AUCTION PREVIEW: Back To 10s

The Australian Office of Financial Management (AOFM) will today sell A$1.7bn of the 1.00% 21 December 2030 Bond, issue #TB160. The line was last sold on 5 August 2020 for A$2.0bn. The sale drew an average yield of 0.8435%, at a high yield of 0.8450% and was covered 2.8280x. There were 31 bidders, 17 of which were successful and 9 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 61.7%.

• The August 5 offering wasn't particularly well received, which raises some questions ahead of today's supply. Granted, today's issuance size is a touch smaller, but probably inconsequential in terms of final demand/takedown.
• The line isn't particularly large, at A$23.0bn outstanding, although it was only syndicated back in Mid-May. The AOFM is likely building the line up to size before it becomes the official 10-Year benchmark.
• ASWs are back from recent peaks, but still remain elevated.
• The 3-/10-Year yield spread hovers around the middle of the range witnessed since the start of April, although the spread is purely a function of the 10-Year's direction given the RBA's YCC policy.
• Results due at 0200BST/1100AEST.