AUCTION PREVIEW: ACGB Nov-33 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$700mn of the 3.00% 21 November 2033 Bond, issue #TB166. The line was last sold on 8 February 2023 for A$1.0bn. The sale drew an average yield of 3.6854%, at a high yield of 3.6875% and was covered 3.5250x. There were 50 bidders, 17 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 66.1%.

• The line sits the best part of 100bp off of outright cycle cheaps, with worry surrounding global banks and the prospect of an imminent pause from the RBA driving the bulk of the month-to-date richening in the space. These lingering matters should result in smooth enough takedown of the line, with the recent run of comfortable pricing through mids set to continue.
• Various measures provide a bit of a blurry picture when it comes to RV for the line. It sits on the cheaper side on a micro fly, but looks rich on various other RV metrics, leaving desks to flag fair to slightly rich pricing into the auction.
• XM basket inclusion and the related hedgability that comes with that status provides some offset to this.
• Results due at 0000GMT/1100AEDT.