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Mint
3 days ago
- Business
- Mint
Australian Bond Auction Draws Weakest Demand in Six Years
(Bloomberg) -- An auction of 12-year Australian government bonds drew the weakest demand in about six years amid higher domestic corporate issuances and a period of outperformance. The bid-to-cover ratio — a key gauge of interest — at the auction of A$1.2 billion ($775 million) worth of bonds maturing in April 2037 was 1.98 on Tuesday, according to the Australian Office of Financial Management. That was the lowest since July 2019 for notes with residual maturities of 10 to 12 years, according to Bloomberg calculations. The weak demand comes as Commonwealth Bank of Australia, ING Groep NV and BPCE SA also tapped Australian markets on Tuesday. Recent gains in sovereign bonds also weighed on the sale. Australia's financial year is also coming to an end after a heavy year of issuance so dealers may also be stepping back as they close their books, said Kit Lowe, an analyst at InTouch Capital Markets Pte. Ltd. in Sydney. As a sale of 2031 notes due later this week is smaller than Tuesday's auction on a risk-adjusted basis, 'I would expect demand to recover,' said Lowe. The April 2037 note forms part of Australia's 10-year bond futures basket, the main avenue for investors to trade the nation's benchmark debt. The cash notes have outperformed peers this quarter amid fiscal issues in the US and a dovish tilt from the Reserve Bank of Australia, as it continues to cut interest rates. The spread between benchmark 10-year bond and its Treasury counterpart fell to the lowest since January on Tuesday. More stories like this are available on
Yahoo
28-03-2025
- Business
- Yahoo
Australia's Bond Demand Gauge Relative to Supply Hits Record Low
(Bloomberg) -- The Australian rates market is signaling that the demand for the nation's sovereign bonds has slumped to a record low relative to supply, underscoring investor concern over heavy debt issuance. They Built a Secret Apartment in a Mall. Now the Mall Is Dying. Why Did the Government Declare War on My Adorable Tiny Truck? How SUVs Are Making Traffic Worse Trump Slashed International Aid. Geneva Is Feeling the Impact. These US Bridges Face High Risk of Catastrophic Ship Strikes The spread between 10-year interest-rate swaps and similar-tenor bond futures slid to negative 14.75 basis points this week, the lowest in Bloomberg-compiled data going back to 1998. That gap is often seen as a gauge of the demand for debt as swaps and bond futures typically move in tandem, unless there is a bond-supply risk. The nation's 10-year yields rose to the highest in a month after the Australian Office of Financial Management said it plans to issue about A$150 billion ($94.4 billion) of government bonds in the 12 months ending June 2026. That's higher than the revised projection of A$100 billion for the current fiscal year. Increasing government bond supply into fiscal year ending June 2026 has been helping put downward pressure on spreads, said Ken Crompton, head of rates strategy at National Australia Bank Ltd. 'The combination of flows and higher issuance points to spreads remaining tight,' he said, adding that 'The swap spread curve will thus remain inverted.' Business Schools Are Back Google Is Searching for an Answer to ChatGPT A New 'China Shock' Is Destroying Jobs Around the World The Richest Americans Kept the Economy Booming. What Happens When They Stop Spending? How TD Became America's Most Convenient Bank for Money Launderers ©2025 Bloomberg L.P. Sign in to access your portfolio
