The Australian Office of Financial.....>

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

sell A$400mln 5.75% May 2021 bonds, issue #TB124. The issue is part of the

underlying basket for the 3-Year future, which should support demand.

- The line has A$30.199bln outstanding, with a modified duration of 2.93 years.

- The bond was last sold on September 8 for $600mln, the auction drew an average

yield of 2.0164%, a high yield of 2.0175%, with a cover ratio of 7.0400. In the

secondary market the issue currently yields 2.135%.

- The domestic 3-/10-Year spread has widened in February, sitting around 75bp

last, while back in September, at the time of the previous auction, it was

operating between 55 & 65 bp, although the Aussie curve has continued to

outperform the US.

- Earlier this week HSBC suggested that the belly of curve looks cheap in ASW &

barbell terms and recommended selling 3 & 15-Year paper against the 7-Year to

form a butterfly.