The Australian Office of Financial Management (AOFM), the Commonwealth Government’s central borrowing authority, is tapping the market with a new benchmark bond offering. The issue has an 11-year maturity, set to mature on October 21, 2037. The AOFM acts as the central borrowing authority for the Commonwealth, managing the Government’s debt and investment portfolios. It aims to ensure the Government’s financing needs are met efficiently.
While the AOFM has not disclosed the issue size, the offering has garnered significant investor interest. Joint lead managers Barrenjoey, National Australia Bank, UBS, and Westpac have amassed an order book exceeding $42 billion. This robust demand underscores strong market confidence in Australian government debt.
The new bond will carry a coupon of 4.75 per cent. It is being marketed with a spread of 5 to 7 basis points above the 10-year bond future, translating to an indicative yield between 4.845 per cent and 4.865 per cent. UBS is managing the billing, delivery, and risk for this transaction.
The bonds boast a triple-A rating from all three major credit rating agencies, reflecting the AOFM’s strong creditworthiness. Pricing is expected to occur on Wednesday, January 21, or potentially sooner, depending on market conditions.
