AUCTION PREVIEW: ACGB Sep-26 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$500mn of the 0.50% 21 September 2026 Bond, issue #TB164. The line was last sold on 2 December 2022 for A$600mn. The sale drew an average yield of 3.0612%, at a high yield of 3.0650% and was covered 4.5333x. There were 36 bidders, 15 of which were successful and 9 were allocated in full. Amount allotted at the highest yield as a percentage of amount bid at that yield was 16.1%.

• Outright yield levels on offer should provide smooth enough digestion of the auction, particularly with the AOFM offering a lower run rate of A$1.0bn of ACGBs this week (vs. the “normal” A$1.5bn). Friday’s stabilisation in U.S. Tsys should provide some help here, as should the annual Chinese GDP growth target being at the attainable end of the spectrum.
• Also note that the line appears to be the cheapest (in micro-RV terms) when it comes to the YM basket bonds (for both the H3 & M3 contracts).
• Offsets to these positives include the fact that the auction will come in the lowest liquidity window of the week for global markets.
• Note that there isn’t much demand for access to the line via the RBA’s SLF (only A$5mn at the last count), suggesting that the market hasn’t got an overwhelming desire for access to the line.
• Results due at 0000GMT/1100 AEDT.