Australia AOFM Issues A$6B 2041 Bond Via Tap at 1.70%

By Sophia Rodrigues

The Australian government's syndicated tap issue of 2.75% May 2041 Treasury Bond priced at the tightest end of the indicative range, after attracting three times coverage at the clearing price.

The 2041 bond was priced at 75.5bps over the implied bid yield for the primary 10-year Treasury bond futures contract, translating to yield of 1.70%. The initial price guidance for the bond was a spread of 75.5bps to 78.5bps, which was tightened to 75.5bps to 77.5bps a few hours into launch.

The Australian Office of Financial Management issued A$6 billion of the bond, taking the total bond line to A$12.6 billion.

National Australia Bank Limited, TD Securities, UBS AG, Australia Branch and Westpac Banking Corporation were Joint-Lead Managers for the issue.

The 2041 bond was first issued in July 2018 via syndication. At the time, the AOFM issued A$3.6 billion after receiving bid totalling A$7.66 billion at the clearing price. Offshore buyers took 45.2% of the issue. The spread was 42bps over 10-year futures.

A tap syndication of the bond was done in February this year where A$2.0 billion was issued, out of A$6.1 billion of bids at clearing price. The spread was 49.5bps. The AOFM also issued an additional A$1.0 billion of the bond via three tenders in 2019.