AUCTION PREVIEW: ACGB Nov '31 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$1.0bn of the 1.00% 21 November 2031 Bond, issue #TB163. The line was last sold on 10 February 2021 for A$1.0bn. The sale drew an average yield of 1.2719%, at a high yield of 1.2750% and was covered 5.5150x. There were 41 bidders, 19 of which were successful and 10 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 7.2%.

• Familiar arguments remain in play here, supportive factors include international yield pickup (although Japanese investor flows point to the recent vol. exacerbating some end of FY caution and may limit interest from one of the biggest ACGB investor bases of recent times), a small weekly nominal issuance task (aided by the AOFM being ahead of task and likely a result of the recent vol./ongoing futures rolls) and the mountains of surplus cash lodged at the RBA.
• However, the recent vol. made for a weak showing at last week's ACGB Jun '31 offering, which actually generated a tail. Markets have calmed this week, although several desks continue to point to impaired liquidity.
• Results due at 0000GMT/1100AEDT.