The Australian Office of Financial.....>

AUSSIE BONDS: The Australian Office of Financial Management (AOFM) will today

sell A$800mln of 2.75% Nov 2028 bonds, issue #TB152.

- The line was last sold on August 2 for A$900mln, drawing an average yield of

2.7523%, covered 2.93x. In the grey market the paper currently yields 2.696%, up

1bp on the day.

- The issue has A$15.8bln outstanding with a modified duration of 9.57 years.

- The AU/US 10-Year yield spread has risen 0.4bp today to 42.6bp as the US

market is hit by Trump political/economic turmoil. The spread has risen from

lows hit in early June of around 17bp and is just off a 2017 high of 46.2bp.

- ANZ note that "Australian 10 year yields are trading 2bp cheap to the average

of 2017, while US 10 year yields are 10bp rich on the same metric." While this

would usually be supportive of Aussie auctions the auction of the 3.25% April

2029 paper on Wednesday saw weak demand compared to previous issues.

- The issue looks slightly rich on the curve at -6bp on an ASW basis compared to

the average -5bp for the sector, but is above its recent average on a Z-spread

basis at this level.