Australia Buys Back Record A$9.3 Billion of 2017 Bonds

  • Bonds were bought from the central bank and cancelled
  • Repurchase largest on record in data that goes back to 2002-3

Australia repurchased a record A$9.3 billion ($6.7 billion) of February 2017 bonds and canceled them.

The bonds were bought from the Reserve Bank of Australia and A$11.8 billion of the debt remains on issue, the Australian office of Financial Management said in an e-mailed statement. The buy back was the largest on record in data from the AOFM that goes back to the 2002-3 financial year.

The AOFM’s move helps smooth out the maturity profile of Australian government securities as well as for benchmark bond indexes, according to Commonwealth Bank of Australia. It will also add to liquidity in market as the AOFM gears up to sell about A$90 billion of bonds in the year to June 30, 2017.

“One impact that this is having is putting additional cash into the fixed income market, which along with a very large maturity of June 2016 bonds means there is a lot of cash on the sidelines potentially to come back into the bond market,” Adam Donaldson, head of debt research at Commonwealth Bank of Australia said by phone. There’d be “plenty of cash that can be reinvested into the bond market,” as new issues come.

Some A$15.9 billion of bonds are due for redemption this month, according to data compiled by Bloomberg. About A$395.7 billion of treasury bonds were outstanding as of Friday in Sydney, according to the AOFM’s website. It also said the RBA will start publishing each month its holdings of short-dated Australian government securities.

The 2017 note declined to A$1,029.41 per A$1,000 face value, the lowest price level in five years, according to data compiled by Bloomberg.

Before it's here, it's on the Bloomberg Terminal.