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The Australian Office of Financial Management (AOFM) will today sell A$1.5bn of the 0.25% 21 November 2024 Bond, issue #TB159. The line was last sold on 19 November 2021 for A$1.0bn. The sale drew an average yield of 0.9588%, at a high yield of 0.9600% and was covered 4.7400x. There were 37 bidders, 7 of which were successful and 3 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 93.5%.
- The elevated level of borrowing of the line via the RBA’s SLF facility (A$1.839bn) points to the potential for strong pricing at the auction, particularly when we look to the results of Friday’s ACGB Apr-24 supply (which was less heavily borrowed but provided the first tap of the line since ~ Jun ‘20, with the AOFM returning to market to rebuild liquidity after the end of the RBA’s YCT scheme).
- Outright yields sit the best part of ~40bp shy of the recent peak, although still provide a ~65bp pickup vs. levels seen in mid-September.
- ~25bp of steepness in the ACGB Apr-24/Nov-24 yield spread provides a decent pickup, especially for those of a more dovish disposition vs. the broader market view when it comes to the RBA hiking cycle.
- More broadly, AOFM auction cover ratios have generally softened in recent weeks, with impaired market liquidity and global central bank uncertainty at the fore. Nonetheless, the trifecta of international relative appeal, record excess liquidity levels in the domestic banking system and negative RBA-purchase adjusted net supply continue to facilitate the smooth takedown at auction.
- Results due at 0000GMT/1100AEDT.