AUCTION PREVIEW: The Australian........>

AUSSIE BONDS: AUCTION PREVIEW: The Australian Office of Financial Management

(AOFM) will today sell A$300mn of the 2.75% 21 May 2041 Bond, issue #TB156. The

line was last sold on 19 August 2019 for A$300mn. The sale drew an average yield

of 1.3820%, at a high yield of 1.3875% and was covered 1.3800x. There were 41

bidders, 31 of which were successful and 26 were allocated in full. Amount

allotted at highest yield as percentage of amount bid at that yield was 45.0%.

- The tap represents a break from the AOFM's recent preference of issuing in the

9-12 Year zone of the curve, and may suggest that dealers have expressed an

interest in duration (although this shouldn't be viewed as a firm idea, more one

of speculation). Also worth flagging the cover ratios seen at the 2 most recent

tenders of the line where questionable.

- The line's yield sits ~25bp back from the mid-August lows and the recent

"partial" Sino-U.S. trade deal may throw the proverbial spanner in the works

ahead of supply. The ASW spread sits around the middle of its 1-Year range.

- Those that are short longer dated ACGBs may use the op to purchase the bond.

- Results due at 0100BST/1100AEST.