Just before Christmas the AOFM published its 2015/2016 borrowing programme and its intention to issue a new benchmark 2.75% November 2027 bond in mid-January. Initial price guidance for the issue was 13.5bps to 17.5 bps over the implied yield for the primary 10 year Treasury bond futures contract. The $4.6 billion (face value) offer was sold at a yield to maturity of 2.865% which, given the guidance, was much as expected. The March 10 year futures contract was at 2.655% at the end of the business day.
The new bond provides additional liquidity for investors around the important 10 year benchmark.