Summary –
The Australian bank hybrid market continues to reflect a stable yield environment, with investor appetite remaining firm across major issuers. Trading margins have compressed modestly in recent weeks, particularly among longer-dated securities, suggesting sustained demand for income-generating instruments amid a cautious macro backdrop.
Key Observations:
- Running Yields: Most bank-issued hybrids are offering running yields between 6.2% and 7.8%, with standout performers such as Macquarie Bank Capital Notes 2 (MBLPC) at 8.55% and AMP Capital Notes 2 (AMPPB) at 8.34%.
- Trading Margins: Shorter-dated notes like Westpac Capital Notes 5 (WBCPH) show inflated trading margins due to technical factors, while mid-curve instruments such as NABPF and SUNPH are trading around 6.7%–7.8%, indicating balanced risk-reward positioning.
- Price Action: Daily price movements remain subdued, with most securities showing +0.01% to +0.04% changes, reinforcing the hybrids’ role as low-volatility income assets.
- Issuer Trends: The big four banks—CBA, Westpac, NAB, and ANZ—continue to dominate issuance, with multiple tranches maturing between 2026 and 2032, offering a range of call dates and margin profiles for portfolio diversification.
Market Sentiment:
Investor sentiment remains constructive, supported by the hybrids’ defensive characteristics and franking credit benefits. The yield curve flattening has made mid-duration hybrids particularly attractive, while newer issues like Westpac Capital Notes 10 (WBCPM) and CBA PERLS 16 (CBAPM) are gaining traction due to their competitive margins and liquidity.
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Name Daily Close Daily Change Daily Change (%) Dow 45,711.34 196.39 0.43% S&P 500 6,512.61 17.46 0.27% Nasdaq 21,879.49 80.79 0.37% VIX 15.08 0.04 0.27% Gold 3,692.00 9.8 0.27% Oil 63.03 0.4 0.64% 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% 0.02% 89.8 8.82% Ramsay Health Care RHCPA Preference Share Perpetual 4.85% 4.55% 0.02% 108.99 8.13%