The Australian Office of Financial.....>

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

sell A$600mln of 1.75% November 2020 bonds, issue TB146, part of the 3-Year

future underlying basket. 

- The line was previously sold on August 4 for A$500mln, the issue was covered

5.04x with an average yield of 1.9447%. In the secondary market the issue

currently yields 2.003%, up 0.8bp on the day/

- The line has A$26.8bln outstanding with a modified duration of 3.12 years.

- The Nov 2028 auction earlier this week saw weak demand by historical standards

and was the third auction of the issue seeing cover below 3.0x. However 3-Year

paper tends to fare much better. 

- The spread between AU and US 3-Year debt is just off YTD highs at 52.6bp,

while the line looks cheap on the curve at -9bp on an ASW basis vs sector

comparables at -11bp. It also looks cheap on a Z-Spread basis.

- One factor that could impact the issue is the negative carry and roll for the

Nov 2020 at around -0.8 vs +4 for the May 2021.

- Results due at 0200 London, 1100 Sydney.