Planned Debt Management Activities in 2002-03

9 July 2002

This press release outlines the debt management transactions the AOFM
expects to undertake this financial year. These transactions relate to
Treasury Bonds, Treasury Indexed Bonds, Treasury Notes and Australian
dollar interest rate swaps.

Treasury Bonds

Issuance tenders

Consistent with indications provided in the 2002-03 Commonwealth Government
Budget, the AOFM is planning issuance of between $2 billion and $3 billion
of Treasury Fixed Coupon Bonds in the coming financial year.

At this stage issuance is planned for the following dates.

  • 13 August 2002;
  • 15 October 2002; and
  • 10 December 2002.

The Commonwealth reserves the right to amend this schedule for any reason.

Issuance tenders will be confirmed at midday on the day prior to a scheduled
tender. These announcements will provide full details of the tender, including
details of the stock and volume that is being offered. Tenders will continue
to be conducted on a competitive tender basis, closing at 12:15 pm
on the day of the tender, with results being announced at 12:45 pm
on that day.

Tenders to be conducted in the second half of the financial year will
be announced early in the new calendar year. At this stage it is expected
a further three tenders will be conducted at intervals of around every
six to eight weeks.

Conversion tenders

The AOFM also intends conducting conversion tenders, although the frequency
of these tenders will depend on market interest. Conversions offer holders
of nominated Treasury Bonds the opportunity to convert their holdings
into holdings of other nominated Treasury Bonds.

A conversion tender will be held on 16 July 2002. The conversion
tender will be for a maximum of $300 million face value of the 10% October 2007
Treasury Fixed Coupon Bond (TB112) to be converted into the equivalent
face value of the 6.5% May 2013 Treasury Fixed Coupon Bond (TB118).
The Commonwealth reserves the right to convert any amount up to the maximum
face value of the bonds. Further details concerning this conversion tender
are available in an accompanying press release (AOFM press release 07/2002).

Repurchases

Conversions to date have reduced the amount of the February 2006
bond outstanding to around $1 billion. The AOFM intends to stand
in the market from time to time to repurchase this security. These repurchases
will be undertaken at what is assessed to be `fair value’. The AOFM is
prepared to leave the existing outstandings in the market if they cannot
be repurchased at `fair value’. The precise operational details in respect
of these repurchases will be announced in the near future.

The AOFM will also repurchase non-benchmark and rebateable Treasury Bonds
on a reverse enquiry basis. The AOFM is prepared to repurchase non-benchmark
bonds at yields equivalent to 5 basis points above the `fair value’ benchmark
curve and rebateable bonds at yields equivalent to 10 basis points below
the `fair value’ benchmark curve.

Treasury Indexed Bonds

Consistent with indications provided in the 2002-03 Commonwealth Government
Budget, the AOFM is planning issuance of $200 million of Treasury Indexed
Bonds in the coming financial year.

At this stage issuance is planned for the following dates. A maximum
of $50 million will be issued at each tender.

• 22 August 2002;

• 21 November 2002;

• 20 February 2003; and

• 22 May 2003.

The Commonwealth reserves the right to amend this schedule for any reason.

As for Treasury Bonds, issuance tenders will be confirmed at midday on
the day prior to a scheduled tender. These announcements will provide
full details of the tender, including details of the stock and volume
that is being offered. Tenders will continue to be conducted on a competitive
tender basis, closing at 12:15 pm on the day of the tender, with
results being announced at 12:45 pm on that day.

Treasury Notes

Treasury Notes are short-dated debt instruments used to assist in managing
the Commonwealth’s within-year funding requirement. It was announced in
the 2002-03 Commonwealth Budget that Treasury Notes would be issued as
required to achieve the most efficient cash management outcomes for the
Commonwealth. Further details regarding issuance of Treasury Notes is
available in AOFM press release 05/2002, issued on 15 May 2002.

The Commonwealth is expected to have a requirement to issue Treasury
Notes from around late-August 2002 to February 2003. At this
stage it is expected that tenders of around $1 billion per week will
be conducted between late August and early October.

Interest Rate Swaps

The AOFM transacts Australian dollar interest swaps to assist in the
management of Commonwealth debt portfolio exposures.

At this stage, the AOFM is not intending to execute interest rate swaps
to achieve portfolio management objectives. Any change to this position
will be the subject of a future public announcement and be made well in
advance of any further interest rate swap transactions being executed.

Further details regarding the Commonwealth’s debt management activities
can be found at www.aofm.gov.au

CANBERRA
9 July 2002

Contact:
Mr Michael Allen
(02) 6263 1100

Last updated: 5 March 2014