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Mediocre ACGB May-32 Supply; Cover Declines

AUSSIE BONDS

The latest round of ACGB May-32 supply went well enough on the pricing side, with the weighted average yield printing 0.72bp through prevailing mids (per Yieldbroker). However, the cover ratio declined to 2.65x from the 3.00x observed at the previous auction, printing below the six-auction average of 2.83x in the process.

  • As flagged in our preview, the lack of relative value amidst the flatness of the ACGB curve as well as the structurally rich status of the line (owing to its benchmark 10-Year status) likely contributed to the softer cover ratio observed at today’s auction, with the continued sidelining of international investors on uncertainty re: the RBA, as well as the proximity to upcoming Q2 WPI data and the RBNZ’s monetary policy decision providing additional headwinds for demand.

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