Plenty of demand for Treasury indexed bond 05 October 2009 5:41PM Philip Bayley The first Treasury Indexed Bond from the Australian government, a planned $1 billion issue, was rushed by both domestic and offshore investors and was ultimately oversubscribed by 5.5 times. This is in line with the level of oversubscription seen when TIB's were last tendered in February 2003. This may say something about the level of demand for inflation-linked product as such, but it may also reflect investor fears about rising inflation as the global economy recovers from the GFC.In the end, the Australian Office of Financial Management opted to sell A$4 billion of the capital indexed bonds, with a September 2025 maturity, at a real yield of 3.04 per cent per annum. Pricing was at the tight end of the quoted zero to five basis points range over the August 2020 TIB, coming in at a spread of just one basis point. New Zealand's Debt Management Office sold NZ$100 million, NZ$150 million and NZ$100 million of April 2013, December 2017 and May 2021 bonds, last week. The bonds were oversubscribed 4.4 times, 2.0 times and 1.6 times and achieved weighted average yields of 4.94 per cent, 5.60 per cent and 5.96 per cent, respectively. NZDMO is no doubt now pondering the success of AOFM's TIB issue, given its comments the week before that inflation-indexed bond issuance remains an option.