A sale today of Australian government bonds due in 19 years, the longest maturity for outstanding debt not linked to inflation, drew the most bids at any auction in almost four months and was snapped up by six buyers.
The auction of A$700 million ($646.5 million) of April 2033 notes attracted 61 bids, the most since a Dec. 6 sale and 4.85 times the amount of securities on offer, according to data compiled by the Australian Office of Financial Management.
The bid-to-cover ratio for today’s auction compares with an average of 4.28 for debt sales last month. The six successful buyers all bid at a yield of 4.71 percent and received 57 percent of the amounts they offered to purchase, the figures show.
Australia’s 10-year bond yield has risen 16 basis points in the past month to 4.18 percent as of 2:18 p.m. in Sydney, the biggest increase among 25 major developed sovereign markets tracked by Bloomberg.
The Reserve Bank signaled stability in interest rates this week, helping drive the premium over U.S. Treasuries offered by benchmark Australian debt, which holds the top credit score from all three major ratings companies, to a one-week high.
Today’s auction “does reflect the fact that there has been good demand over the last few weeks and months for longer-dated Aussie bonds,” said Damien McColough, the Sydney-based head of Australian rates strategy at Westpac Banking Corp.
“When the RBA says they’re on hold for an extended period of time and spreads to U.S. Treasury yields are at the upper end of their range, then the stars are in line to pick up the highest-yielding AAA assets in the world.”
Syndicated Offering
Today’s auction for the April 2033 bonds was the first since A$5.9 billion of the securities were sold in a bank-led transaction on Nov. 19, a volume unseen in any previous sale. November’s syndicated offering drew A$8.91 billion of bids, the AOFM said in an e-mailed statement.
Australian sovereign debt maturing in 10 years or longer has returned 2.1 percent this year following a 4.9 percent loss in 2013, Bank of America Merrill Lynch Index data show.
A gauge of the South Pacific nation’s government securities that also includes shorter maturities has gained 1.1 percent since Dec. 31.
bloomberg.com
The auction of A$700 million ($646.5 million) of April 2033 notes attracted 61 bids, the most since a Dec. 6 sale and 4.85 times the amount of securities on offer, according to data compiled by the Australian Office of Financial Management.
The bid-to-cover ratio for today’s auction compares with an average of 4.28 for debt sales last month. The six successful buyers all bid at a yield of 4.71 percent and received 57 percent of the amounts they offered to purchase, the figures show.
Australia’s 10-year bond yield has risen 16 basis points in the past month to 4.18 percent as of 2:18 p.m. in Sydney, the biggest increase among 25 major developed sovereign markets tracked by Bloomberg.
The Reserve Bank signaled stability in interest rates this week, helping drive the premium over U.S. Treasuries offered by benchmark Australian debt, which holds the top credit score from all three major ratings companies, to a one-week high.
Today’s auction “does reflect the fact that there has been good demand over the last few weeks and months for longer-dated Aussie bonds,” said Damien McColough, the Sydney-based head of Australian rates strategy at Westpac Banking Corp.
“When the RBA says they’re on hold for an extended period of time and spreads to U.S. Treasury yields are at the upper end of their range, then the stars are in line to pick up the highest-yielding AAA assets in the world.”
Syndicated Offering
Today’s auction for the April 2033 bonds was the first since A$5.9 billion of the securities were sold in a bank-led transaction on Nov. 19, a volume unseen in any previous sale. November’s syndicated offering drew A$8.91 billion of bids, the AOFM said in an e-mailed statement.
Australian sovereign debt maturing in 10 years or longer has returned 2.1 percent this year following a 4.9 percent loss in 2013, Bank of America Merrill Lynch Index data show.
A gauge of the South Pacific nation’s government securities that also includes shorter maturities has gained 1.1 percent since Dec. 31.
bloomberg.com
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