Australia is one of the only nine countries with Triple A rating. It is alongside Denmark, Germany, the Netherlands, Luxembourg, Norway, Singapore, Sweden, and Switzerland. The Australian Office of Financial Management (AOFM), the Triple A has no problem executing the first syndicated nominal bond sale in a year. It received A$15bn print of new November 21 2033 Treasury bonds. The joint leads are CBA, NAB, Deutsche Bank and UBS.
The final bid of A$37.5bn pays a 3% coupon and is priced at 98.647 to yield 3.14%. This placement is within the minus 1.5bp to plus 1.5bp guidance range. It is at EFP or 10-year futures minus 0.5bp. The executive director of fixed income syndication at CBA, Paul O’Brien said confidently that AOFM has done a good job amid inflation, pandemic, and market volatility. AOFM allows investors to participate after the mandate announcement.
O’Brien added that the absolute yield pick-up is available over U.S. Treasuries as an attractive proposition for relative value offshore investors. The 10-year benchmark bond yield at 3.08% versus 2.77% for 10-year Treasuries. Meanwhile, the 10-year JGBs, Bunds and Gilts offer respective returns of 0.24%, 0.81% and 1.85%.
Domestic investors caught 66.9% of the November 2033s, Asia ex-Japan 12.5%, the UK 9.3%m Europe 3.4%, and etc. Fund managers would take 34.6%, bank balance sheets 21.2%, hedge funds 16.9%, bank trading desk 15.7%, central banks 8.3%, and other 3.2%.
During the Covid-19 outbreak, AOFM raised A$116bn from seven syndicated nominal Treasury bond issues. It was with maturities ranging from 2024 out of 2051. Thus it includes record-smashing A$25bn issue of new 0.5% for September 21, 2026s. The syndicated sale of A$86.8bn was raised from the fiscal A$100bn target. It was with the reduction from A$105bn following the federal budget on March 29. It benefited from higher-than-anticipated commodity tax receipt.
