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Death Cross Adding Pressure

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AUSSIE BONDS
AUSSIE BONDS: The Australian Office of Financial Management (AOFM) will today
sell A$500mln of 4.75% 21 April 2027 Bonds, issue #TB136.
- The line was last sold on 04 October 2017 for A$700mln. The sale drew an
average yield of 2.7655%, a high yield of 2.7675% with 67% allotted at the high
yield and was covered 4.4643x. There were 39 bidders, 10 of which were
successful and 5 were allocated in full.
- The line has A$29.2bln outstanding with a modified duration of 7.45 years.
- The domestic 3-/10-Year spread widened in February, and now sits around 71bp,
while the Aussie curve has continued to outperform the US, with the AU/US
10-Year spread now at circa -7bp.
- The line is included in the basket for the 10-Year bond future (XMH8) which
should support demand, although RBC point out that the "line is the the shortest
basket bond and will drop out at the next roll. This appears to be largely
reflected in the price already: they have cheapened up to be comparable to the
Apr-26s on a forward-yield basis."
- Results due at 0000GMT/1100AEDT.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com