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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 7 August 2024 for A$800mn. The sale drew an average yield of 4.1218%, at a high yield of 4.125% and was covered 3.3813x. There were 36 bidders, 15 of which were successful and 11 were allocated in full. The amount allotted at the highest yield as a percentage of the bid at that yield was 75.8%.

  • This week's ACGB supply is at the recent average weekly issuance range, with A$700mn of the 2.75% 21 November 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 to 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 10bps lower than the level observed at the August auction and approximately 100bps lower than the cycle high of 5.01% set in early November. This could work to limit the bid at today's auction.
  • However, sentiment towards longer-dated global bonds remains favourable, as evidenced by the US 10-year Treasury yield, which is still about 100bps below its April peak.
  • Additionally, the 3s/10s cash curve has steepened by roughly 5bps since the early August auction, nearing its steepest point this year.
  • It's also important to note that the Jun-35 line is part of the XM basket, which may provide some support.
  • 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 7 August 2024 for A$800mn. The sale drew an average yield of 4.1218%, at a high yield of 4.125% and was covered 3.3813x. There were 36 bidders, 15 of which were successful and 11 were allocated in full. The amount allotted at the highest yield as a percentage of the bid at that yield was 75.8%.

  • This week's ACGB supply is at the recent average weekly issuance range, with A$700mn of the 2.75% 21 November 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 to 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 10bps lower than the level observed at the August auction and approximately 100bps lower than the cycle high of 5.01% set in early November. This could work to limit the bid at today's auction.
  • However, sentiment towards longer-dated global bonds remains favourable, as evidenced by the US 10-year Treasury yield, which is still about 100bps below its April peak.
  • Additionally, the 3s/10s cash curve has steepened by roughly 5bps since the early August auction, nearing its steepest point this year.
  • It's also important to note that the Jun-35 line is part of the XM basket, which may provide some support.
  • Results are due at 0200 BST / 1100AEST.