Australian Bond Exchange Weekly Update
2nd May 2025
Key Points
- Final Days to Secure 7.80% p.a. – Booking Closing Soon
- Australia: The Reserve Bank of Australia (RBA) held the cash rate at 4.10% per annum. March quarter inflation was 2.4%, with the trimmed mean at 2.9%.
- United States: The Federal Reserve maintained its policy rate between 4.25% and 4.50%. March inflation eased to 2.4%, while core inflation rose 2.8% year-on-year.
- United Kingdom: The Bank of England left its Bank Rate unchanged at 4.50%. March inflation declined to 2.6% from 2.8% in February.
- Eurozone: The European Central Bank cut rates by 25 basis points, bringing the deposit facility to 2.25%. Inflation in March moderated slightly to 2.2%.
Market Insights
- Australia’s March quarter inflation remains steady at 2.4%
- S&P flags risks to Australia’s AAA credit rating
- Chinese manufacturing activity shows signs of slowing
Australia’s March Quarter Inflation Holds at 2.4%
Consumer prices in Australia rose 2.4% in the March 2025 quarter compared to a year earlier, unchanged from the December 2024 quarter. The trimmed mean, which is closely monitored by the RBA, fell to 2.9%, now sitting within the Bank’s 2–3% target range for the first time since 2021.
Services inflation also eased during the quarter, supporting the view that underlying inflationary pressures are moderating. The quarterly increase in CPI was 0.7%, in line with the RBA’s forecast. Markets are now largely pricing in a potential rate cut at the Bank’s May meeting, aligning with previous expectations.
S&P Places Australia’s Credit Rating on Outlook Negative
Credit rating agency S&P Global has placed Australia’s AAA sovereign credit rating on negative outlook. The agency cited the risk of increased off-budget public spending following the upcoming 2025 federal election.
Key concerns include spending commitments across infrastructure and climate initiatives — including projects such as the National Broadband Network (NBN), Snowy Hydro, and the Clean Energy Finance Corporation — which may amount to over $100 billion through to 2029.
Australia has held its AAA rating since 2003 and remains one of just 11 countries globally with this top-tier rating. A downgrade could potentially impact the credit ratings of major Australian banks through S&P’s broader Banking Industry Country Risk Assessment (BICRA) framework.
Chinese Manufacturing Activity Slows Amid Trade Pressures
China’s manufacturing sector saw its steepest slowdown in over a year, as measured by the official Purchasing Managers’ Index (PMI), which fell below the 50-mark in April — signalling contraction.
This decline follows a brief export surge in March, likely driven by manufacturers expediting shipments ahead of newly imposed U.S. tariffs. The introduction of these trade measures is now weighing on production and sentiment.
Institutions including the IMF, Goldman Sachs, and UBS have revised down their growth forecasts for China, citing ongoing uncertainty and external trade pressures. Most projections now fall short of China’s official growth target for 2025.
Introducing a New Fixed Income Investment – Backed by Commodity Finance
China’s manufacturing sector saw its steepest slowdown in over a year, as measured by the official Purchasing Managers’ Index (PMI), which fell below the 50-mark in April — signalling contraction.
This decline follows a brief export surge in March, likely driven by manufacturers expediting shipments ahead of newly imposed U.S. tariffs. The introduction of these trade measures is now weighing on production and sentiment.
Institutions including the IMF, Goldman Sachs, and UBS have revised down their growth forecasts for China, citing ongoing uncertainty and external trade pressures. Most projections now fall short of China’s official growth target for 2025.
ABE is s pleased to bring you access to a bond-linked investment opportunity delivering a fixed return of 7.80% p.a., linked to the CRAFT Secured Notes – a unique exposure to the Commodities Receivables and Finance Trust (CRAFT).
Investment Overview:
- Coupon Rate: 7.80% p.a (Fixed)
- Term: 31 March 2030 (the Issuer has the opportunity to extend the maturity date to 30 September 2030)
- Coupon Frequency: Paid semi-annually
- Minimum Investment: $AUD 10,000.00
What is CRAFT?
The Commodities Receivables and Finance Trust (CRAFT) is a private capital vehicle designed to address the evolving needs of the resource sector. It helps resource enterprises manage their cash flow amidst the current market challenges.
CRAFT brings together seasoned executives from the commodity sector to offer a reliable, innovative platform for commodity finance. It focuses on Tier 1 and Tier 2 resource operators in top markets, providing them with essential financing solutions.
This investment opportunity offers an attractive return of 7.80% per annum return paid semi-annually over a 5-year term.
Why Consider CRAFT?
- Diversification Benefits – A unique opportunity to diversify your portfolio by gaining access to commodity financing
- Consistent, Competitive Returns
- Asset-Backed Security
- First-Loss Protection
Investing in this bond is subject to a range of risks including:
- Interest rate movements
- Credit risk of issuer
- Market risk if you sell before maturity
Please refer to the IM for full details of the risks
Reference Overview:
- CRAFT is a private capital vehicle designed to address the growing liquidity gap in the resource sector, providing financing solutions for resource operators.
- Focuses on providing commodity finance to Tier 1 and Tier 2 resource operators in leading markets.
- Led by seasoned executives with deep expertise in the commodity sector, ensuring reliable and innovative financing solutions while carefully managing associated risks.
- Partners with approved commodity finance lenders and co-underwrites loans.
Positioned as a strategic provider of private credit, responding to the increasing demand for non-bank financing in the resource sector.
Key Information
Investors should view the product info page before considering an investment with CRAFT Bond Issues Pty Ltd.
*Data accurate as at 02.05.2025
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