Editor’s note: This is general educational information about how Australian Government debt is structured, reported and costed. It is not investment advice and does not recommend any security. All figures are as published in the Budget documents and legislation listed at the end, and carry the dates given there.

Analysis: the sensitivity table is the real answer on pricing

Because the interest estimates rest on a yield assumption, the Budget publishes what happens when the assumption is wrong. Statement 7 models bond yields increasing by 100 basis points by 30 June 2026, held constant to 2028-29 and then converging linearly to a long-run assumption of nominal GDP growth over 15 years. Under that higher yield case the underlying cash balance deteriorates by 0.3 percentage points of GDP by 2035-36 and gross debt is 2.1 percentage points of GDP higher at 30 June 2036. The lower yield case is symmetric, improving the balance by 0.2 percentage points and reducing gross debt by 2.1 percentage points of GDP.

That is the closest thing the official record gives to a price for government borrowing, and its shape is instructive. A one percentage point move in yields does not reprice the debt at once, because the cost of what is already outstanding is locked at the yield achieved when each line was issued. It works through the stock gradually as new issuance replaces old, which is why a 6.4 year weighted average term to maturity on the bond portfolio matters as much as the level of yields on any given day.

The ownership figure is worth reading alongside the ceiling rather than on its own. A non-resident share of 51 per cent in the December 2024 quarter, well below the 77 per cent recorded in 2012, reflects both a larger stock of debt and a domestic buyer, the central bank, that stepped in during 2020 and 2021 and then stepped back. The proportion fell while the value rose, which is a statement about the denominator.

For a reader trying to judge Australian government borrowing, the useful documents are therefore the ones with dates attached: the direction fixing the maximum face value, the line by line table showing which maturities carry which coupons, the quarterly holdings series, and the stated cost of borrowing assumption. The commentary that matters is the difference between them from one update to the next.

What the documents say

Australian Government Securities are not issued into a vacuum. There is a statutory ceiling on how much can be outstanding, a published inventory of every bond line with its coupon and maturity, a quarterly figure for how much of it foreigners hold, and an explicit assumption about what the next tranche will cost. The Budget’s Debt Statement puts all four in one place, and reading it is a better guide to how the government borrows than any description of a single auction.

The ceiling is set by direction, not by the Budget

The Commonwealth Inscribed Stock Act 1911 supplies the legal frame. Its Part VA deals with Treasury Bonds, including the power to make out and issue them at section 51A and their sale at section 51B, and Part VB covers delegations and directions by the Governor General and the Treasurer, including section 51JA.

The Act requires the Treasurer to issue a direction stipulating the maximum face value of relevant securities that may be on issue. Effective from 7 October 2020, the then Treasurer directed that the maximum face value of securities that can be on issue is $1,200 billion. Certain stock and securities are excluded from that limit, as set out in subsection 51JA(2A) of the Act.

Against that ceiling, gross debt is estimated at $1,022 billion in 2025-26, or 35.5 per cent of GDP, rising to $1,223 billion and 36.8 per cent of GDP in 2028-29. The Debt Statement also reports a within-year peak separately from the end-of-year figure, and notes that the value and timing of those peaks are subject to considerable uncertainty. The Australian Office of Financial Management is responsible for issuing the securities and exercises operational independence in doing so.

What is actually on issue

The inventory is published line by line. As at 11 March 2025, Treasury Bonds accounted for $869,349 million of face value, Treasury Indexed Bonds $41,085 million and Treasury Notes $41,500 million, for a total of $951,934 million subject to the Treasurer’s direction and $951,939 million including other stock and securities. Market values differ from face values in each case, and the market value of the total was $899,446 million.

There were 30 Treasury Bond lines on issue at that date, with a weighted average term to maturity of 6.4 years and the longest maturity extending to June 2054. Coupons across those lines run from 0.25 per cent on the November 2025 maturity to 4.75 per cent on the April 2027 and June 2054 lines, and every line pays interest twice yearly. One of them is a Green Treasury Bond maturing in June 2034, the first of which was issued in June 2024, with the inaugural allocation and impact report published in February 2025.

The indexed and short-dated instruments work differently. There were seven Treasury Indexed Bond lines, with a weighted average term to maturity of 8.8 years and the longest maturity extending to February 2050, and these pay interest quarterly rather than twice yearly. There were nine Treasury Note lines, and Treasury Notes do not pay a coupon at all, with the interest payment occurring at maturity.

Ownership is reported too. In the December 2024 quarter, the proportion of non-resident holdings of Australian Government Securities was 51 per cent, down from historical highs of 77 per cent in 2012. The Budget attributes the fall to non-resident buying not keeping pace with issuance, and to the Reserve Bank of Australia’s bond purchase operations in 2020 and 2021 reducing the amount available to other investors, while noting the value of non-resident holdings has increased significantly over the period.

What the debt costs, and on what assumption

The Debt Statement is explicit about the two components of its interest estimates. The cost of securities already on issue reflects the actual yield at the time of issuance. The expected cost of future issuance is based on a recent average of daily spot rates across the yield curve at the time of a budget estimates update.

That second component is a stated assumption rather than a forecast of the market. The assumed weighted average cost of borrowing for future issuance of Treasury Bonds over the forward estimates decreased to 4.3 per cent, against 4.4 per cent assumed at the 2024-25 MYEFO and 2.2 per cent at the 2022 Pre-election Economic and Fiscal Outlook.

Interest payments on securities are estimated at $26,303 million in 2025-26, rising to $36,623 million in 2028-29. Total interest payments by the end of the forward estimates are estimated at $38.2 billion, of which $36.6 billion relates to securities on issue, with interest receipts of $10,109 million in the final year. Net debt is estimated at $620,345 million in 2025-26 and $768,236 million in 2028-29, measured as interest bearing liabilities including securities at market value, less cash and deposits, advances paid, and investments, loans and placements.