The appeal of inflation-linked bonds has been highlighted by strong demand for a $3.25 billion 10-year issue by the Australian Office of Financial Management (AOFM).
There was a total of $7.5 billion of bids at the final clearing price of the inflation-linked bonds and the Australian Financial Review reported the issue was heavily over subscribed, attracting more than 30 investors.
The AOFM conducts bond auctions on behalf of the federal government.
“The AOFM announces that the issue by syndication of a new 0.25% 21 November 2032 Treasury Indexed Bond has been priced at a real yield to maturity of negative 0.675 per cent,” the AOFM said in a statement.
“The issue size is $3.25 billion in face value terms. There was a total of $7.5 billion of bids at the final clearing price.”
National Australia Bank Limited; UBS AG, Australia Branch; and Westpac will act as Joint-Lead Managers for the issue.
Repurchase of February 2022 Treasury Indexed Bond
In conjunction with the syndicated offer, the AOFM repurchased $1,719.253 million (in face value terms) of the 1.25% 21 February 2022 Treasury Indexed Bond line at a real yield of negative 2.50 per cent.
Following settlement and cancellation of the bonds on Tuesday, 31 August 2021, the remaining volume on issue of the 1.25% 21 February 2022 Treasury Indexed Bond line will be $5,120.853 million.