AUCTION‌ ‌PREVIEW:‌ ‌Nov '27 I/L Bond Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$100mn of the 0.75% 21 November 2027 I/L Bond, issue #CAIN414.

• The line was last sold on 13 April 2021 for A$150mn. The sale drew an average yield of -0.8600%, at a high yield of -0.8550% and was covered 6.6533x. There were 42 bidders, 8 of which were successful and 4 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 24.3%.
• Breakevens are somewhat shy of their recent wides. Participants continue to assess the "transitory" nature of the underlying inflationary impulse against RBA policy, with the central bank's cash rate seemingly on hold for the foreseeable (until '24 if you believe its forward guidance), as it pursues realised not expected underlying inflation.
• Westpac have noted that they "believe the recent narrowing in BEIs will slow from here. On a medium-term outright basis real yields remain expensive."
• Results due at 0200BST/1100AEST.