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The Australian Office of Financial Management (AOFM) will today sell A$1.0bn of the 1.75% 21 November 2032 Bond, issue #TB165. The line was last sold on 4 August 2021 for A$800mn. The sale drew an average yield of 1.2175%, at a high yield of 1.2200% and was covered 5.0187x. There were 45 bidders, 20 of which were successful and 12 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 10.8%.

  • It should be another smooth auction, with the well-defined supportive factors (excess liquidity in the domestic banking system, negative RBA-purchase adjusted net supply dynamics and international relative value appeal) continuing to support demand.
  • The uptick off of the recent flats in terms of the 3-/10-Year yield spread will also be supportive for demand.
  • Questions re: the RBA's upcoming decision on whether the bank decides to renege on its already announced tapering move may provide an incremental headwind, although the fact that the already announced A$1bn tapering plan would still result in negative RBA purchase-adjusted supply on a weekly basis means that potential bidders shouldn't be too put out ahead of tomorrow's central bank meeting.
  • Results due at 0200BST/1100AEST.