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AUCTION PREVIEW: ACGB Nov-24 Supply Due

AUSSIE BONDS

The Australian Office of Financial Management (AOFM) will today sell A$700mn of the 0.25% 21 November 2024 Bond, issue #TB159. The line was last sold on 25 Mar 2022 for A$1.0bn. The sale drew an average yield of 2.0318%, at a high yield of 2.0325% and was covered 3.9900x. There were 30 bidders, 8 of which were successful and 3 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 43.6%.

  • The recent stabilsaiton away from outright cycle cheaps will likely foster smooth enough digestion at today’s auction.
  • Note that market pricing surrounding RBA rate hike expectations has pared back from extremes, but still looks a little aggressive. Still, the 3-/10-Year yield spread has received little in the way of steepener interest owing to the ongoing RBA tightening cycle and worry surrounding recession in the U.S. & Europe.
  • A reminder that the RBA’s YCC scheme distorts the relative value perceptions surrounding the line, with most desks suggesting the line looks fair vs. surrounding bonds.
  • Also note that the digestible DV01 on offer and the fact that A$2.212bn of the line is on loan via the RBA’s SLF (roughly 3x the size of today’s auction), indicating demand for access to the line, should support takedown.
  • Results due at 0200BST/1100AEST.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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