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 7 March 2022 for A$1.0bn. The sale drew an average yield of 1.4148%, at a high yield of 1.4175% and was covered 4.8370x. There were 45 bidders, 13 of which were successful and 8 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 34.5%.

• Even with wider RBA SLF usage pulling back from the recent extremes (although remaining elevated in a historical sense) demand for access to the line via the facility remains elevated (the reasoning behind this is very well documented, namely RBA QE), with over A$3.7bn lent out at the last count. That, coupled with the hedgability of the line owing to YMM2 basket inclusion bodes well for takedown this time out, and should mean that pricing of the auction comes in at the firmer end of the spectrum.
• Meanwhile, market pricing of the RBA hiking cycle remains aggressive, which could mean that those of a more dovish disposition see some value in today’s auction, with the line operating around cycle cheaps.
• Results due at 0000GMT/1100AEDT.