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AUSSIE BONDS: AUCTION PREVIEW: ACGB Nov-27 Supply Due

AUSSIE BONDS
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The Australian Office of Financial Management (AOFM) will today sell A$700mn of the 2.75% 21 November 2027 Bond, issue #TB148. The line was last sold on 4 November 2024 for A$700mn. The sale drew an average yield of 4.0313%, at a high yield of 4.0325% and was covered 3.5429x. There were 40 bidders, 11 of which were successful, and 5 were allocated in full.

  • This week’s ACGB supply aligns with the recent average weekly issuance of A$1.5bn, including the issuance of A$800mn of the 3.50% 21 December 2034 bond on Wednesday.
  • According to the MYEFO 2024-25 Issuance Program Update from the Australian Office of Financial Management (AOFM), total issuance has been revised to around $95 billion ($46.4 billion has been completed). This includes around $2 billion of Green Treasury Bond tenders ($600 million has been completed). Issuance of Treasury Indexed Bonds is expected to be around $3 billion ($1.7 billion has been completed).
  • Bidding at today’s auction is likely to be influenced by several factors. Several factors are influencing today’s auction. The outright yield is approximately 10bps lower than the previous auction and 30bps below the November 2024 peak.
  • The 3/10 yield curve is slightly steeper compared to the last auction and is near its steepest level since mid-2022.
  • Also on the positive side, market expectations currently fully price a 25bp rate cut by April, with a 105% probability, and a 67% chance of a February cut, based on an effective cash rate of 4.34%.
  • Additionally, the bond’s inclusion in the YM basket is expected to support demand. However, sentiment toward global bonds has deteriorated over recent months, though recent performance has improved following US CPI data. This mixed global sentiment may act as a constraint on the strength of bidding.
  • While firm pricing is anticipated at the auction, the combination of lower outright yields, a steeper yield curve, and ongoing mixed sentiment in the global bond market may temper the overall bidding strength.
  • Results are due at 0000 GMT / 1100AEST.
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The Australian Office of Financial Management (AOFM) will today sell A$700mn of the 2.75% 21 November 2027 Bond, issue #TB148. The line was last sold on 4 November 2024 for A$700mn. The sale drew an average yield of 4.0313%, at a high yield of 4.0325% and was covered 3.5429x. There were 40 bidders, 11 of which were successful, and 5 were allocated in full.

  • This week’s ACGB supply aligns with the recent average weekly issuance of A$1.5bn, including the issuance of A$800mn of the 3.50% 21 December 2034 bond on Wednesday.
  • According to the MYEFO 2024-25 Issuance Program Update from the Australian Office of Financial Management (AOFM), total issuance has been revised to around $95 billion ($46.4 billion has been completed). This includes around $2 billion of Green Treasury Bond tenders ($600 million has been completed). Issuance of Treasury Indexed Bonds is expected to be around $3 billion ($1.7 billion has been completed).
  • Bidding at today’s auction is likely to be influenced by several factors. Several factors are influencing today’s auction. The outright yield is approximately 10bps lower than the previous auction and 30bps below the November 2024 peak.
  • The 3/10 yield curve is slightly steeper compared to the last auction and is near its steepest level since mid-2022.
  • Also on the positive side, market expectations currently fully price a 25bp rate cut by April, with a 105% probability, and a 67% chance of a February cut, based on an effective cash rate of 4.34%.
  • Additionally, the bond’s inclusion in the YM basket is expected to support demand. However, sentiment toward global bonds has deteriorated over recent months, though recent performance has improved following US CPI data. This mixed global sentiment may act as a constraint on the strength of bidding.
  • While firm pricing is anticipated at the auction, the combination of lower outright yields, a steeper yield curve, and ongoing mixed sentiment in the global bond market may temper the overall bidding strength.
  • Results are due at 0000 GMT / 1100AEST.