The market’s response to the Australian Government’s 30-year bond reaffirms investor confidence in the long term prospects of the Australian economy.
Strong interest has seen $7.6 billion raised from investors, after the historic issue attracted bids totalling almost double that amount.
The Australian Office of Financial Management has confirmed a yield of 3.27 per cent.
This, along with Australia’striple-A sovereign rating, presented an attractive proposition to investors.
The strong appetite from both foreign and domestic investors for the Government’s 30-year bond demonstrates investor confidence in our country’s strong economy, policies and institutions.
The decision to issue a longer-dated bond is consistent with a strategy of lengthening the average term-to-maturity of the Australian Government’s debt portfolio.
This aims to reduce the impact of volatility in interest rates on the Government’s budget over time.
It will also further diversify the Government’s bond market investor base by attracting investors with an appetite for very long dated maturities, for example, pension funds, life insurance companies and fund managers.
Another positive outcome from extending the yield curve is that it provides a benchmark for longer-dated bond issuances in the private sector.