AUCTION PREVIEW: ACGB Sep '26 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$800mn of the 0.50% 21 September 2026 Bond, issue #TB164. The line was last sold on 19 March 2021 for A$1.0bn. The sale drew an average yield of 0.9577%, at a high yield of 0.9625% and was covered 3.4850x. There were 56 bidders, 17 of which were successful and 11 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 94.4%.

• The RBA purchase-adjusted net negative supply backdrop (at least until September) and record level of excess liquidity in the domestic banking system should continue to support demand for AOFM offerings, although speculation surrounding the potential for the RBA to choose not to extend its yield targeting scheme to ACGB Nov '24 in July poses a medium term risk to the space. Still, most desks foresee smooth takedown today.
• The ACGB 2-/5-/10-Year butterfly operates around the middle of the range that has been in play since mid-February.
• Results due at 0200BST/1100AEST.