AUCTION PREVIEW: ACGB Nov-24 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$1.0bn of the 0.25% 21 November 2024 Bond, issue #TB159. The line was last sold on 6 December 2021 for A$1.5bn. The sale drew an average yield of 0.8779%, at a high yield of 0.8825% and was covered 3.3633x. There were 40 bidders, 14 of which were successful and 8 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 52.7%.

• The overnight Fed/U.S. CPI-induced market volatility and cessation of the RBA’s bond buying scheme present obvious risks to today’s issuance, although ACGBs have seemingly stabilised in early Sydney dealing. It is hard to assess the potential for demand at auction in these circumstances, even with outright yields surging to the highest levels observed since early ’19 (with this level of cheapening likely providing a bit of demand for this area of the curve early on in Sydney trade).
• The 3-/10-Year yield spread has flattened to ~50bp, in recent weeks, levels not witnessed since the COVID induced vol. of ’20.
• Results due at 0000GMT/1100AEDT.