Summary –
The hybrid securities market continues to reflect a dynamic interplay between investor appetite for yield and issuer-specific risk premiums. This week’s data reveals several noteworthy shifts across both major bank-issued hybrids and non-standard instruments.
Major Bank Hybrids: Margins Widen, Yields Hold
Trading margins on Tier 1 bank hybrids have widened significantly, with Westpac’s WBCPH posting a margin of 110.24%, despite a relatively stable running yield of 7.08%. This suggests heightened demand for liquidity or shorter duration exposure. CBA’s CBAPJ and NAB’s NABPH remain competitive, offering 6.30% and 6.95% respectively, with pricing reflecting their perceived stability and call date proximity.
Non-Bank Issuers: Risk Premiums Drive Yield
Judo Capital’s JDOPA leads the pack with a running yield of 9.53%, underscoring its elevated risk profile and investor demand for higher returns. Latitude’s LFSPA and Macquarie’s MBLPC follow closely, offering 8.92% and 8.35% respectively. These instruments continue to attract yield-focused investors willing to trade off liquidity and credit quality.
Non-Standard Hybrids: Step-Ups and Preference Shares
Among non-standard hybrids, Nufarm’s NFNG stands out with an 8.72% yield, trading at a discount of 89.7, while Ramsay’s RHCPA offers 8.12%, trading above par at 108.05. These instruments reflect nuanced pricing based on structural features, including step-up clauses and call date expectations.
Market Sentiment & Strategic Implications
- The widening of trading margins across bank hybrids may signal cautious optimism, with investors pricing in potential rate stability but remaining wary of duration risk.
- Elevated yields among non-bank issuers suggest a bifurcation in investor strategy—those seeking yield are moving down the credit curve, while others remain anchored to major bank names.
- Non-standard hybrids continue to offer tactical opportunities for portfolio diversification, particularly for those comfortable with structural complexity.
ASX-Listed Hybrids
| COMPANY | CODE | HYBRID TYPE | MATURITY/ CALL DATE | MARGIN INCL. CREDITS | TRADING MARGIN | DAY CHANGE | DAY CLOSE | RUNNING YIELD** |
|---|---|---|---|---|---|---|---|---|
| Westpac | WBCPH | Capital Notes 5 | 22-09-2025 | 3.20% | 110.24% | 6.32% | 100.452 | 7.08% |
| AMP Group | AMPPB | Capital Notes 2 | 16-12-2025 | 4.50% | 9.81% | 0.13% | 102.2 | 8.16% |
| Macquarie Bank | MBLPC | Capital Notes 2 | 22-12-2025 | 4.70% | 9.48% | 0.11% | 101.95 | 8.35% |
| Challenger | CGFPC | Capital Notes 3 | 25-05-2026 | 4.60% | 9.13% | 0.05% | 101.66 | 8.38% |
| Nat Aust Bank | NABPF | Capital Notes 3 | 17-06-2026 | 4.00% | 4.97% | 0.03% | 103.1 | 7.58% |
| Suncorp | SUNPH | Capital Notes 3 | 17-06-2026 | 3.00% | 5.02% | 0.03% | 101.851 | 6.63% |
| Macquarie Group | MQGPD | Capital Notes 4 | 10-09-2026 | 4.15% | 3.77% | 0.02% | 103.9 | 7.65% |
| CBA | CBAPJ | PERLS 13 | 20-10-2026 | 2.75% | 3.08% | 0.02% | 102.92 | 6.30% |
| Latitude | LFSPA | Capital Notes | 27-10-2026 | 4.75% | 12.08% | 0.04% | 98.3 | 8.92% |
| Westpac | WBCPJ | Capital Notes 7 | 22-03-2027 | 3.40% | 4.80% | 0.02% | 103.66 | 7.06% |
