The bond market remains volatile but much of its strength this year rests on the decisions by US President Donald Trump and the Reserve Bank of Australia.
One of the first big cash calls of the year is from AusNet Services, which could be raising as much as $1bn next week.
The money is being used to repay a $650m bond due in October.
What’s slightly unusual about the raise is that it is a 30-year bond with a six-year non call period.
But AusNet is a popular name so the deal should go well.
AusNet Services is an Australian energy delivery services business, owning and operating more than $13bn of electricity and gas network assets. Privately held, it was previously listed on the ASX and is attractive for its stable, low risk cash flows.
Interest rate cuts will play a big part in the bond market pushing up prices.
Expectations are that benign jobs data could push back the prospect of an interest-rate cut to April. The Australian reported on Wednesday that Australia’s inflation data was lower than expected for the December quarter, potentially increasing the chance of the Reserve Bank cutting interest rates after its meeting next month.
The consumer price index rose 0.2 per cent quarter-on-quarter and 2.4 per cent year-on-year versus expectations of 0.3 per cent and 2.5 per cent, according to Bloomberg’s survey of economists.
For December, the CPI rose 2.5 per cent on-year versus 2.7 per cent expected and increased 2.7 per cent on a trimmed mean basis.
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