AUCTION PREVIEW: ACGB May '32 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$1.0bn of the 1.25% 21 May 2032 Bond, issue #TB158. The line was last sold on 24 March 2021 for A$1.2bn. The sale drew an average yield of 1.7834%, at a high yield of 1.7850% and was covered 4.2167x. There were 47 bidders, 20 of which were successful and 11 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 76.5%.

• The well-trodden themes of yield pickup in the international arena and record levels of excess liquidity will continue to support demand at AOFM auctions, at least in the short-term, with the steepness of the curve and relative recent resilience of the space adding further reasons for solid demand at today's auction.
• Inclusion in the XMM1 & XMU1 baskets also boosts the hedgability of the line, which is an incremental demand positive.
• From a relative value perspective, the 5-/10-/15-Year butterfly trades around the middle of the range largely in play since the turn of the calendar year, with 10-Year swap spreads hovering around the widest levels seen since early to mid-March.
• Results due at 0200BST/1100AEST.