Australian bond traders suspect mystery buyer a central bank

Mon Aug 19, 2013 1:05am EDT
 
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By Wayne Cole

SYDNEY (Reuters) - A mystery buyer outbid dozens of others at recent sales of Australian government bonds to snap up all the A$1.6 billion ($1.47 billion) on offer, in a highly unusual and expensive vote of confidence in the country's debt.

Dealers were unsure if it was the same buyer at each sale, but they suspected it was, raising the prospect that a foreign central bank or sovereign wealth fund was the unknown bidder.

Traders reckoned the buyer, or buyers, would have to have deep pockets and a relaxed attitude to costs to outspend between 40 and 52 other bids in the auctions on July 16, July 31 and August 2.

"It is very rare to see one buyer on three different tenders. It could be a central bank or sovereign wealth fund," said a bond trader at an Asian bank in Sydney.

It would be a positive for the Australian dollar, and could be one reason it has rallied recently after several months of losses. The Aussie dollar was up at $0.9213 on Monday after bouncing from three-year lows under 89 cents touched just a couple of weeks ago.

It would also be a vote of confidence in Australia's debt even as the Labor government has put back plans to return its budget to surplus and intends to borrow more.

COST NOT A PRIORITY

The last time an auction was taken by just one buyer was back in April 2008 and that had been for a much smaller amount.   Continued...