Australia Issues A$3.25B Of 2032 Treasury Indexed Bonds, Buys Back A$1.72B

By Sophia Rodrigues

(Sydney, August 24, 2021)—The Australian Office of Financial Management has issued A$3.25 of 0.25% November 2032 Treasury Indexed Bond after attracting an orderbook of A$7.5 billion.

The size of orderbook and the issue size was lower than A$7.8 billion receiving at the last syndication in September 2018 when A$3.75 billion of 1% February 2050 TIB was issued.

The issue was priced at a real yield to maturity of -0.675%.

That would be a spread of around 17bps over the mid-yield of the 2.5% September 2030 TIB.

The bond was launched on Monday at initial price guidance of 16bps to 19bps over the mid-yield of September 2030 TIB. At that time, the price guidance corresponded to a spread of around -181 to -178 basis points to the implied yield for the September 2021 10-year Treasury Bond Futures contract.

The issue will settle on August 31.

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

Fund managers are usually big buyers at TIB syndication and have bought as high as 86.3% of the issue at previous syndications.

Simultaneous with the bond syndication, the AOFM also offered to buy back the 1.25% 21 February 2022 TIB at a real yield of -2.5%. The AOFM repurchased A$1.72 billion of bonds in face value terms.

Following settlement and cancellation of the bonds on August 31, the remaining volume on issue of the 1.25% 21 February 2022 TIB line will be A$5.12 billion, AOFM said.