AUCTION PREVIEW: ACGB Nov-29 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$500mn of the 2.75% 21 November 2029 Bond, issue #TB154. The line was last sold on 7 September 2020 for A$2.0bn. The sale drew an average yield of 0.9238%, at a high yield of 0.9250% and was covered 4.8450x. There were 43 bidders, 13 of which were successful and 4 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 60.0%.

• The auction should ultimately pass smoothly, although as we have stressed in recent weeks, the RBA’s withdrawal from market has generally resulted in a slightly less aggressive bidding stance when it comes to ACGB auctions. The line sits a touch off recent cheaps, but the well-documented move higher in yields will ultimately aid demand.
• Demand to borrow the line via the RBA’s SLF facility has been apparent in recent days, although the scope of demand to borrow the line is fairly limited at present (A$100mn lent out by the RBA at the last count). The line represents the longest maturity borrowed via the SLF at present. This should mean that the auction goes a little better than we would otherwise assume.
• Results due at 0000GMT/1100AEDT.