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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 11 October 2023 for A$800bn. The sale drew an average yield of 3.9644%, at a high yield of 3.9600% and was covered 3.0187x. There were 42 bidders, 17 of which were successful, and 11 were allocated in full.

  • This week's ACGB supply is around the recent average weekly issuance range, including Monday’s sale of A$300 million of the 1.75% 21 June 2051 bond and Wednesday’s sale of A$500 million of the 3.00% 21 November 2033 bond.
  • According to the June 2024 Issuance Program Update, the AOFM plans to: issue a new December 2035 Treasury Bond by 30 September 2024 (by syndication and subject to market conditions); conduct 2 Treasury Bond tenders most weeks; and hold 1-2 Treasury Indexed Bond tenders each month. Issuance of Treasury Bonds in 2024-25 is expected to be around $90 billion. Around $2 billion will consist of Green Treasury Bond tenders.
  • Bidding at today’s auction is likely to be influenced by several factors. The outright yield is around the same level as the mid-October auction but remains around 45bps lower than the November high.
  • The 3/10 yield curve is about 25bps flatter than in mid-October and close to its flattest level since August last year.
  • The line’s inclusion in the YM basket and improved sentiment towards global bonds should be supportive.
  • On the negative side, the RBA’s relatively hawkish stance at the June meeting and May’s higher-than-expected CPI may negatively impact demand. RBA-dated OIS indicates a cumulative 45% chance of a 25bp hike by September.
  • While there is an expectation for continued firm pricing at auctions, the above factors could constrain the overall strength of bidding.
  • Results are due at 0200 BST / 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 11 October 2023 for A$800bn. The sale drew an average yield of 3.9644%, at a high yield of 3.9600% and was covered 3.0187x. There were 42 bidders, 17 of which were successful, and 11 were allocated in full.

  • This week's ACGB supply is around the recent average weekly issuance range, including Monday’s sale of A$300 million of the 1.75% 21 June 2051 bond and Wednesday’s sale of A$500 million of the 3.00% 21 November 2033 bond.
  • According to the June 2024 Issuance Program Update, the AOFM plans to: issue a new December 2035 Treasury Bond by 30 September 2024 (by syndication and subject to market conditions); conduct 2 Treasury Bond tenders most weeks; and hold 1-2 Treasury Indexed Bond tenders each month. Issuance of Treasury Bonds in 2024-25 is expected to be around $90 billion. Around $2 billion will consist of Green Treasury Bond tenders.
  • Bidding at today’s auction is likely to be influenced by several factors. The outright yield is around the same level as the mid-October auction but remains around 45bps lower than the November high.
  • The 3/10 yield curve is about 25bps flatter than in mid-October and close to its flattest level since August last year.
  • The line’s inclusion in the YM basket and improved sentiment towards global bonds should be supportive.
  • On the negative side, the RBA’s relatively hawkish stance at the June meeting and May’s higher-than-expected CPI may negatively impact demand. RBA-dated OIS indicates a cumulative 45% chance of a 25bp hike by September.
  • While there is an expectation for continued firm pricing at auctions, the above factors could constrain the overall strength of bidding.
  • Results are due at 0200 BST / 1100AEST.