AUCTION PREVIEW: Feb-50 I/L Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$100mn of the 1.00% 21 February 2050 I/L Bond, issue #CAIN415. The line was last sold on 11 May 2021 for A$100mn. The sale drew an average yield of 0.3107%, at a high yield of 0.3225% and was covered 3.6000x. There were 36 bidders, 10 of which were successful and 8 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 70.0%.

• The market expects RBA normalisation to move at a swift pace after last week’s larger than expected cash rate lift off, although market pricing is more aggressive than the assumption on which the RBA has conditioned its economic forecasts.
• 10+-Year BEIs have struggled to gain any meaningful traction above 2.50% as a result i.e. the metrics have struggled to move into the upper half of the RBA’s 2-3% target range, even as inflation surges.
• Still, the well-documented inflation worry that is evident at present should result in the smooth passage of today’s supply.
• Results due at 0200BST/1100AEST.