Smooth Digestion Of Apr-37 Supply

The latest round of ACGB Apr-37 supply sees the weighted average yield print 0.99bps through prevailing mids (per Yieldbroker), extending the recent trend of firm pricing at ACGB auctions.

• The cover ratio was however lower at 2.9143x versus recent auctions around this line’s maturity. Given the considerable time elapsed since the last issuance of this bond line, any reference to the previous auction result would lack substantial relevance.
• An expectation of continued firm pricing at today’s auction on the back of the prevailing bullish sentiment towards longer-dated global bonds proved correct. This came despite the current outright yield for this line being around 70bps lower than the peak observed in early November.
• The possible negative factor flagged in our auction preview, namely the line not being part of the XM basket did not appear to have materially constrained the overall strength of bidding.
• There has been a slight richening in XM futures and the bond line in early post-supply dealings.