AOFM's teething troubles 29 June 2015 4:31PM Philip Bayley The Australian Office of Financial management fell well short of its target when it held the first auction from its holding of residential mortgage-backed securities last week.The AOFM is selling down its A$4.6 billion RMBS portfolio, with the proceeds going to reduce government debt. RMBS with an original face value of $688 million were offered for sale and bids totalling almost $1.7 billion (in original face value terms) were received, but only $216 million were accepted. In amortised face value terms, the bids accepted amounted to only $160.5 million. Either AOFM's price expectations were too high or bidders were expecting bargain basement prices. No doubt there was some testing of the water in this first auction and the results for the second auction due on July 14 will be better. AOFM also announced the details of the third auction after releasing the results of the first. The third auction will take place on August 17, with almost $1.7 billion (in original face value terms) being offered. Hopefully the expectations of bidders and AOFM will have bedded down by then.