Westpac have noted that "while both....>

AUSSIE BONDS: Westpac have noted that "while both the new 5yr and 30yr bond

maturities will be built up to benchmark size outstanding, it is not clear what

the AOFM's plans for the initial syndication will be. Suffice to say that the

previous 2 syndications have been for record amounts and we are facing around a

A$280-290bn gross borrowing need this fiscal year. So, we have calculated the

index impacts of the issuance under a number of different syndication sizes and

made some calculations based on a A$15bn initial issuance. The 5yr bond will

actually shorten the modified duration of the index, given that the index is

currently longer than the duration of the Nov '25. Of course the 30yr bond will

do the opposite and extend the index duration significantly For example, the

Ausbond 1+Y Composite Index will be 0.218 years longer due to the 30yr bond

issuance. Clearly that is significant and it will necessitate a large

participation from real money accounts, as was the case for the 2047, when a

record fund manager participation occurred."