A mystery buyer outbid dozens of others at recent sales of Australian government bonds to snap up all the A$1.6 billion ($1.47 billion) on offer, in a highly unusual and expensive vote of confidence in the country's debt.
Dealers were unsure if it was the same buyer at each sale, but they suspected it was, raising the prospect that a foreign central bank or sovereign wealth fund was the unknown bidder.
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Traders reckoned the buyer, or buyers, would have to have deep pockets and a relaxed attitude to costs to outspend between 40 and 52 other bids in the auctions on July 16, July 31 and August 2.
"It is very rare to see one buyer on three different tenders. It could be a central bank or sovereign wealth fund," said a bond trader at an Asian bank in Sydney.
It would be a positive for the Australian dollar, and could be one reason it has rallied recently after several months of losses. The Aussie dollar was up at $0.9213 on Monday after bouncing from three-year lows under 89 cents touched just a couple of weeks ago.
It would also be a vote of confidence in Australia's debt even as the Labor government has put back plans to return its budget to surplus and intends to borrow more.
COST NOT A PRIORITY
The last time an auction was taken by just one buyer was back in April 2008 and that had been for a much smaller amount.
"To outbid everyone at an auction is an expensive way to build a portfolio," said a dealer at a local bank. "Clearly, cost was not an over-riding factor. Frankly, people are scratching their heads wondering why they would do it this way."
Also puzzling was the eclectic range of debt purchased. Some A$700 million of both a 2017 and a 2027 issue along with A$200 million of a 2022 inflation-linked offer all went to a single bidder.
On that evidence, dealers suspected a foreign central bank or sovereign wealth fund. Central banks have been active buyers of Australian dollars in recent years as part of their efforts to diversify currency reserves away from U.S. dollars and euro.
Even institutions as financially conservative as the Swiss National Bank and Bundesbank have started adding Australian dollars to their reserves.
The Australian Office of Financial Management (AOFM) this month increased its bond issuance target for the fiscal year to end June 2014 by A$10 billion to A$60 billion.
Total debt on issue will now peak around A$370 billion by 2015/16, but that is still minor compared to many other major economies and one reason Australia has a triple A credit rating.
Around 70 percent of government debt is currently held by offshore investors, down from a peak of 78 percent last year but a long way above the levels seen in the early 2000's.
(Reporting by Wayne Cole; Editing by Simon Cameron-Moore)