AUCTION‌ ‌PREVIEW:‌ ACGB Nov '25 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$700mn of the 0.25% 21 November 2025 Bond, issue #TB161. The line was last sold on 16 July 2021 for A$700mn. The sale drew an average yield of 0.5080%, at a high yield of 0.5100% and was covered 6.5743x. There were 47 bidders, 8 of which were successful and 4 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 67.8%.

• The recent trend of solid ACGB tenders is expected to continue, given the level of excess liquidity evident in the domestic banking system, international appeal of ACGBs, continued RBA-adjusted negative net supply (at least for now) and a more than digestible DV01/auction size.
• This area of the curve is particularly susceptible to view changes re: the RBA, which means that this auction could draw support from the recent COVID developments in Australia, although the RBA's choice to not walk back its tapering announcement could be an incremental negative.
• This is the shortest ACGB line that is still regularly tendered by the AOFM.
• Outright yields have edged away from multi-month richest levels in recent sessions.
• In terms of relative valuation, the belly has seen some modest cheapening vs. say 2s & 10s in recent days after the RBA chose not to delay its tapering move (scheduled for early to mid-September) after richening vs. the wings of such fly structures from mid-June.
• Results due at 0200BST/1100AEST.