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 24 January 2024 for A$800mn. The sale drew an average yield of 4.2409%, at a high yield of 4.2425% and was covered 2.9688x. There were 40 bidders, 15 of which were successful and 7 were allocated in full. The amount allotted at the highest yield as a percentage of the amount bid at that yield was 55%.

• 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.
• The bidding at today’s auction is likely to be influenced by several factors. The outright yield is 10-15bps higher than the level at the January auction but still around 60bps lower than the November high.
• The 3/10 yield curve is slightly steeper than January’s auction levels but still 10-15bps flatter than the late October high.
• A sanguine view towards the RBA's policy outlook and the line being part of the XM basket are also likely to influence the level of demand.
• However, it is also important to acknowledge that the positive sentiment towards longer-dated global bonds has waned since the start of the year.
• Results are due at 0200 BST / 1100 AEST.