A ratio under 1 is exceptionally rare for Australian government debt, which carries the top triple-A credit rating and usually draws more than enough demand. An auction last week of A$500 million of the same January notes drew bids worth A$1.95 billion. The auction miss was unusual enough for the AOFM to issue a statement declaring, "Today's result is in no way a default by the Commonwealth of Australia.

"Treasury notes are a short-term debt instrument, and as such, are not part of planned issuance to achieve the AOFM's annual funding task." The AOFM plans to issue A$58 billion in treasury bonds in the year to the end of June 2020 and now has securities on issue worth A$567 billion.

The agency said treasury notes were used for short-term cash management, and it held plenty of liquid assets to manage funding needs week-to-week. Analysts saw no need for alarm. "This was a technical issue and we're not concerned at all," said Martin Whetton, head of bond & rates strategy at Commonwealth Bank of Australia. "The AOFM has billions in cash on hand and a miss of A$64 million in a single auction is immaterial." He added, "It's more an issue of maturity, with buyers clearly favouring the longer-dated offer on this occasion."

Copyright Reuters, 2019