AUCTION PREVIEW: ACGB May-28 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$500mn of the 2.25% 21 May 2028, issue #TB149. The line was last sold on 18 May 2020 for A$1.0bn. The sale drew an average yield of 0.7711%, at a high yield of 0.7725% and was covered 3.9600x. There were 42 bidders, 14 of which were successful and 8 were allocated in full. Amount allotted at the highest yield as a percentage of amount bid at that yield was 27.6%.

• As noted above, this is the first tap of the line since May 2020, which makes the previous auction metrics pretty much redundant from a comparables standpoint.
• The time since the prior tap and restricted free float (given RBA holdings), as well as the limited total outstanding value vs. surrounding lines, has seemingly resulted in the AOFM deciding to tap the line.
• The yield on offer and the above free float dynamics should result in smooth enough digestion of the line, even with a lack of meaningful micro-RV and wider relative value appeal evident.
• Results due at 0000GMT/1100AEDT.