Summary –
The hybrid securities market remains active, with investors navigating a wide spectrum of yield opportunities and credit profiles. Recent trading data reveals a clear divergence between high-yielding instruments and those priced at a premium with compressed margins, particularly among bank-issued hybrids.
Major Bank Hybrids: Premium Pricing, Compressed Margins
Hybrids from Commonwealth Bank (CBAPM), National Australia Bank (NABPK), and ANZ (AN3PK) continue to trade above par, reflecting strong institutional demand and low perceived risk. Margins on these securities remain tight, with running yields hovering around 6%—a signal of market confidence in the stability of these issuers.
High-Yield Opportunities: Challenger, Latitude, Judo
At the other end of the spectrum, hybrids from Challenger (CGFPC), Latitude (LFSPA), and Judo Capital (JDOPA) are offering significantly higher running yields, ranging from 8.5% to over 9.5%. JDOPA, in particular, stands out with a strong margin and elevated price, suggesting robust demand despite its higher risk profile. Latitude’s LFSPA, trading below par, reflects market caution but offers one of the highest trading margins in the sector.
Price Movements: Suncorp and Bendigo Lead Gains
Suncorp’s SUNPH and Bendigo Bank’s BENPH posted the strongest daily gains, up 1.87% and 1.16% respectively. These movements may indicate renewed investor interest or positioning ahead of potential call dates. Meanwhile, Macquarie Group’s MQGPD and Challenger’s CGFPC saw modest declines, likely driven by margin compression or short-term profit-taking.
Non-Standard Hybrids: Nufarm and Ramsay
Outside the standard listings, Nufarm’s step-up bond (NFNG) and Ramsay Health Care’s preference share (RHCPA) continue to attract attention. NFNG trades well below par, offering a running yield near 9%, while RHCPA remains above par with a yield above 8%. Both instruments are perpetual, and their pricing reflects investor views on issuer strength and call likelihood.
Strategic Takeaway
Investors are increasingly weighing yield against credit and structural risk. While major bank hybrids offer stability and predictable income, higher-yielding instruments—particularly those trading below par—present opportunities for enhanced returns, albeit with greater volatility. The market’s current posture suggests a cautious but opportunistic approach, with selective buying in both premium and discounted segments.
ASX-Listed Hybrids
COMPANY CODE HYBRID TYPE MATURITY/
CALL
DATEMARGIN
INCL. CREDITSTRADING
MARGINDAY
CHANGEDAY
CLOSERUNNING
YIELD**Westpac WBCPH Capital Notes 5 22/09/2025 3.20% 201.14% 21.13% 100.52 7.14% AMP Group AMPPB Capital Notes 2 16/12/2025 4.50% 15.80% 5.37% 101 8.32% Macquarie Bank MBLPC Capital Notes 2 22/12/2025 4.70% 15.88% 6.69% 100.53 8.54% Challenger CGFPC Capital Notes 3 25/05/2026 4.60% 8.25% -0.34% 102.5 8.38% Nat Aust Bank NABPF Capital Notes 3 17/06/2026 4.00% 6.96% 2.30% 101.88 7.74% Suncorp SUNPH Capital Notes 3 17/06/2026 3.00% 6.48% -0.25% 101.01 6.75% Macquarie Group MQGPD Capital Notes 4 10/09/2026 4.15% 5.37% 1.19% 102.55 7.81% CBA CBAPJ PERLS 13 20/10/2026 2.75% 5.02% 1.87% 101.1 6.48% Latitude LFSPA Capital Notes 27/10/2026 4.75% 11.69% -0.28% 98.98 8.92% Westpac WBCPJ Capital Notes 7 22/03/2027 3.40% 4.74% -0.13% 103.95 7.10% CBA CBAPI PERLS 12 20/04/2027 3.00% 3.97% 1.01% 102.2 6.67% Bank of Queensland BOQPF Capital Notes 2 14/05/2027 3.80% 4.92% 0.11% 103.41 7.49% Bendigo Bank BENPH Capital Notes 15/06/2027 3.80% 4.61% 0.15% 102.81 7.46% Macquarie Group MQGPE Capital Notes 5 20/09/2027 2.90% 3.49% 0.14% 102.07 6.54% Nat Aust Bank NABPH Capital Notes 5 17/12/2027 3.50% 3.92% 0.93% 103.1 7.12% ANZ Bank AN3PI Capital Notes 6 20/03/2028 3.00% 2.40% -0.11% 104.15 6.48% CBA CBAPL PERLS 15 15/06/2028 2.85% 3.19% 0.32% 102.81 6.47% Suncorp SUNPI Capital Notes 4 17/06/2028 2.90% 3.18% 0.37% 102.99 6.51% Westpac WBCPL Capital Notes 9 22/09/2028 3.40% 3.52% -0.08% 105.61 6.98% Macquarie Bank MBLPD Capital Notes 3 7/12/2028 2.90% 3.24% 0.12% 102.43 6.52% Bank of Queensland BOQPG Capital Notes 3 15/12/2028 3.40% 3.44% 0.11% 103.87 6.97% Judo Capital JDOPA Capital Notes 16/02/2029 6.50% 4.57% 0.01% 112.01 9.53% ANZ Bank AN3PJ Capital Notes 7 20/03/2029 2.70% 2.40% -0.14% 103.65 6.21% Challenger CGFPD Capital Notes 4 25/05/2029 3.60% 3.72% 0.15% 104.28 7.18% CBA CBAPK PERLS 14 15/06/2029 2.75% 2.92% 0.36% 103.1 6.35% IAG IAGPE Capital Notes 2 15/06/2029 3.50% 3.60% 0.01% 104.89 7.08% Macquarie Group MQGPF Capital Notes 6 12/09/2029 3.70% 3.06% 0.02% 105.8 7.11% Nat Aust Bank NABPI Capital Notes 6 17/09/2029 3.15% 2.94% 0.32% 104.55 6.66% Westpac WBCPK Capital Notes 8 21/09/2029 2.90% 3.04% -0.24% 105.19 6.49% ANZ Bank AN3PK Capital Notes 8 20/03/2030 2.75% 2.36% -0.07% 104.25 6.22% CBA CBAPM PERLS 16 17/06/2030 3.00% 2.52% 0.17% 105.58 6.45% Suncorp SUNPJ Capital Notes 5 17/06/2030 2.80% 2.79% 0.00% 103.72 6.36% Nat Aust Bank NABPJ Capital Notes 7 17/09/2030 2.80% 2.68% 0.36% 104.2 6.33% Bendigo Bank BENPi Capital Notes 2 13/12/2030 3.20% 3.11% 0.03% 104.4 6.73% Insurance Australia IAGPF Capital Notes 3 15/12/2030 3.20% 3.26% 0.18% 104.62 6.77% ANZ Bank AN3PL Capital Notes 9 20/03/2031 2.90% 2.24% -0.15% 105.71 6.29% Westpac WBCPM Capital Notes 10 22/09/2031 3.10% 2.92% -0.01% 106.65 6.60% Macquarie Group MQGPG Capital Notes 7 15/12/2031 2.65% 2.88% 0.13% 102.31 6.27% Nat Aust Bank NABPK Capital Notes 8 17/03/2032 2.60% 2.53% 0.22% 103.98 6.14% 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% 5.23% -0.13% 89.8 8.81% Ramsay Health Care RHCPA Preference Share Perpetual 4.85% 4.54% -0.04% 108.99 8.13%