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Government Bond Issuance

Description and purpose

The Australian Office of Financial Management (AOFM) manages the Australian Government’s borrowing needs (debt management) and ensures that there is enough money in its bank account (the Official Public Account) to meet its payment obligations at all times (cash management).

The government’s payment obligations include public spending, investments and repaying debt. When tax receipts are not expected to meet the government’s payment obligations in any year, the AOFM borrows money through global financial markets. 


The AOFM currently issues three different instruments: Treasury Bonds, Treasury Indexed Bonds and Treasury Notes. Collectively, these instruments are referred to as Australian Government Securities (AGS). Treasury Bonds pay a fixed amount of interest (called a coupon) twice each year until the bond ‘matures’. Treasury Indexed Bonds pay a quarterly coupon that is linked to inflation. Treasury Notes are short term instruments that do not pay interest; rather, the investor pays less for them than they will receive at maturity.

Investors from Australia and overseas pay for the bonds, in return for regular interest payments and the repayment of principal at a set date in the future. Bonds (as financial instruments) are traded in financial markets.

Issuance Strategy

The AOFM sets an issuance strategy for each year. It is based on the mix of long-term and short-term debt and the mix of Treasury Bonds and Treasury Indexed Bonds. The AOFM aims for an outcome that balances the various risks and costs involved with different approaches under a range of possible financial market scenarios.