AUCTION PREVIEW: ACGB Nov-28 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$500mn of the 2.75% 21 November 2028 Bond, issue #TB152. The line was last sold on 1 October 2021 for A$1.0bn. The sale drew an average yield of 1.1425%, at a high yield of 1.1475% and was covered 5.2980x. There were 53 bidders, 22 of which were successful and 11 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 10.1%.

• Once again, a hard one to gauge in terms of prospects of demand pre-auction. You would expect the combination of recent cheapening and increased geopolitical tensions to underscore demand (with yields back from their recent cycle highs), although the line’s positioning on the curve and RBA’s withdrawal from the market presents a couple of challenges, as does the timing of the auction (Monday), which may mean that the auction isn’t quite as strong as it otherwise would be.
• The line has seen some modest borrowing via the RBA’s SLF, which is an incremental positive for demand at today’s auction.
• Results due at 0000GMT/1100AEDT.