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.
ASX LISTED HYBRIDS
|∆ MONTH||MONTH |
|ANZ Banking Group||ANZPA||MCPS I||16/12/2016||0.03||0.03||0.01||99.75||0.06|
|ANZ Banking Group||ANZPC||MCPS II||28/09/2017||0.03||0.04||0.00||98.77||0.06|
|ANZ Banking Group||ANZPD||MCPS II||1/09/2021||0.03||0.05||0.01||92.05||0.07|
|ANZ Banking Group||ANZPE||Capital Note||24/03/2022||0.03||0.05||0.01||90.50||0.07|
|Bendigo Bank||BENPD||MCPS II||13/12/2017||0.05||0.04||0.00||103.50||0.07|
|Bendigo Bank||BENPE||MCPS II||30/11/2020||0.03||0.05||0.00||93.10||0.08|
|Bendigo Bank||BENPF||MCPS II||15/06/2021||0.04||0.05||0.00||97.20||0.07|
|Bank Of Queensland||BOQPD||MCPS II||15/04/2018||0.05||0.04||-0.01||103.10||0.06|
|CBA PERLS 3||PCAPA||Step Up||6/04/2016||0.01||0.03||-0.01||197.55||0.05|
|CBA PERLS 6||CBAPC||MCPS II||15/12/2018||0.04||0.04||0.00||100.30||0.06|
|CBA PERLS 7||CBAPD||MCPS II||15/12/2022||0.03||0.05||0.01||87.00||0.07|
|IAG RES||IANG||Reset pref||16/12/2019||0.04||0.04||0.01||100.49||0.07|
|Macquarie Bank||MBLHB||Income Sec||Perpetual||0.02||0.04||0.00||71.25||0.06|
|Multiplex SITES||MXUPA||Perp'l Pref||Perpetual||0.04||0.06||0.00||77.15||0.08|
|Nat Aust Bank||NABHA||Income Sec||Perpetual||0.01||0.03||0.00||68.20||0.06|
|Nat Aust Bank||NABPA||MCPS II||20/03/2019||0.03||0.05||0.00||95.84||0.07|
|Nat Aust Bank||NABPB||MCPS II||17/12/2020||0.03||0.05||0.00||92.88||0.07|
|Ramsay Health Care||RHCPA||Perp'l Pref||Perpetual||0.05||0.05||0.00||101.00||0.07|
|Seven Network TELYS 4||SVWPA||Perp'l Pref||2/12/2054||0.05||0.09||0.01||64.50||0.12|
** 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