Australian Bond Exchange Weekly Update
5th September 2025
Key Points
- Australia: Australia’s GDP expanded by 0.6% in Q2 2025, lifting annual growth to 1.8%. The rebound was driven by a recent pickup in household spending, marking a shift after several weak quarters.
- United States: Job openings fell to 7.18m in July, undershooting expectations. Combined with Powell’s dovish tone, this supports expectations of Fed easing. U.S. Treasury yields declined, led by the front end.
- Eurozone: The ECB kept its deposit rate steady at 2.0% p.a. Inflation remains close to target, with July CPI stable at 2.1% YoY. Growth indicators continue to show sluggish momentum, keeping the easing debate alive.
- United Kingdom: The Bank of England left the Bank Rate unchanged at 4.00% p.a. July inflation held at 3.8% YoY, well above target, limiting room for rate cuts despite a slowing economy.
Market Insights
- Magnetic Rail’s fixed-rate note with a 9.25% p.a coupon is now trading on ABE
- Australian GDP growth accelerates to 1.8% YoY in Q2.
- RBA Governor Bullock warns stronger consumer spending could delay cuts.
- Australian Bond markets reprice easing: front-end yields rise, curve flattens.
- U.S. job openings fall further, reinforcing signs of labor market cooling.
- U.S. Treasury yields fell after soft jobs data, with the 2-year at 3.59% p.a. and the 10-year at 4.17% p.a.
RBA Governor cautioned on stronger consumer spending
Australia’s GDP expanded by 0.6% in Q2 2025, lifting annual growth to 1.8%. The rebound was driven by a recent pickup in household spending, marking a shift after several weak quarters.
RBA Governor Michele Bullock cautioned that stronger consumer spending could delay the timing of rate cuts. Bond markets reacted by repricing, with short-dated yields moving higher and flattening the curve as investors trimmed expectations for aggressive 2025 easing.
U.S. Labor Market Softening
U.S. job openings fell to 7.18 million in July, well below expectations, reinforcing a clear trend of cooling in the labor market. Last night’s data showed job growth slowing sharply, with weaker hiring, falling openings, and significant downward revisions to recent payrolls.
This adds to the mounting evidence that labor demand is losing momentum. Combined with Fed Chair Powell’s recent dovish stance, the data has strengthened market expectations for a September rate cut now seen as almost certain with further easing likely by year-end. Bond yields moved lower in response, led by the front end, and the yield curve has begun to steepen as investors price in a more accommodative Fed trajectory.
We’re pleased to announce that the fixed rate note from Magnetic rail has now been admitted to trading status on ABE
Contact your ABE adviser now to take advantage of this opportunity today
Investment Overview:
- Product: Magnetic Rail Group Pty Ltd
- Type: Fixed Rate Note
- Coupon: 9.25 % p.a. Paid Semi-Annually
- Maturity Date: 24 May 2030
- Currency: AUD
- Minimum Investment for Wholesale: $50,000 AUD
- Eligibility: Wholesale Investors Only
Overview
- Magnetic Rail Group(MRG) owns 100% of One Rail Australia Holdings Ltd(ORA), a leading rail haulage that has undertaken a A$175M notes issuance to refinance its existing Loan Notes.
- The new financing is in the form of a 5 Year, A$ Medium Term Note (“MTN”) and will be secured over all the assets of MRG, including its shares in One Rail Australia Holdings Ltd (“ORA”).
Magnetic Rail Group – Company Overview
Magnetic Rail Group (MRG) is a 50:50 joint venture between PT Asian Bulk Logistics and M Infrastructure Group Trust, established in 2022 to acquire and operate the coal haulage business of One Rail Australia (ORA).
Through its key operating subsidiary ORA, MRG is one of Australia’s leading coal haulage operators, with ~30% market share in the Hunter Valley (NSW) and a growing presence in the Bowen Basin (QLD). The business transports metallurgical and thermal coal to export terminals under long-term, take-or-pay contracts with blue-chip counterparties.
The cornerstone of this contracted revenue base is an exclusive agreement with Glencore plc (Moody’s Baa1 / S&P BBB+) through 2036, covering almost all of Glencore’s Hunter Valley coal production. Other key customers include Yancoal and Stanmore.
Operating Subsidiary- One Rail Australia (ORA)
ORA operates a modern fleet of 51 locomotives and 1,468 wagons, with an average age of ~10 years and a book value of ~$420m. The company has invested significantly in rolling stock and maintenance facilities, supporting reliable and efficient operations.
Looking ahead, ORA is expanding further in Queensland with three new locomotives and ~130 wagons set to enter service in 2025 under a haulage agreement with Stanmore. This strengthens its growing Bowen Basin presence while reinforcing contracted volumes.
Financially, ORA generates stable, predictable cashflows: ~99% of haulage volumes are under take-or-pay agreements, supporting forecast net operating cash flow of ~AUD 100m in 2025 against ~AUD 50m interest expense.
Risks to Consider
📘 Example: How Fixed Income Works
A company issues a debt security with the following terms:
- Term: 5 years
- Coupon: 5.15% p.a., paid semi-annually
- Issue Price: $100
- Minimum Investment: $10,000 AUD
Investor Scenario – Semi-Annual Payments:
Sarah may choose to receive income every 6 months. She receives $2,575 every 6 months (5.15% × $100,000 / 2). Over 5 years, she receives $25,750 in total income, plus her $100,000 principal at maturity (subject to no credit event or early redemption).
If she sells before maturity, she may receive more or less than $100,000 depending on market conditions.
*Data accurate as at 05.09.2025
Disclaimer: This document has been prepared by ABE Distribution Pty. Ltd ACN 673 177 912 Corporate Authorised Representative 1307088 (“ABE”) and is of a general nature only. It was prepared without considering your financial needs, circumstances and objectives. Before investing in a fixed-interest product with ABE, you should consider whether it is appropriate for your circumstances and review the relevant terms and conditions. This document contains links to other third-party websites, some of which require a subscription to read. Such links are for your convenience only, and ABE does not recommend or endorse these third-party sites.. No representation or warranty is made as to the accuracy, completeness or reliability of any estimates, opinions, conclusions, or other information contained in the content. The content may contain certain forward-looking statements. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors, many of which are beyond our control. To the maximum extent permitted by law ABE disclaims all liability and responsibility for any direct or indirect loss or damage that you may suffer as a result of relying on anything in this content. Past performance is not an indication of future performance