AUD Swaps: Offered after earlier bid amid slower-than-expected GDP growth

• Bond futures erase losses as GDP grew slower than expected

• Swaps offered after earlier bid

• AOFM sells 2032 ACGBs

• New issues: Banco Santander plans 5y Kanga; Telstra 5y domestic bonds

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Bond futures erase losses as GDP grew slower than expected

AUD bond futures were weaker and were a few ticks lower in the morning, but rebounded after domestic data.

Official data released earlier today showed that GDP in Australia was up 0.5% quarter-on-quarter in the 4Q, down from 0.7% in the previous period and below economists’ expectation of 0.8% of growth.

Dealers said the market was expecting some upside surprise, and the weaker-than-expected growth has triggered renewed demand for AUD rates. “After recent data shocks this has inevitably prompted flows from the other side,” he said.

3-year bond future was down by 3-5 ticks in the morning, but quickly climbed to 10-ticks higher of 96.49 after the data. In mid-afternoon Sydney trading 3- and 10-year bond futures were 8- and 6-ticks higher at 96.47 and 96.205 respectively, and the 3s/10s futures curve were 2bps steeper at 26.5bps.

Swaps offered after earlier bid

Swaps were generally better bid in the morning as players prepared for some strong GDP growth data.

10-year, for example, was paid up to 4.4775% in early morning domestic trading. The data surprise then drove closing out of some prior positions in 10-year, as well as modest amount of receiving there. It traded down to 4.365% in the afternoon session before being marked around 4.3675% at time of writing, down from those traded around 4.43% near market close on Tuesday. 3-year traded 6-7bps higher of 4.10% before being offered down to 3.965% after lunch break.  5-year was subdued ahead of the data, and was offered down to 4.115% intraday, down from those traded above 4.2% on the previous day.

EFPs were mixed with 3-year down marginally at just below 44.5bps, 5-year up marginally at 60bps, 10-year down 0.25bp at 57.5bps.

AOFM sells 2032 ACGBs

The AOFM sold AUD1.2bn in 1.75% November 21, 2032 ACGBs at tender today, bringing the new size of the line to AUD29bn. Bid-to-cover was 2.79 times and average yield was 3.8927%.

New issues: Banco Santander plans 5y Kanga; Telstra 5y domestic bonds

• Banco Santander is planning to sell 5-year Kangaroo bonds via ANZ, Mizuho and TD Securities with pricing around AUD 3M BBSW + 160bps.

   

• Rentenbank has increased the size of its existing 4%, January 19, 2028 Kangaroo bonds by AUD50m to bring the new size to AUD350m. Priced at 78.25bps over ACGBs. Leads are Bayern LB, JPM, NatWest Markets and NORD/LB.

   

• Telstra Group has launched a 5-year senior unsecured fixed-rate bond deal with pricing around +100-105bps area. Leads are ANZ, CBA, NAB and WBC. Final pricing is expected later today.