AUCTION PREVIEW: ACGB Nov-29 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$700mn of the 2.75% 21 November 2029 Bond, issue #TB154. The line was last sold on 25 February 2022 for A$500mn. The sale drew an average yield of 2.1648%, at a high yield of 2.1650% and was covered 3.7700x. There were 37 bidders, 10 of which were successful and 1 was allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 62.1%.

• Note that the smaller size of and the time elapsed since the previous auction of the bond means that the auction details witnessed back in February provide little to no value when it comes to comparables.
• The line looks a little cheap on the curve, but this is quite often the case when it comes to bonds in this zone that have moved out of the 10-Year futures basket. We doubt this will provide anything in the way of truly outstanding demand levels, but we expect the recent stabilisation away from cycle cheaps for the wider core global FI space and moderation in RBA tightening expectations to facilitate a solid baseline level of demand.
• Expect a solid enough auction.
• Results due at 0000GMT/1100AEDT.