We are not even into the final week of January and the Federal Government has already arranged borrowings to the tune of $11.4 billion. Mind you of this, $9.3 billion is from the syndicated sale of December 2021 bonds just announced, with settlement on 27 January, 2017. $9.3 billion is the largest bond sale ever undertaken by the AOFM, with the previous record held by a syndicated sale of $7.6 billion March 2047s in mid-October 2016.
Bids totalled $15.3 billion so the coverage ratio was around 1.65, which is a ratio usually considered to be quite low. However, the AOFM is known for surveying investor demand prior to auctions and sales. The transaction was also held in conjunction with a buy back of $3.1 billion of bonds maturing in 2017 so one could argue the net amount to be borrowed is substantially lower at $6.2 billion.
Source : AOFM
To put all of this in context, the AOFM issued bonds totalling $116.5 billion in 2016. Some of this was to finance maturing bonds or other bonds nearing maturity which were repurchased, but a good chunk of it was to finance the budget deficit as well as any other expenditure which is deemed not to part of the budget. In the 2016/2017 financial year, gross issuance is expected to be around $100 billion and about $74 billion in net terms.