Australia AOFM Tightens Bid Format for T-Note Tenders

By Sophia Rodrigues

The Australian Office of Financial Management has tightened bidding format at Treasury-Note tenders, bringing it in line with international practice as record low yields and strong demand made a compelling case to make the change.

A case for the change was made in an analysis published by CB-Intel on June 26.

Last week, the AOFM refined the yield bid or offer format at T-Note tenders to a maximum of four decimal places from two allowed previously. Such bids must be a whole multiple of 0.0050%, the AOFM said.

For Treasury bonds, the AOFM allows a maximum of four decimal places but with a whole multiple of 0.0025%.


At the T-Note tenders earlier Thursday, the weighted average issue yield on the November 2020 Note fell to a new record low of 0.1375% as the highest accepted yield fell to 0.145% from 0.15% last week.

CB-Intel wrote last week that yields at T-Note auctions would continue declining due to a combination of reasons, including strong demand from offshore investors.

The weighted issue average yield on the June 25, 2021 Note was 0.1963% which is also a record low for a 10-month Note. The closest to this was the April 23, 2021 Note tendered last week where the weighted average issue yield was 0.1930%.

Demand for the June Note was strong with coverage ratio of 7.277 times, and the dollar amount of A$7.277 billion was the highest on record for a Note of over six-month duration.