Australia’s government will sell a 15-year bond tomorrow, the first such sale since 1986, after a record rally in existing notes.
The 4.75 percent security maturing April 21, 2027, is expected to price at between 32.5 and 35.5 basis points above the implied yield on 10-year bond futures, the Australian Office of Financial Management said today in a statement. The issue is expected to be of benchmark size and will be the first bond to be sold through a group of banks rather than at auction, the Canberra-based debt manager said.
“I think it will be a reasonably successful issue,” said Sally Auld, a Sydney-based interest-rate strategist at JPMorgan Chase & Co., referring to the new Australian bond sales. “Relative to Bunds, gilts, even U.S. Treasuries or JGBs, Australian bonds still look reasonably attractive despite the fact that yields are lower historically for Australia.”
Yields on benchmark 10-year notes have climbed 24 basis points, or 0.24 percentage point, this month to 4.46 percent as of 12:01 p.m. in Sydney. The rate has pared the declines from this year’s record rally amid optimism that Australia’s economy is strong enough to ride out the impact of Europe’s sovereign-debt crisis. The 10-year yield declined nine straight months, the longest stretch since at least 1978, dropping 132.5 basis points over the period.