AUCTION PREVIEW: ACGB Nov-33 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$1.0n of the 3.00% 21 November 2033 Bond, issue #TB166. The line was last sold on 7 December 2022 for A$900mn. The sale drew an average yield of 3.3903%, at a high yield of 3.3925% and was covered 2.7778x. There were 44 bidders, 18 of which were successful and 10 were allocated in full. Amount allotted at the highest yield as a percentage of amount bid at that yield was 51.2%.

• It should be another case of fairly routine demand at an AOFM auction, with the yield on offer after yesterday’s RBA meeting providing enough temptation to promote smooth passage of supply, although the marginal premium of Aussie vs. vs. U.S. 10s (with the spread just below parity), a sense of micro richness (which could worsen as the line moves towards benchmark 1-Year status) and a little bit more uncertainty re: the RBA terminal rate may provide some headwinds.
• The hedgability of the line via XM futures is an incremental positive.
• Results due at 0000GMT/1100AEDT.