AUCTION PREVIEW: An Atypical Offering

The Australian Office of Financial Management (AOFM) will today sell A$500mn of the 3.25% 21 June 2039 Bond, issue #TB147. The line was last sold on 12 August 2019 for A$400mn. The sale drew an average yield of 1.4105%, at a high yield of 1.4125% and was covered 2.4225x. There were 43 bidders, 20 of which were successful and 10 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 38.5%.

• A particularly long bond, which makes the tap atypical. Indeed, the line itself hasn't been tapped since August last year. The ACGB June '51 syndication was of course well received, but the nature of the two issuance methods is somewhat different, which is reflected in the A$500mn size of the issuance on offer today. The atypical nature and limited size on offer may also point to demand expressed via AOFM liaison with dealers.
• Anyhow, the ample liquidity in the system, potential for further easing from the RBA and broad foreign demand for ACGB is expected to support demand at auction.
• ASWs have moved back from extremes in recent months.
• Results due at 0200BST/1100AEST.