AUCTION PREVIEW: I/L Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$150mn of the 0.75% 21 November 2027 I/L Bond, issue #CAIN414. The line was last sold on 23 March 2021 for A$150mn. The sale drew an average yield of -0.7882%, at a high yield of -0.7850% and was covered 5.1667x. There were 40 bidders, 12 of which were successful and 8 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 85.7%.

• Australian breakevens have edged away from their early March peak, but still remain in the upper end of the ranges witnessed in recent years (for both the 5- & 10-Year tenors). Australian CPI will obviously impact the carry dynamic for the space, while broader price action will likely be driven by the reflation trade narrative/market belief in the RBA's forward guidance. Still, desks haven't indicated much in the way of worry ahead of today's supply.
• Results due at 0200BST/1100AEST.