Record-breaking Government Bond auction proves the world is ‘bullish’ on Australia

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The Australian Government’s economic bailout package is worth about VND 213 billion. To obtain this money, the Australian Government needs to sell its bonds (Commonwealth Government Securities) to banks in Australia and foreign investors, because the proceeds from taxation will not be enough. On Wednesday morning, the Australian Government, through the Australian Office of Finance Management, put these bonds on sale. Global investors scrambled to buy them. The government offered 4.5-year bonds with interest rates of 0.47 percent. On the surface, this is not a good investment.

So why do investors want to buy Australian bonds?

1. Australia is rated at a AAA level with the best ranking, the risk is very low. Australia is highly likely to fulfill its debt obligations

2. The current stock market looks like roller coaster ride, real estate is facing big challenges and many countries are staring at the current negative interest rates, any more investment. 0% are quite attractive. Investors can still sell bonds before maturity or wait for four and a half years to get back capital and interest.

Although the Australian economy, before coronavirus, was not very strong, but it still works well. That’s because Australia’s population has grown significantly over the past decade, raw material exports are high, Australians consume a lot and government spending continues to grow – all of which adds to GDP.

So the Australian Government no longer has to worry about a deficit of 250 billion to 300 billion dollars.

The Labor and Liberal Party has been continuously successful in managing the Australian economy for decades without recession. Australia had a big win this week, and that’s something Australia can be proud of.

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