Prior to the AOFM's weekly.............>

AUSSIE BONDS: Prior to the AOFM's weekly announcement ANZ wrote "following the

federal government's announcement of the fiscal stimulus package, yesterday, the

AOFM has updated its issuance intentions. It plans to issue between AUD1.2bn and

AUD1.6bn of ACGBS "for most coming weeks", while not altering its buyback

intentions. There will be an update of the issuance plan following the May

budget. The AOFM is already running AUD3.2bn ahead of its run rate for 2019-20

(Figure 1). If it were to average issuance of AUD1.4bn over the rest of the

fiscal year, this would take total issuance to AUD62.1bn, which is AUD7.1bn over

the AUD55bn target announced at MYEFO. Given the size of the fiscal package, the

possibility of a second round of stimulus and the drop-off in government

revenue, we think risks around this issuance figure skew to the upside. It is

likely that the economic impacts of the COVID-19 pandemic will increase issuance

in 2020-21. The main challenge the AOFM will have with increasing its auction

volumes is that liquidity has fallen sharply. This was clear on Thursday, with

the sharp underperformance of bonds versus futures and the widening in bid/offer

spreads."