.
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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 19 June 2024 for A$800mn. The sale drew an average yield of 4.1816%, at a high yield of 4.1775% and was covered 2.2125x. There were 28 bidders, 17 of which were successful and 13 were allocated in full. The amount allotted at the highest yield as a percentage of the bid at that yield was 64.7%.

  • This week's ACGB supply is around the recent average weekly issuance range, with A$700mn of the 4.75% 21 April 2027 bond due to be issued on Friday.
  • According to the June 2024 Issuance Program Update, the AOFM plans to: conduct 2 Treasury Bond tenders most weeks; and hold 1-2 Treasury Indexed Bond tenders each month. Issuance of Treasury Bonds in 2024-25 is expected to be around $90 billion. Around $2 billion will consist of Green Treasury Bond tenders.
  • The current outright yield for this line is around 5bps lower than the level observed at the 19 June auction and approximately 90bps lower than the cycle high of 5.01% set in early November. This could work to limit the bid at today's auction.
  • However, on the flip side, it is essential to acknowledge that sentiment towards longer-dated global bonds has turned more positive over recent weeks, exemplified by the US tsy 10-year yield sitting some 80bps below its April peak.
  • Additionally, the 3/10 cash curve has steepened by 5-10bps since the mid-June auction. In late June, the curve hit its flattest level since September last year.
  • It's also worth noting that the Jun-35 line is included in the XM basket.
  • Results are due at 0200 BST / 1100AEST.