| CBA | CBAPI | PERLS 12 | 20-04-2027 | 3.00% | 3.21% | 0.01% | 103.13 | 6.55% |
| Bank of Queensland | BOQPF | Capital Notes 2 | 14-05-2027 | 3.80% | 5.06% | 0.02% | 102.99 | 7.46% |
| Bendigo Bank | BENPH | Capital Notes | 15-06-2027 | 3.80% | 3.44% | 0.01% | 104.45 | 7.28% |
| Macquarie Group | MQGPE | Capital Notes 5 | 20-09-2027 | 2.90% | 2.90% | 0.01% | 102.98 | 6.42% |
| Nat Aust Bank | NABPH | Capital Notes 5 | 17-12-2027 | 3.50% | 2.97% | 0.01% | 104.8 | 6.95% |
| ANZ Bank | AN3PI | Capital Notes 6 | 20-03-2028 | 3.00% | 2.45% | 0.01% | 103.918 | 6.44% |
| CBA | CBAPL | PERLS 15 | 15-06-2028 | 2.85% | 2.65% | 0.01% | 103.92 | 6.34% |
| Suncorp | SUNPI | Capital Notes 4 | 17-06-2028 | 2.90% | 3.14% | 0.01% | 102.91 | 6.46% |
| Westpac | WBCPL | Capital Notes 9 | 22-09-2028 | 3.40% | 3.56% | 0.01% | 105.34 | 6.94% |
| Macquarie Bank | MBLPD | Capital Notes 3 | 07-12-2028 | 2.90% | 2.55% | 0.01% | 104.15 | 6.36% |
| Bank of Queensland | BOQPG | Capital Notes 3 | 15-12-2028 | 3.40% | 3.04% | 0.01% | 104.79 | 6.85% |
| Judo Capital | JDOPA | Capital Notes | 16-02-2029 | 6.50% | 4.75% | 0.01% | 111.3 | 9.53% |
| ANZ Bank | AN3PJ | Capital Notes 7 | 20-03-2029 | 2.70% | 2.45% | 0.00% | 103.4 | 6.17% |
| Challenger | CGFPD | Capital Notes 4 | 25-05-2029 | 3.60% | 3.49% | 0.01% | 104.76 | 7.09% |
| CBA | CBAPK | PERLS 14 | 15-06-2029 | 2.75% | 2.52% | 0.01% | 104.19 | 6.22% |
| IAG | IAGPE | Capital Notes 2 | 15-06-2029 | 3.50% | 3.21% | 0.01% | 105.9 | 6.95% |
| Macquarie Group | MQGPF | Capital Notes 6 | 12-09-2029 | 3.70% | 2.60% | 0.01% | 107.15 | 6.96% |
| Nat Aust Bank | NABPI | Capital Notes 6 | 17-09-2029 | 3.15% | 2.40% | 0.01% | 106.12 | 6.51% |
| Westpac | WBCPK | Capital Notes 8 | 21-09-2029 | 2.90% | 3.18% | 0.01% | 104.595 | 6.47% |
| ANZ Bank | AN3PK | Capital Notes 8 | 20-03-2030 | 2.75% | 2.41% | 0.00% | 103.95 | 6.19% |
| CBA | CBAPM | PERLS 16 | 17-06-2030 | 3.00% | 2.43% | 0.00% | 105.78 | 6.38% |
| Suncorp | SUNPJ | Capital Notes 5 | 17-06-2030 | 2.80% | 2.78% | 0.00% | 103.6 | 6.31% |
| Nat Aust Bank | NABPJ | Capital Notes 7 | 17-09-2030 | 2.80% | 2.53% | 0.00% | 104.61 | 6.25% |
| Bendigo Bank | BENPi | Capital Notes 2 | 13-12-2030 | 3.20% | 2.83% | 0.00% | 105.34 | 6.61% |
| Insurance Australia | IAGPF | Capital Notes 3 | 15-12-2030 | 3.20% | 3.04% | 0.00% | 105.35 | 6.67% |
| ANZ Bank | AN3PL | Capital Notes 9 | 20-03-2031 | 2.90% | 2.38% | 0.00% | 105.001 | 6.28% |
| Westpac | WBCPM | Capital Notes 10 | 22-09-2031 | 3.10% | 2.87% | 0.00% | 106.7 | 6.54% |
| Macquarie Group | MQGPG | Capital Notes 7 | 15-12-2031 | 2.65% | 2.64% | 0.00% | 103.22 | 6.16% |
| Nat Aust Bank | NABPK | Capital Notes 8 | 17-03-2032 | 2.60% | 2.32% | 0.00% | 104.83 | 6.03% |
ASX-Listed Hybrids (Non-standard)
| COMPANY | CODE | BOND TYPE | CALL DATE | ISSUE MARGIN (inc frank) | TRADING MARGIN | DAY | CLOSING PRICE | RUNNING YIELD |
|---|---|---|---|---|---|---|---|---|
| Nufarm | NFNG | Step Up | Perpetual | 3.90% | 5.19% | 0.01% | 89.7 | 8.72% |
| Ramsay Health Care | RHCPA | Preference Share | Perpetual | 4.85% | 4.58% | 0.01% | 108.05 | 8.12% |