AUCTION PREVIEW: Aug-40 I/L Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$100mn of the 1.25% 21 August 2040 Indexed Bond, issue #CAIN413. The line was last sold on 11 October 2022 for A$100mn. The sale drew an average yield of 1.9689%, at a high yield of 1.9825% and was covered 2.9600x. There were 52 bidders, 27 of which were successful and 25 were allocated in full. Amount allotted at the highest yield as a percentage of amount bid at that yield was 27.3%.

• The current inflationary environment should result in smooth enough takedown of today’s auction, even after the RBA suggested that the inflation peak in Australia has been seen.
• 15-Year breakevens have pulled back in recent days, with worry surrounding the U.S. banking sector front and centre there. That leaves the measure at levels not seen since late November and could present an attractive entry point for tactical participants.
• Results due at 0000GMT/1100AEDT.