September 2015


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As share markets around the world went through a bout of continued selling, listed hybrids securities were caught up in the price action. The timing was poor for investors in the Westpac’s Capital Notes 3 issue with the initial margin of BBSW + 400bps looking decidedly skinny in between the price setting and the admission to the ASX trading list. The trading margin blew out from 400bps to around 500bps and stayed at that level through the month.

Once the darling of financial markets, doubts emerged over Woolworths’ competitiveness, and its senior bonds and hybrid margins blew out more than the market in general.

The blow out in yields may have convinced PIMCO there was value to be had in this space because it announced it would start a global fund which invests in hybrids. BHP announced that it would issue multi-currency hybrid securities and is perhaps also a little unlucky with its timing, given the increased focus and scrutiny on mining house balance sheets. But in a win for hybrid investors, right at the end of the month Origin Energy announced its intentions to initiate a capital raising and exercise its option to redeem its ORGHA hybrid securities by the December 2016. The securities were trading at around $94.30 and are expected to resume trading at close to $100 giving a 6% capital gain on top of the interest payments.

And who would have thought our new PM holds hybrids? In the parliamentary register of interests it seems Malcolm Turnbull has an appetite for hybrid securities.

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ANZ Banking GroupANZPAMCPS I16/12/20160.030.030.0199.750.06
ANZ Banking GroupANZPCMCPS II28/09/20170.030.040.0098.770.06
ANZ Banking GroupANZPDMCPS II1/09/20210.030.050.0192.050.07
ANZ Banking GroupANZPECapital Note24/03/20220.030.050.0190.500.07
Bendigo BankBENHBPerpetual21/10/20540.010.030.0074.000.05
Bendigo BankBENPDMCPS II13/12/20170.050.040.00103.500.07
Bendigo BankBENPEMCPS II30/11/20200.030.050.0093.100.08
Bendigo BankBENPFMCPS II15/06/20210.040.050.0097.200.07
Bank Of QueenslandBOQPDMCPS II15/04/20180.050.04-0.01103.100.06
CBA PERLS 3PCAPAStep Up6/04/20160.010.03-0.01197.550.05
CBA PERLS 6CBAPCMCPS II15/12/20180.040.040.00100.300.06
CBA PERLS 7CBAPDMCPS II15/12/20220.030.050.0187.000.07
ChallengerCGFPACapital Note25/05/20200.030.050.0094.300.07
EldersELDPAPerp'l Pref30/06/2051N/A0.000.0075.520.00
IAGIAGPCMCPS II1/05/20170.040.040.00102.620.06
IAG RESIANGReset pref16/12/20190.040.040.01100.490.07
Macquarie BankMBLHBIncome SecPerpetual0.020.040.0071.250.06
MacquarieMBLPACapital Note24/03/20210.030.050.0093.500.07
MacquarieMQGPACapital Note7/06/20190.040.040.00100.300.07
Multiplex SITESMXUPAPerp'l PrefPerpetual0.040.060.0077.150.08
Nat Aust BankNABHAIncome SecPerpetual0.010.030.0068.200.06
Nat Aust BankNABPAMCPS II20/03/20190.030.050.0095.840.07
Nat Aust BankNABPBMCPS II17/12/20200.030.050.0092.880.07
NufarmNFNGStep UpPerpetual0.040.060.0083.310.08
PaperlinxPXUPAPerp'l Pref30/06/2052N/A0.090.0013.000.11
Ramsay Health CareRHCPAPerp'l PrefPerpetual0.050.050.00101.000.07
Suncorp-MetwaySBKHBIncome SecPerpetual0.010.020.0076.500.04
SuncorpSUNPCMCPS II17/12/20170.050.040.00101.300.06
SuncorpSUNPEMCPS II17/06/20200.030.050.0095.000.07
Seven Network TELYS 4SVWPAPerp'l Pref2/12/20540.050.090.0164.500.12
WestpacWBCPCMCPS II31/03/20180.030.040.0098.200.06
WestpacWBCPDMCPS II8/03/20190.030.050.0095.750.07
WestpacWBCPEMCPS II22/09/20220.030.050.0090.280.07
WestpacWCTPAStep Up30/06/20160.010.03-0.0198.550.05

** 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