Cash Management – Short term Investments and Purchases of Maturing Stock

15 December 2009

This notice provides an update of the planned short-term investment activity by the Australian Office of Financial Management (AOFM) in its management of the Government’s daily cash balances.

As part of its cash management role, the AOFM currently invests surplus funds in term deposits with the Reserve Bank of Australia, and bank accepted bills and certificates of deposit issued by Authorised Deposit-taking Institutions.  To further enhance the efficient investment of short-term funds, the AOFM intends to extend the range of eligible investments for short-term cash management purposes to include short-dated State government bonds with maturities on or before 30 June 2011.  It will also consider buying back and cancelling some Treasury Bonds and Treasury Indexed Bonds that would otherwise mature in 2010-11.

These transactions will result in lower average cash balances than would otherwise be the case.  They will also help smooth the volume of gross issuance of Treasury Bonds and Treasury Indexed Bonds between the two years 2009-10 and 2010-11.

The State government bonds purchased may be used by the AOFM as collateral under repurchase (‘repo’) transactions issuance as part of its daily cash management.  The AOFM will look to negotiate repurchase agreements with AOFM Investment Facility dealing panel members in early 2010.

Purchases of Treasury Bonds and Treasury Indexed Bonds due to mature in 2010-11 will be executed by the AOFM with the Reserve Bank of Australia.

AOFM Investment Facility – Conditions of Panel Participation

Investments in short-dated State government bonds will be transacted only with members of the AOFM Investment Facility dealing panel and the Reserve Bank of Australia.

Publication of Investment Holdings

The AOFM will publish, by the fifth business day of each month, a high level summary of the short and long-term investment holdings at the end of the previous month.

Last updated: 31 July 2015