The Reserve Bank of Australia now owns close to 7% of the overall Australian government bond market.

The Reserve Bank of Australia

The Reserve Bank of Australia has purchased A$51.348 billion by face value in government securities since March 20, when it started buying bonds to hold down borrowing costs in the economy. Of those, 78.4% are federal government notes. The RBA, which last purchased debt on May 6, now owns close to 7% of the overall Australian government bond market.

Yields on federal and semi-government bonds spiked in mid-March, especially for longer-dated debt, as concerns about the economic impact of the coronavirus outbreak roiled global markets. The RBA started buying bonds to hold the three-year government yield near 0.25% — it closed Tuesday at 0.234% — and to bring yields down across the economy.

Bonds maturing in 2027 and 2028 have been the favorite target in terms of the face value purchased. The RBA bought A$10.6 billion worth of bonds maturing in 2027 (88% federally issued) and A$9.8 billion maturing in 2028 (87% federal).

RBA has purchased A$11.098 million in Australian state and territorial bonds since the start of the program. Queensland leads all semi-government issuers in bonds purchased by the RBA, at A$2.707 billion, closely followed by New South Wales at A$2.634 billion.

Long-Dated Open Market Operations are when the Bank purchases (or sells) eligible securities with terms to maturity greater than 18 months. These transactions are executed on an outright basis not under repurchase agreement, and for standard settlement date of T+2.

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