AUCTION PREVIEW: ACGB Mar-47 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$300mn of the 3.00% 21 Mar 2047 Bond, issue #TB150. The line was last sold on 2 Dec 2019 for A$300mn. The sale drew an average yield of 1.6494%, at a high yield of 1.6575% and was covered 2.0900x. There were 40 bidders, 16 of which were successful 13 were allocated in full. The amount allotted at the highest yield as a percentage of the amount bid at that yield was 28.6%.

• Modest inversion in the ACGB Mar-47/Jun-51 spread (although that will be aided by the 30-Year benchmark status of the Jun-51 line, at least in part) should promote solid enough takedown when it comes to today’s auction, with micro value and broader stabilisation off of cycle cheaps set to promote demand.
• Also note that the inversion of that particular micro spread has pulled back from extremes since the auction of ACGB Jun-51 at the tail end of June. Looking at wider curve measures, the 5-/30-Year ACGB yield spread has moved back towards its own cycle flats after finding a bit of a base in mid-June.
• The DV01 of ~A$458K is easily digestible, although the Monday timing of the auction may be an incremental negative given the fact that the auction will take place at the most illiquid time of the week.
• Note that the low frequency of issuance of the line means that the previous auction results don’t provide much, if any, meaningful comparable information.
• Results are due at 0200BST/1100AEST.