Demand for ACGBs continues to decline – ANZ

In its latest report analyzing bond operations concerning the Australian Office of Financial Management (AOFM), the Australia and New Zealand Banking Group (ANZ) said that the demand for Australian Government Bonds (ACGBs) continues to decline based on various measures.

Key quotes

“Demand for government bonds in AOFM auctions has been declining through the year according to a number of measures.”

“We think the decline in breadth of demand most likely reflects Australia’s current low interest rate environment, with the spread to the US having fallen to record lows.”

“However, we don’t see a risk of a sharp increase in the cost of funding for the Government, even with reduced demand for ACGBs.”