AUCTION PREVIEW: ACGB Jun-51 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$300mn of the 1.75% 21 June 2051 Bond, issue #TB162. The line was last sold on 2 March 2022 for A$300mn. The sale drew an average yield of 2.6294%, at a high yield of 2.6325% and was covered 2.8167x. There were 64 bidders, 25 of which were successful and 17 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 76.9%.

• An atypical tap (rounding off this week’s barbell issuance strategy), with the potential that AOFM liaison has unearthed some demand in the dealer community for its longest maturity ACGB line.
• The recent trend of auctions and current market vol. suggest that the headline cover ratio may not be on the firmer side of things i.e. sub-2.50x, but firm enough pricing should mean that the auction is digested smoothly.
• One worry may be some speculation surrounding the potential for the imminent syndication of the new ACGB Nov-33, which could detract from demand.
• Meanwhile the curve is flat, in a local sense, with the long end resilient in relative terms, despite the continued cheapening and hawkish re-pricing re: the RBA, which, when coupled with the more attractive outright entry point, should support demand, providing some counter to the above headwinds.
• Results due at 0100BST/1100AEDT.