The federal government may by about to lift the nation's debt limit, but the agency that manages the commonwealth's debt portfolio says there is strong demand for Australian bonds.
Treasurer Joe Hockey last month announced plans to legislate to lift the debt ceiling to $500 billion from $300 billion when the new parliament sits next week.
The current limit will be reached on December 12 and and debt is forecast to peak at more than $400 billion in 2015/16, underlying the government's urgency.
The Australian Office of Financial Management (AOFM) says while yields, or interest rates, on commonwealth government securities (CGS) had risen over 2012/13, they remained at relatively low historic levels.
It had reaped this low borrowing cost by locking in long-dated bond issues to benefit the Australian community, according to the agency's annual report.
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"We took confidence from new issuance being smoothly and readily absorbed into the market, as well as receiving feedback from intermediaries and investors that continued to convey underlying strength and market support," AOFM chief Rob Nicholl said in the report.
He said the strong and positive trade links between Australia and the high-growth Asian region encouraged debt investors.
"They see Australia as being well-placed to benefit from an expected underlying medium to longer-term growth trend in Asia," he said.
