16 September 2025

Summary –

The hybrid securities market continues to reflect a nuanced balance between yield-seeking behavior and issuer credit confidence. Across the board, trading margins have compressed slightly for major bank-issued notes, while newer or less conventional issuers are offering elevated margins to attract capital.

Major Bank Hybrids: Stability with Modest Yield

  • CBA, Westpac, NAB, and ANZ hybrids remain tightly priced, with trading margins ranging from 2.4% to 3.6%, reflecting strong investor confidence and low perceived risk.
  • Running yields for these instruments hover around 6.2% to 7.1%, offering modest income with relatively low volatility.
  • Notable instruments:
    • CBAPM (PERLS 16): Trading margin of 2.58%, price at 105.58, running yield 6.46%
    • WBCPM (Capital Notes 10): Trading margin 2.97%, price 106.65, yield 6.61%

High-Yield Outliers: Risk Premiums in Play

  • Judo Capital’s JDOPA stands out with a 6.50% issue margin and 9.56% running yield, indicating a significant risk premium for a newer issuer.
  • Latitude’s LFSPA also offers a compelling 8.94% yield, with a trading margin of 12.17%, suggesting market caution despite attractive returns.

Mid-Tier Issuers: Balanced Appeal

  • Macquarie Group, Challenger, Suncorp, and Bendigo Bank hybrids show healthy yields between 6.5% and 8.5%, with trading margins reflecting moderate risk.
  • These instruments may appeal to investors seeking diversification without venturing into speculative territory.

Yield vs. Margin Dynamics

  • Several hybrids show a disconnect between trading margin and running yield, often due to price premiums or discounts:
    • AMP Group’s AMPPB: Trading margin 18.36%, price 101, yield 8.34%
    • MBLPC (Macquarie Bank): Trading margin 18.19%, price 100.53, yield 8.55%
    • These anomalies may stem from data irregularities or temporary market dislocations.

 

  • ASX-Listed Hybrids

    COMPANYCODEHYBRID TYPEMATURITY/
    CALL
    DATE    		MARGIN
    INCL. CREDITS    		TRADING
    MARGIN    		DAY
    CHANGE    		DAY
    CLOSE    		RUNNING
    YIELD**
    WestpacWBCPHCapital Notes 522-09-20253.20%2455.26%964.00%100.527.15%
    AMP GroupAMPPBCapital Notes 216-12-20254.50%18.36%0.26%1018.34%
    Macquarie BankMBLPCCapital Notes 222-12-20254.70%18.19%0.23%100.538.55%
    ChallengerCGFPCCapital Notes 325-05-20264.60%8.85%0.06%102.58.40%
    Nat Aust BankNABPFCapital Notes 317-06-20264.00%7.44%0.04%101.887.76%
    SuncorpSUNPHCapital Notes 317-06-20263.00%6.94%0.04%101.016.76%
    Macquarie GroupMQGPDCapital Notes 410-09-20264.15%5.65%0.03%102.557.83%
    CBACBAPJ PERLS 1320-10-20262.75%5.30%0.03%101.16.49%
    LatitudeLFSPACapital Notes27-10-20264.75%12.17%0.04%98.988.94%
    WestpacWBCPJCapital Notes 722-03-20273.40%4.94%0.02%103.957.12%
    CBACBAPI PERLS 1220-04-20273.00%4.14%0.02%102.26.68%
    Bank of QueenslandBOQPFCapital Notes 214-05-20273.80%5.12%0.02%103.417.51%
    Bendigo BankBENPHCapital Notes15-06-20273.80%4.78%0.02%102.817.48%
    Macquarie GroupMQGPECapital Notes 520-09-20272.90%3.61%0.01%102.076.55%
    Nat Aust BankNABPHCapital Notes 517-12-20273.50%4.05%0.01%103.17.14%
    ANZ BankAN3PICapital Notes 620-03-20283.00%2.47%0.01%104.156.49%
    CBACBAPL PERLS 1515-06-20282.85%3.29%0.01%102.816.48%
    SuncorpSUNPICapital Notes 417-06-20282.90%3.27%0.01%102.996.52%
    WestpacWBCPLCapital Notes 922-09-20283.40%3.62%0.01%105.617.00%
    Macquarie BankMBLPDCapital Notes 307-12-20282.90%3.31%0.01%102.436.53%
    Bank of QueenslandBOQPGCapital Notes 315-12-20283.40%3.53%0.01%103.876.98%
    Judo CapitalJDOPACapital Notes16-02-20296.50%4.68%0.01%112.019.56%
    ANZ BankAN3PJCapital Notes 720-03-20292.70%2.45%0.00%103.656.22%
    ChallengerCGFPDCapital Notes 425-05-20293.60%3.80%0.01%104.287.20%
    CBACBAPK PERLS 1415-06-20292.75%3.00%0.01%103.16.36%
    IAGIAGPECapital Notes 215-06-20293.50%3.66%0.01%104.897.09%
    Macquarie GroupMQGPFCapital Notes 612-09-20293.70%3.12%0.01%105.87.12%
    Nat Aust BankNABPICapital Notes 617-09-20293.15%3.00%0.01%104.556.68%
    WestpacWBCPKCapital Notes 821-09-20292.90%3.12%0.01%105.196.50%
    ANZ BankAN3PKCapital Notes 820-03-20302.75%2.40%0.00%104.256.23%
    CBACBAPM PERLS 1617-06-20303.00%2.58%0.01%105.586.46%
    SuncorpSUNPJCapital Notes 517-06-20302.80%2.85%0.01%103.726.37%
    Nat Aust BankNABPJCapital Notes 717-09-20302.80%2.73%0.00%104.26.34%
    Bendigo BankBENPiCapital Notes 213-12-20303.20%3.17%0.01%104.46.74%
    Insurance AustraliaIAGPFCapital Notes 315-12-20303.20%3.31%0.00%104.626.78%
    ANZ BankAN3PLCapital Notes 920-03-20312.90%2.28%0.00%105.716.29%
    WestpacWBCPMCapital Notes 1022-09-20313.10%2.97%0.00%106.656.61%
    Macquarie GroupMQGPGCapital Notes 715-12-20312.65%2.92%0.00%102.316.28%
    Nat Aust BankNABPKCapital Notes 817-03-20322.60%2.58%0.00%103.986.15%

  • ASX-Listed Hybrids (Non-standard)

    COMPANYCODEBOND TYPECALL DATEISSUE MARGIN (inc frank)TRADING MARGINDAYCLOSING PRICE RUNNING YIELD
    NufarmNFNGStep UpPerpetual3.90%5.23%0.02%89.88.81%
    Ramsay Health CareRHCPAPreference SharePerpetual4.85%4.55%0.02%108.998.13%