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AUSSIE BONDS: AUCTION PREVIEW: ACGB Dec-34 Supply Due

AUSSIE BONDS
BulletAPACFixed Income BulletsAustraliaMarkets

The Australian Office of Financial Management (AOFM) will today sell A$800mn of the 3.50% 21 December 2034 bond, issue #TB168. The line was last sold on 1 November 2024 for A$800bn. The last sale drew an average yield of 4.5499%, at a high yield of 4.5525% and was covered 3.2125x. There were 39 bidders, 15 of which were successful and 8 were allocated in full. The amount allotted at the highest yield as a percentage of the amount bid at that yield was 19.3%.

  • This week's ACGB supply is at the recent average weekly issuance, with A$700mn of the 1.50% 21 June 2031 bond to be issued on Friday.
  • According to the June 2024 Issuance Program Update from the Australian Office of Financial Management (AOFM), total issuance is expected to reach around A$90 billion for the 2024-25 period, with approximately A$2 billion allocated for Green Treasury Bonds.
  • The previous round of ACGB Dec-34 supply saw the recent run of strong pricing at ACGB auctions continue with the weighted average yield printing through prevailing mids. Moreover, the significantly higher outright yield and steeper curve did appear to support the overall strength of bidding, with the cover ratio increasing to 3.2125x from 2.3125x prior, despite the recent deterioration in sentiment towards global bonds.
  • Several factors will likely influence today's auction bidding. The current outright yield is around 10bps lower than the previous auction and approximately 50bps lower than the cyclical peak.
  • Moreover, the 3/10 yield curve is slightly flatter than at the previous auction but remains near its steepest since November 2023.
  • The line is included in the XM basket.
  • However, there has been a notable deterioration in sentiment towards global bonds since September. This is exemplified by the US tsy 10-year yield, which is around 70bps above its September low.
  • While some factors may limit the overall strength of bidding, there is an expectation of continued firm pricing at today's auction.
  • Results are due at 0000 GMT / 1100AEST.
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The Australian Office of Financial Management (AOFM) will today sell A$800mn of the 3.50% 21 December 2034 bond, issue #TB168. The line was last sold on 1 November 2024 for A$800bn. The last sale drew an average yield of 4.5499%, at a high yield of 4.5525% and was covered 3.2125x. There were 39 bidders, 15 of which were successful and 8 were allocated in full. The amount allotted at the highest yield as a percentage of the amount bid at that yield was 19.3%.

  • This week's ACGB supply is at the recent average weekly issuance, with A$700mn of the 1.50% 21 June 2031 bond to be issued on Friday.
  • According to the June 2024 Issuance Program Update from the Australian Office of Financial Management (AOFM), total issuance is expected to reach around A$90 billion for the 2024-25 period, with approximately A$2 billion allocated for Green Treasury Bonds.
  • The previous round of ACGB Dec-34 supply saw the recent run of strong pricing at ACGB auctions continue with the weighted average yield printing through prevailing mids. Moreover, the significantly higher outright yield and steeper curve did appear to support the overall strength of bidding, with the cover ratio increasing to 3.2125x from 2.3125x prior, despite the recent deterioration in sentiment towards global bonds.
  • Several factors will likely influence today's auction bidding. The current outright yield is around 10bps lower than the previous auction and approximately 50bps lower than the cyclical peak.
  • Moreover, the 3/10 yield curve is slightly flatter than at the previous auction but remains near its steepest since November 2023.
  • The line is included in the XM basket.
  • However, there has been a notable deterioration in sentiment towards global bonds since September. This is exemplified by the US tsy 10-year yield, which is around 70bps above its September low.
  • While some factors may limit the overall strength of bidding, there is an expectation of continued firm pricing at today's auction.
  • Results are due at 0000 GMT / 1100AEST.