AUCTION PREVIEW: Nov-25 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$1.5bn of the 0.25% 21 November 2025 Bond, issue #TB161. The line was last sold on 12 November 2021 for A$1.0bn. The sale drew an average yield of 1.3045%, at a high yield of 1.3075% and was covered 6.4900x. There were 45 bidders, 14 of which were successful and 10 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 40.9%.

• The runup in issuance evident this week has weighed on the strength of the demand metrics observed at ACGB auctions, although both rounds of ACGB supply seen already this week have still been digested smoothly, given the flush liquidity in the banking system, international relative value appeal and negative RBA purchase-adjusted net supply dynamic.
• Lending in this area of the curve, via the RBA's SLF, signals the potential for decent demand at today's auction, even though borrowing through that facility has eased back from levels seen last week.
• In outright terms, the line sits a little over 10bp from its YtD cheaps, providing more than 3x the yield level observed in the middle of September.
• The belly of the curve has moved away from recent richest levels across several fly structures, so there isn't much in the way of impediment for demand coming from a relative value lens, although the potential for flatter curves on views surrounding wider global central bank tightening prospects may deter some from such plays. Questions re: the short-term ACGB supply dynamic may also deter some from bidding.
• Results due at 0000GMT/1100AEDT.