Following the release of the Federal Government 2017/2018 budget, the AOFM has announced it intends to issue around $80 billion of Treasury bonds in the 2017/2018 financial year. $46 billion worth of various bonds will be issued to finance existing bonds which are due to mature or are planned for repurchase, leaving net issuance at $34 billion. On top of this, $5 billion of index-linked bonds (ILBs) will be issued with an as-yet-unspecified amount of November 2018 ILBs to be repurchased.
The planned issuance of $80 billion bonds and $5 billion ILBs represents a fall in bond and ILB issuance from previous years. In the financial year to date, $92 billion bonds and $2.1 billion ILBs have been issued while in the 2015/2016 year $96.2 billion bonds and $2.4 billion ILBs were issued. New lines are planned in the form of November 2022s, November 2029s and May 2041s. There will also be a new line of ILBs which will have a 2027 or 2028 maturity dates. While the November 2022 and November 2029 lines will be issued some time during 2017/2018, the May 2041 line will not be issued until the 2018/2019 year. This particular bond line has been created as part of the AOFM’s commitment to the 20 year Treasury bond futures contract and so we can expect to see regular new issues of the May 2041s and bonds with similar tenors in the future.
