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The Australian Office of Financial Management (AOFM) unveiled this week the Australian government's first ever launch of 30 year T-bonds

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The Australian Office of Financial Management (AOFM) unveiled this

week the Australian government's first ever launch of 30 year T-bonds. The bonds are to pay an indexed rate or, variable rate, of 1% to 1.07% over the implied return of 10 year bonds which as at the date of this report was 2.21%. The AAA-rated bond tenders are likely to attract life insurance companies from around the world keen to match their long term liabilities with well rated income securities. 


a.    Outline the tender process of Australian government bonds and why perhaps life insurance and superannuation companies might seek to invest in them. (4 marks)
 
b.    What impact does the fact that Australia still has managed to hang on to its AAA rating have on the bonds being issued? (3 marks)
 
c.    Assuming as an investor rather then investing in T-bonds you chose to invest in T-notes, what would be the face value of a 180-day T-note given a yield of 1.66% p.a. and a purchase price of $5,000,000? (3 marks)