Sell-Side Views On What To Expect From The AOFM

A quick recap of sell-side views from ahead of the aforementioned AOFM issuance announcement (this was posted on our interactive chat service ahead of time, while bullets were subject to technical issues).

• NAB: There are A$85bn of maturities to refinance during 22-23, but A$25bn of this is due to a nominal bond maturity in July 2022. In practice, this maturity will have been essentially entirely prefunded by the end of the current fiscal year, so although on face value the gross borrowing program for 22-23 is A$156bn, in practice it will likely be closer to A$131bn. This is likely going to mean a larger borrowing program next year than will be realised in 21-22. We expect the AOFM to issue a brief update, but full details of their 22-23 plans are unlikely to be released until the next scheduled biennial update in July. The projection of A$906bn outstanding in June 2022 leaves room for about A$40bn of further net issuance this fiscal year, comfortably allowing for the ACGB Apr-33 syndication that’s been previously announced.
• RBC: The AOFM’s funding term task for 2022-23 could be around A$150bn, well above what we had been pencilling in.
• TD Securities: Based on a back of the envelope estimates working off Budget numbers, the AOFM's gross funding requirement for 22/23 is expected to be ~A$155bn (of which A$85bn is maturities). This would be an improvement of ~A$30bn compared with the backed out estimate from the MYEFO. We stress these are very rough calculations, but we will await the AOFM's official announcement for guidance. Otherwise, markets will be looking for an update on the remaining funding task for 21/22, with news on when the AOFM intends to bring the new ACGB Nov-33 line to market. Our guess is that this line could be priced next week or the week after.
• Westpac: We estimate that gross term AGS issuance over the 22-23 financial year will be approximately A$156bn. That includes both nominal and indexed bonds and reflects A$71bn of net issuance to fund the deficit and A$85.5bn of maturing bonds. As it was in the previous three financial years, the swing variable for 22-23 gross issuance will be how much the AOFM wishes to pre-fund its future maturities.