18 May– 22 May 2015

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NAB hybrids

Some investors are focusing on the turnover of NAB hybrids after the NAB rights issue, with the possibility that some are using the hybrids as a rights funding source. The first chart below looks at the hybrids volume after the rights announcement and several weeks before. There appears to be some volume spike at the announcement date and for another few days earlier this week. Otherwise volumes are only slightly elevated. The second chart shows the trading margins. Since the announcement date, NABPB, NABPC and lately NABHA have widened. However these margin increases are not too different from other bank hybrid margin moves over the same time frame. The Institutional rights offer has closed. Rights trading concluded on 25 May. The retail entitlement offer settles on 10 June.

YieldReport-NABhybrid-18-22May2015YieldReport-NABasx-18-22May2015

Shorter dated hybrids

With longer dated hybrids struggling, shorter dated issues are still in demand. The chart shows four issues with 8-24 months to expected maturity. ANZPA and WCTPA are moving toward lows sub 2.5% margin. IAGPC however is near highs. Note there is much variation in margins from week to week.

YieldReport-ShortHybrid-18-22May2015

ASX-Listed Hybrids

COMPANYCODEHYBRID TYPEMATURITY OR STEP-UP DATEMARGIN INC FRANK TRADING MARGIN∆ WEEKWEEK CLOSEYTM Est**S&P CREDIT RATING COMP/HYBRID
ANZ Banking GroupANZPAMCPS I12/16/20163.10%2.71%-0.08%101.54.84%AA-/BBB
ANZ Banking GroupANZPCMCPS II09/28/20173.10%3.21%-0.01%100.95.46%AA-/BBB+
ANZ Banking GroupANZPDMCPS II09/01/20213.40%4.00%0.09%98.216.25%AA-/BBB+
ANZ Banking GroupANZPECapital Note03/24/20223.25%4.06%0.05%96.56.31%AA-/
Bendigo BankBENHBPerpetual10/21/20541.00%2.29%n/an/a4.42%A-/BBB
Bendigo BankBENPBStep Up06/15/20151.50%3.22%-3.56%99.625.35%A-/BBB
Bendigo BankBENPDMCPS II12/13/20175.00%3.62%-0.07%106.355.87%A-/BBB-
Bendigo BankBENPEMCPS II11/30/20203.20%4.18%0.21%95.46.43%N/A
Bank Of QueenslandBOQPDMCPS II04/16/20185.10%3.69%-0.01%104.45.94%BBB+/BB+
CBA PERLS 3PCAPAStep Up04/06/20161.05%2.64%-0.07%1984.77%AA-/BBB
CBA PERLS 6CBAPCMCPS II12/15/20183.80%3.19%0.01%1035.32%AA-/BBB-
CBA PERLS 7CBAPDMCPS II12/15/20222.80%3.95%0.05%94.156.08%AA-/BBB-
ChallengerCGFPACapital Note05/25/20203.40%4.10%-0.03%976.23%-/-
EldersELDPAPerp'l Pref06/30/2051N/A0.00%0.00%750.00%N/A
IAGIAGPCMCPS II05/01/20174.00%3.29%-0.02%101.615.54%A+/A-
IAG RESIANGReset pref12/16/20194.00%3.28%-0.12%103.955.41%A+/BBB+
Macquarie BankMBLHBIncome SecPerpetual1.70%3.39%0.03%76.55.52%A/BB+
MacquarieMBLPACapital Note03/24/20203.30%3.75%0.06%98.76.00%A/-
MacquarieMQGPACapital Note06/19/20184.00%3.71%-0.13%103.415.96%A-/BBB-
Multiplex SITESMXUPAPerp'l PrefPerpetual3.90%4.99%0.10%87.77.12%BB+/BB
Nat Aust BankNABHAIncome SecPerpetual1.25%2.85%0.07%75.814.98%AA-/BBB
Nat Aust BankNABPAMCPS II03/20/20193.20%3.95%0.15%98.366.08%AA-/BBB-
Nat Aust BankNABPBMCPS II12/17/20203.25%3.99%0.08%97.536.12%AA-/BBB-
NufarmNFNGStep UpPerpetual3.90%5.02%-0.11%87.497.27%BB /B+
PaperlinxPXUPAPerp'l Pref06/30/2052N/A8.80%0.00%8.7511.05%N/A
Ramsay Health CareRHCPAPerp'l PrefPerpetual4.85%4.43%-0.06%105.896.68%BBB/BB+
Suncorp-MetwaySBKHBIncome SecPerpetual0.75%2.13%0.08%774.26%A+/A-
SuncorpSUNPCMCPS II12/17/20174.65%3.64%0.01%103.65.77%A /BBB+
SuncorpSUNPEMCPS II06/17/20203.40%3.86%-0.15%995.99%A /BBB+
Seven Network TELYS 4SVWPAPerp'l Pref12/02/20544.75%6.27%0.14%84.118.52%BB+/BB-
WestpacWBCPCMCPS II03/31/20183.25%3.48%0.05%100.155.73%AA-/BBB-
WestpacWBCPDMCPS II03/08/20193.20%3.96%0.25%98.56.09%AA-/BBB-
WestpacWBCPEMCPS II09/23/20223.05%3.87%0.04%96.146.00%AA-/BBB+
WestpacWCTPAStep Up06/30/20161.00%2.64%0.13%98.654.77%AA-/BBB

** YTM for floating rate securities is an estimate using current interest rates. This will vary if rates change.
Source: Evans & Partners. Dealing Contact Michael Saba +61 3 9631 9813