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AUCTION PREVIEW: ACGB Nov-28 Supply Due

AUSSIE BONDS

The Australian Office of Financial Management (AOFM) will today sell A$1.0bn of the 2.75% 21 November 2028. The line was last sold on 23 August 2024 for A$700mn. The sale drew an average yield of 3.5510%, at a high yield of 3.5525% and was covered 4.2286x. There were 48 bidders, 16 of which were successful and 8 were allocated in full.

  • This week's ACGB supply is consistent with the recent average weekly issuance when Wednesday’s sale of A$500mn of 3.25% 21 June 2039 is included.
  • According to the June 2024 Issuance Program Update, the AOFM plans to 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.
  • The previous offering of the Nov-28 line saw the weighted average yield print 0.75bp through prevailing mids, with the cover ratio remaining above 4.0x.
  • For today’s auction, the Nov-28 bond's yield has rebounded from the lower end of its 12-month trading range, now standing 20-25bps higher than at the late August auction. However, it remains roughly 80bps below its early November peak.
  • The 3/5 cash curve is at its steepest since November 2023 and 5bps steeper than in late August.
  • Bidding in today’s auction may also be influenced by some other factors. On the positive side, the Nov-28 bond is included in the YM basket. However, the RBA’s resistance to market expectations for easing by year-end, currently priced at 7bps, may temper enthusiasm.
  • Overall, another round of well-received supply is anticipated, though likely accompanied by a less aggressive bid tone.
  • Results are due today at 0100 BST / 1100 AEST.
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The Australian Office of Financial Management (AOFM) will today sell A$1.0bn of the 2.75% 21 November 2028. The line was last sold on 23 August 2024 for A$700mn. The sale drew an average yield of 3.5510%, at a high yield of 3.5525% and was covered 4.2286x. There were 48 bidders, 16 of which were successful and 8 were allocated in full.

  • This week's ACGB supply is consistent with the recent average weekly issuance when Wednesday’s sale of A$500mn of 3.25% 21 June 2039 is included.
  • According to the June 2024 Issuance Program Update, the AOFM plans to 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.
  • The previous offering of the Nov-28 line saw the weighted average yield print 0.75bp through prevailing mids, with the cover ratio remaining above 4.0x.
  • For today’s auction, the Nov-28 bond's yield has rebounded from the lower end of its 12-month trading range, now standing 20-25bps higher than at the late August auction. However, it remains roughly 80bps below its early November peak.
  • The 3/5 cash curve is at its steepest since November 2023 and 5bps steeper than in late August.
  • Bidding in today’s auction may also be influenced by some other factors. On the positive side, the Nov-28 bond is included in the YM basket. However, the RBA’s resistance to market expectations for easing by year-end, currently priced at 7bps, may temper enthusiasm.
  • Overall, another round of well-received supply is anticipated, though likely accompanied by a less aggressive bid tone.
  • Results are due today at 0100 BST / 1100 AEST.