The record for the largest single Commonwealth Government bond (ACGB) sale has been broken again this week. The Australian Office of Financial Management (AOFM) sold $11 billion November 2028 ACGBs via a syndicated process, an amount which is normally raised by the AOFM over the space of five weeks. Total bids were reported to have exceeded $20 billion and most of the bonds were purchased by domestic banks and fund managers, at a yield to maturity of 3.005%.
The size of the offer seems to have some, albeit a small, effect on bond yields. Westpac suggested bond yields “had moved a little higher in anticipation of this issue” and bond yield did actually rise on the day. The AOFM announced the syndicated sale on 17 February 2017 when the 10 year bond yield was at 2.835% and by the close of business on the day of the sale the yield had risen 3bps to 2.865%. Bond yields have moved up or down by this amount for little or no reason in the past so whether this movement is sale-related or just normal variation is debatable.
