7 August 2009
Treasury Indexed Bonds - Resumption of Issuance and Participation in Syndicate
Operational Notice 11/2009 of 13 May 2009 provided information on the planned issuance of Commonwealth Government Securities by the Australian Office of Financial Management (AOFM) during the 2009-10 financial year. It indicated that consideration would be given to resuming the issuance of Treasury Indexed Bonds (TIBs), which were last issued in 2003.
Following consultations with a wide range of financial market participants the AOFM has decided to proceed with the issuance of TIBs.
- Issuance of TIBs will assist management of Australian Government debt by widening the range of available debt instruments, diversifying risk and tapping additional sources of investor demand.
The AOFM expects that its next issue of TIBs will be made in late September or early October 2009. This will be a new capital indexed bond with the same structure and features as the TIBs currently on issue. The maturity of the bond will be determined closer to the time of issuance. The AOFM intends the bond to become a market benchmark and will undertake further issuance as necessary to achieve this.
The issue will be launched through a syndication process. The AOFM is seeking expressions of interest for participation in the syndicate and invites dealers to notify their interest by email to email@example.com by 5.00 pm Australian Eastern Standard Time on 17 August 2009. Notifications should include a summary of the applicant’s expertise and experience in the placement of indexed bonds with domestic and overseas investors.
A new Information Memorandum for TIBs will be provided prior to the new issue. When the volume on issue of the new line has been built up to a liquid level, it is planned to issue other indexed bond lines. At this stage it is not planned to issue further amounts into existing TIB lines. However, it is expected that provision will be made for holders of existing August 2010 TIBs to convert them to the new TIB line as part of the initial issue.