Australia Sells Linkers at Record-Low Yield on Inflation Outlook Concerns

The Australian government sold A$900 million ($965 million) of inflation-linked notes at a yield of 1.37 percent, the least ever in offerings that started in 1985.

The government sold the 1.25 percent Feb. 21, 2022 notes at a gross price of A$98.930 per A$100 face value, the Canberra- based Australian Office of Financial Management said today in a statement. The sale implies that investors expect the inflation rate to average 2.80 percent over the lifetime of the debt, the government funding arm said in a separate presentation to investors.

That would be the highest so-called breakeven rate for 10- year Australian debt since Aug. 1, data compiled by Bloomberg show. The AOFM yesterday said it planned to sell A$750 million of the debt, also known as linkers, at a spread of six to eight basis points to the existing 2020 inflation-linked notes. The rate at today’s sale was six basis points higher than the 2020 yield, the AOFM said.

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