The Australian Office of Financial.....>

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

A$900mln 2.25% May 2028 bonds on Wednesday, issue #TB149. The issue is part of

the underlying basket for XMZ7.

- The line was last sold on November 22, the sale drew an average yield of

2.5746%, a high yield of 2.575%, covered 4.1611x. The sale had 45 bidders, 11

successful and 6 bids allocated in full.

- The issue has A$21.2bln outstanding with a modified duration of 9.43 years.

- In the grey market the issue currently yields 2.636% and has cheapened on the

curve since the previous auction, currently near the top of its range on a

Z-Spread basis at -4bp.

- The sell off on Tuesday post RBA has seen the AU/US 10-Year spread widen to

20.bp after hitting 2017 lows of 11.5bp on Thursday last week. The more upbeat

RBA saw bonds sell off but there was little movement in OIS pricing of a hike by

Q3 2018 at around 31%.

- Results due at 0000GMT/1100AEDT.