The AOFM will provide full details.....>

AUSSIE BONDS: The AOFM will provide full details of a new 21 May '30 Bond tender

today. TD suggest that an avg. of straight-line interpolation between the ACGB

11/29 & ACGB 04/33 lines & their zero fitted curve model suggests that the fair

ACGB 05/30 spread above ACGB 11/29 = 2.150bps. "This implies a fair 10yr EFP

spread of 6bps. We have noted prior ACGB concessions have ~0.5-1bps. For this

new line we assume the AOFM issues ~A$2-3bln. The AOFM has indicated that it

intends to bring the line to ~A$8-$10bln over coming months, suggesting a

concession at the wider end of the range, say 1bp. With 10yr ACGBs trading

through US 10s, offshore investors are likely to warrant a concession as well.

Offsetting this however is the European mkt volatility & risk-off in EMs,

meaning ACGBs should be sought for safety. In addition there appears little risk

of the RBA turning hawkish anytime soon. On net this suggests that a concession

of 1bp is probably fair. On this basis the May 2030s at a mid 10yr EFP spread of

+7bps appears appropriate. Should a 2.50% coupon be chosen, we would expect this

new line to price at most +0.5bps wider on an EFP basis compared to our 2.75%

coupon assumption, meaning a mid 10yr EFP spread of +7.5bps."