AUCTION PREVIEW: ACGB Nov-33 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$800mn of the 3.00% 21 November 2033 Bond, issue #TB166. The line was last sold on 23 August 2023 for A$700mn. The sale drew an average yield of 4.2172%, at a high yield of 4.220% and was covered 4.1286x. There were 38 bidders, 19 of which were successful and 11 were allocated in full. The amount allotted at the highest yield as a percentage of the amount bid at that yield was 5.1%.

• This week's ACGB supply is consistent with the lower 2023-24 borrowing requirement outlined in the AOFM’s January’24 Issuance Program Update. The update followed the release of the MYEFO in December. A$50bn of Treasury Bond issuance is planned for 2023-24 (of which $23.6 billion has been completed as at the end of 2023).
• The bidding at today’s auction is likely to be influenced by several factors. The outright yield is at a similar level to the August auction but around 70bps lower than the November high. Whereas the 3/10 yield curve is 10bps steeper than August’s auction levels but 15-20bps flatter than the late October high.
• A sanguine view towards the RBA's policy outlook and the line’s inclusion in the XM basket are also likely to influence the level of demand.
• It is also important to acknowledge that sentiment towards longer-dated global bonds remains positive.
• Results are due at 0000 GMT / 1100 AEST.