30 September 2009
Pricing of New 2025 Treasury Indexed Bond
The Australian Office of Financial Management (AOFM) announces that the syndicated offering of a new 3.0% 20 September 2025 Treasury Indexed Bond has been priced at a real yield to maturity of 3.04%, equating to a gross price of $99.703 per $100 face value of the bond.
The issue size is $4.0 billion in face value terms. This excludes $10 million that will be taken up by the Reserve Bank of Australia.
Settlement of the issue will occur on 8 October 2009.
The issue was launched at 8.30 am Australian Eastern Standard Time on 29 September 2009 with indicative price guidance of a yield spread of 0 to 5 basis points to the 20 August 2020 Treasury Indexed Bond. The order book was closed at 11.00 am Australian Eastern Standard Time today with bids totalling $5.486 billion. Following assessment of the bids it was decided to price the offer at a yield spread of +1 basis point to the 20 August 2020 Treasury Indexed Bond.
Holders of the 2010 Treasury Indexed Bond were offered the opportunity to convert each $100 face value of that bond (unadjusted for changes in the inflation-adjusted capital value of the bond) to $160 face value of the new 2025 Treasury Indexed Bond. The AOFM will repurchase $713 million face value of the 2010 Treasury Indexed Bond at a real yield to maturity of 1.82%. Following their repurchase these bonds will be cancelled.