5 August 2025

Summary:

Market Highlights

The Australian bank hybrid securities market continues to offer a range of opportunities for income-focused investors, with trading margins and running yields staying attractive relative to conventional fixed income products.

Key Market Insights

• Running Yields: Most major bank hybrids, including capital notes from Westpac, CBA, NAB, ANZ, and Macquarie, are delivering running yields between 6.2% and 7.8% depending on the issue and maturity profiles. Select higher-yielding issues, such as those from regional and non-major banks—Judo Capital (JDOPA, 9.48%), Latitude (LFSPA, 9.03%), and AMP (AMPPB, 8.30%)—are standing out, reflecting higher margins and often specific risk factors.

• Trading Margins: Trading margins for most bank hybrids sit between 2.2% and 4.8%. Bank names with longer-dated or newer issues generally offer slightly lower trading margins, suggesting sustained strong demand and robust support for major bank issuance.

• Issuance Diversity: In addition to the “Big Four,” regional banks (Bendigo, Bank of Queensland), insurance names (IAG, Challenger), and specialty lenders (Judo, Latitude) provide further diversification. Terms, margins, and yields vary by issuer risk rating and investor appetite.

• Day-to-Day Performance: Daily price changes have been muted (mostly ±0.01%–0.03%), underlining a stable trading environment amid the current rate landscape.

Maturity Profile

• Short to Medium Term: Hybrids with the closest call or maturity dates (2025–2026) generally offer higher running yields (7%–8.5%) as their margin over benchmark remains attractive to investors planning for nearer-term events.

• Longer Dated Issues: Securities extending out to 2032 offer lower trading margins and slightly lower running yields (generally 6.2%–6.8%), reflecting the declining margin premium as duration risk increases.

Non-Standard Hybrids

• Step-Ups and Perpetuals: Securities like Nufarm’s (NFNG) perpetual step-up (9.00% running yield) and Ramsay’s perpetual preference share (8.26%) offer higher yields but also carry greater complexity and risk due to their perpetual structures and sub-investment grade standing.

• 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%	46.24%	1.27%	100.25	7.22%
  AMP Group	AMPPB	Capital Notes 2	16/12/2025	4.50%	8.45%	0.09%	101.85	8.30%
  Macquarie Bank	MBLPC	Capital Notes 2	22/12/2025	4.70%	7.32%	0.08%	101.97	8.46%
  Challenger	CGFPC	Capital Notes 3	25/05/2026	4.60%	4.40%	0.03%	104.3	8.27%
  Nat Aust Bank	NABPF	Capital Notes 3	17/06/2026	4.00%	4.58%	0.03%	102.85	7.72%
  Suncorp	SUNPH	Capital Notes 3	17/06/2026	3.00%	4.24%	0.03%	101.91	6.75%
  Macquarie Group	MQGPD	Capital Notes 4	10/09/2026	4.15%	3.50%	0.02%	103.75	7.78%
  CBA	CBAPJ	PERLS 13	20/10/2026	2.75%	3.43%	0.02%	102.08	6.48%
  Latitude	LFSPA	Capital Notes	27/10/2026	4.75%	11.16%	0.04%	98.3	9.03%
  Westpac	WBCPJ	Capital Notes 7	22/03/2027	3.40%	4.76%	0.02%	103.16	7.22%
  CBA	CBAPI	PERLS 12	20/04/2027	3.00%	3.07%	0.01%	102.88	6.69%
  Bank of Queensland	BOQPF	Capital Notes 2	14/05/2027	3.80%	4.20%	0.02%	103.71	7.52%
  Bendigo Bank	BENPH	Capital Notes	15/06/2027	3.80%	3.37%	0.01%	104.09	7.42%
  Macquarie Group	MQGPE	Capital Notes 5	20/09/2027	2.90%	2.44%	0.01%	103.47	6.52%
  Nat Aust Bank	NABPH	Capital Notes 5	17/12/2027	3.50%	2.85%	0.01%	104.6	7.08%
  ANZ Bank	AN3PI	Capital Notes 6	20/03/2028	3.00%	2.56%	0.01%	103.35	6.61%
  CBA	CBAPL	PERLS 15	15/06/2028	2.85%	2.86%	0.01%	103	6.52%
  Suncorp	SUNPI	Capital Notes 4	17/06/2028	2.90%	2.92%	0.01%	103	6.58%
  Westpac	WBCPL	Capital Notes 9	22/09/2028	3.40%	3.62%	0.01%	104.69	7.11%
  Macquarie Bank	MBLPD	Capital Notes 3	7/12/2028	2.90%	2.72%	0.01%	103.32	6.54%
  Bank of Queensland	BOQPG	Capital Notes 3	15/12/2028	3.40%	3.10%	0.01%	104.15	7.01%
  Judo Capital	JDOPA	Capital Notes	16/02/2029	6.50%	3.98%	0.01%	112.81	9.48%
  ANZ Bank	AN3PJ	Capital Notes 7	20/03/2029	2.70%	2.44%	0.00%	103.09	6.32%
  Challenger	CGFPD	Capital Notes 4	25/05/2029	3.60%	3.12%	0.01%	105.39	7.16%
  CBA	CBAPK	PERLS 14	15/06/2029	2.75%	2.51%	0.01%	103.8	6.37%
  IAG	IAGPE	Capital Notes 2	15/06/2029	3.50%	3.07%	0.01%	105.95	7.07%
  Macquarie Group	MQGPF	Capital Notes 6	12/09/2029	3.70%	2.76%	0.01%	106.21	7.14%
  Nat Aust Bank	NABPI	Capital Notes 6	17/09/2029	3.15%	2.58%	0.01%	105.09	6.69%
  Westpac	WBCPK	Capital Notes 8	21/09/2029	2.90%	3.27%	0.01%	103.84	6.65%
  ANZ Bank	AN3PK	Capital Notes 8	20/03/2030	2.75%	2.43%	0.00%	103.55	6.34%
  CBA	CBAPM	PERLS 16	17/06/2030	3.00%	2.18%	0.00%	106.31	6.46%
  Suncorp	SUNPJ	Capital Notes 5	17/06/2030	2.80%	2.72%	0.01%	103.41	6.45%
  Nat Aust Bank	NABPJ	Capital Notes 7	17/09/2030	2.80%	2.35%	0.00%	104.9	6.35%
  Bendigo Bank	BENPi	Capital Notes 2	13/12/2030	3.20%	2.85%	0.00%	104.8	6.77%
  Insurance Australia	IAGPF	Capital Notes 3	15/12/2030	3.20%	3.09%	0.00%	104.78	6.83%
  ANZ Bank	AN3PL	Capital Notes 9	20/03/2031	2.90%	2.34%	0.00%	104.85	6.41%
  Westpac	WBCPM	Capital Notes 10	22/09/2031	3.10%	2.88%	0.00%	106.19	6.69%
  Macquarie Group	MQGPG	Capital Notes 7	15/12/2031	2.65%	2.58%	0.00%	103.15	6.29%
  Nat Aust Bank	NABPK	Capital Notes 8	17/03/2032	2.60%	2.42%	0.00%	103.96	6.21%

• 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%	5.31%	0.00%	88.3	9.00%
  Ramsay Health Care	RHCPA	Preference Share	Perpetual	4.85%	4.57%	0.00%	107.62	8.26%