$27bn more in government bonds next year

The Australian government expects the face value of treasury bonds on issue to rise to around A$260 billion at June 2014, up from $233 billion at June 2013, Treasury projected in last night's budget papers.

The Australian Office of Financial Management is likely to release its plans for handling this increase in the borrowing task today.

Treasury noted that the AOFM's approach in recent years has been to lengthen both the nominal and real yield curves gradually. Treasury said the weighted average term to maturity of Australia's treasury bond portfolio increased to 5.22 years as at March 2013 from 4.64 years March 2011 .

Treasury argued that increasing the term to maturity of debt reduces both refinancing risk and the variability of public debt interest costs.

Net debt for the Australian government is now expected to peak at $191.6 billion in 2014‑15 (11.4 per cent of GDP), falling to $185.7 billion (10.0 per cent of GDP) in four years time.