SYDNEY, Oct 7 (Reuters) - The Australian government will
issue bonds worth A$240 billion ($170.4 billion) in the current
financial year, surprisingly unchanged from earlier projections
despite a massive increase in spending to bolster the
The Australian Office of Financial Management (AOFM), which
manages the government's debt, said on Wednesday the weekly bond
tender would be between A$3 billion and A$4 billion in most
weeks for the remainder of the 2020 calendar year, from A$4-A$5
The AOFM added that A$117 billion of the A$240 billion
expected issuances for the year-ending June 2021 has already
"An unchanged issuance task and no new bonds this calendar
year mean a flatter curve and tighter spreads," said Robert
Thompson, Sydney-based rates strategist at RBC.
AOFM's unchanged issuance target comes despite a
larger-than-expected budget deficit estimate for the 2020/21
fiscal year of A$213.7 billion announced on Tuesday.
The AOFM now has more than A$100 billion on deposit with the
Reserve Bank of Australia (RBA), which has been buying
three-year government debt in the secondary market since
mid-March to help keep borrowing costs low.
"The super-sized buffer seems to have allowed the AOFM to
hold off on any task increases," Thompson added.
"It also reinforces our suspicion that the AOFM took a much
more conservative approach than Treasury back in July in
forecasting debt raising requirements."
Yields on three-year government bonds slipped for
a second straight day to 0.145% on Wednesday, much lower than
the RBA's cash rate target of 0.25%.
Yields on the 10-year paper eased to 0.8% in
anticipation long-term rates will remain low for some while yet.
The RBA has said it would keep policy accommodative until
progress is being made toward full employment and inflation is
back within its medium-term range of 2% to 3%.
Economists are widely expecting a 15 basis point cut to 0.1%
at the RBA's next policy meeting in November.
($1 = 1.4086 Australian dollars)
(Reporting by Swati Pandey; Additional reporting by Renju Jose;
Editing by Kim Coghill)