The Australian Office of Financial.....>

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

A$600 of 2.75% 21 November 2028 bonds on Wednesday, issue #TB152.

- The line was last sold on 29 November 2017 for A$900mln, the sale drew an

average yield of 2.5563%, a high yield of 2.5575% with 56.5% of bids allotted at

high, the sale was covered 3.40x. The issue has A$21.2bln outstanding with a

modified duration of 9.22 years and is part of the underlying basket for the

10-Year future (XMH8). In the grey market the issue currently yields 2.837%,

down 11.7bp in the previous session as bonds saw a bid led by a wave of risk off

trade in the US after equity markets plunged.

- The curve has flattened on the move, 3-/10-Year spread around 2.5bp narrower

at 70bp, however is much wider than levels from mid-December (around 47bp). The

AU/US 10-Year spread has come off lows of -2bp on Monday, but at 11.6bp is still

at historically low levels.

- The AOFM has only just started the funding programme for 2018, the first

tender auction on Monday drew cover of just 1.87x, weakest in the sector since

August 2016. Results due Wednesday at 0000GMT/1100AEDT.