AUD Swaps: Budget surplus drives longs bid; 2027 linker sale

Budget Australia
AUD swaps saw paying mostly in 10y as the treasurer was looking to announce the country's first budge surplus in 15 years. The AOFM sold 2027 linkers.

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  • Bond futures weaker on budget surplus and China data

  • Longs bid; EFPs in

  • AOFM sells 2027 linkers

  • New issues


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Bond futures weaker on budget surplus and China data

10-year AUD bond future has been slightly leading a selloff today, despite further contraction in official retail sales (excluding inflation), and weak domestic spending data from CBA.


The move was driven by further rises in US treasury yields in overnight trading as an aftermath of the stronger-than-expected jobs data on Friday, and after Australia’ treasurer projected earlier today that the country is heading to its first budget surplus in 15 years. China’s April trade surplus was wider than March and beat expectations, backing thoughts that the economy in Australia would improve further.


In mid-afternoon Sydney trading 10-year bond future was down 6.5-ticks at 96.535, and the 3s/10s futures curve was 2bps steeper at 37bps.



Longs bid; EFPs in

The selloff in AUD rates has backed some paying interest in AUD swaps. A swapper reported decent amount of bid-side flow in 10-year at up to 4% in the morning session. It was last traded around 3.99%, or up from previous close of around 3.93%. 15-year traded up to more than 9bps higher of 4.1835% near mid-day. 3-year went through 3.515% intraday before last seen changing hands 2bps higher at 3.51%.


EFPs were mostly tighter with mild widening at the superlong-end. Key EFPs were marked as: 3-year down 0.5bp at 40.75bps, 5-year down marginally at 56bps, 10-year down 0.5bp at 53bps.



AOFM sells 2027 linkers

The AOFM sold AUD150m in 0.75% November 21, 2027 linkers at tender today, bringing the new size of the line to AUD7.05bn. Bid-to-cover was 4.17 times and average yield was 0.5222%.



New issues

  • ANZ self-led AUD1.15bn worth of May 15, 2033 bonds with quarterly call at par from May, 2028 as follows:


    • AUD275m, 5.845%.

    • AUD875m paying AUD 3M BBSW + 235bps.


  • Bendigo and Adelaide Bank raised AUD770m via selling May 15, 2026 bonds as follows:


    • AUD200m, 4.7%.

    • AUD550m paying AUD 3M BBSW + 125bps.


  • Korea Development Bank issued via Mizuho AUD30m in 5% May 15, 2033 bonds.


  • New South Wales Treasury Corp added AUD500m to its existing 1.75%, March 20, 2034 bond line to bring the new size to AUD6.27bn. Priced at ACGBs + 63bps.


  • Treasury Corp of Victoria upsized its existing 2.25%, November 20, 2034 bond line by AUD100m to AUD5.63bn. Priced at ACGBs + 57.5bps.