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

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

(AOFM) will today sell A$2.0bn of the 1.25% 21 May 2032 Bond, issue #TB158. The

line was last sold on 5 June 2020 for A$1.0bn. The sale drew an average yield of

1.1700%, at a high yield of 1.1700% and was covered 3.7250x. There were 40

bidders, 3 of which were successful and none were allocated in full. Amount

allotted at highest yield as percentage of amount bid at that yield was 87.0%.

- The recent futures roll may boost demand at auction given the bonds inclusion

in the XMU0 basket, although recent outperformance of Australian 10s vs. U.S.

10s may provide some light headwinds (although this should be relatively minor

given the trajectory of the AU/U.S. 10-Year yield spread over a longer horizon),

while FX hedged yields aren't particularly attractive for JPY, GER or U.S.

investors. More broadly, the recent strength of auctions in the 10-12 Year zone

should continue, given more than ample liquidity, although the recent back up

from cheaps in outright yield terms may result in a marginally weaker auction

this time around.

- Results due at 0200BST/1100AEST.