RBC Weigh In On The Latest AOFM Address

RBC have noted that AOFM CEO Nicholl "provided an overall gross bond issuance estimate for the 2020-21 fiscal year of "around A$240bn" while also reaffirmed that the current guidance of A$4-5bn bonds per week via tender and A$2-4bn per week in treasury notes would likely stay in place until at least the October Budget update. The A$240bn number is higher than the figures suggested by last week's JEFU debt outstanding figures of closer to A$210bn, suggesting the AOFM is keen to build a buffer against uncertainty. Given we thought some of the JEFU estimates were on the low side (in terms of spending and deficit), we think this is both prudent and likely to better reflect actual funding needs. We also detected a large emphasises on tenor, with Nicholl keen to espouse the benefits of a longer-term debt portfolio, which given the new 30yr has just been issued suggests 20yr issuance could instead become a large focus in the near future."