AUCTION PREVIEW: November 2031 To Be Tapped

The Australian Office of Financial Management (AOFM) will today sell A$2.0bn of the 1.00% 21 November 2031 Bond, issue #TB163. The line was last sold on 11 November 2020 for A$2.5bn. The sale drew an average yield of 1.0211%, at a high yield of 1.0225% and was covered 4.2628x. There were 54 bidders, 21 of which were successful and 11 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 74.5%.

• The line is young in age terms, but the demand that has been witnessed at this year's syndications means that there is already A$26.0bn of the line in existence after a mere 2 taps.
• Participants will have to weigh up the upcoming break in AOFM issuance (next week is set to be the final week of issuance for calendar 2020) vs. the current cross currents evident on the news flow front i.e. short term pain but what seems to be medium term salvation in the form of vaccine deployment. There has been some concession ahead of supply, based on the moves in U.S. markets overnight.
• Negative net weekly supply dynamics, based on RBA ACGB purchases should provide some support.
• ASWs hover around the middle of their recent range, while swaps have cheapened vs. ACGBs in recent months, back from their historical extremes.
• Results due at 0000GMT/1100AEDT.