Australia Sells A$7.6 Billion of 30-Year Bonds in Record Deal

(Bloomberg) -- Australia’s government sold its biggest-ever bond, raising A$7.6 billion ($5.8 billion) in its first ever offering of 30-year bonds.

The new March 2047 securities were priced to yield 3.27 percent, the Australian Office of Financial Management said in a statement. That equated to 101.5 basis points more than the 10-year bond future. The bank-managed transaction further extends the nation’s yield curve following the AOFM’s sale of 2039 bonds a year ago.

The government’s borrowing needs have blown out as lower commodity prices and reduced mining investment sapped government revenues, while the authorities have also struggled to rein in spending. The country is in the midst of its longest stretch of budget deficits since at least 1970 and expectations for a return to surplus have been repeatedly pushed back. The face value of the government debt pile at the end of last week was A$443 billion and budget estimates have it climbing to almost A$500 billion by the end of June 2017.

“I think many investors -- including us -- were very interested, as the bond is very cheap,” Ben Alexander, who helps oversee A$6.2 billion as principal at Ardea Investment Management in Sydney, said before the AOFM pricing announcement. “The market has really made room for the issue.”

To contact the reporter on this story: Narayanan Somasundaram in Sydney at nsomasundara@bloomberg.net. To contact the editors responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net, Benjamin Purvis, Naoto Hosoda