Hybrids

Summary: 

Hybrid spreads continued their downward trajectory this week, compressing to levels not seen since before the global financial crisis. Five-year major bank hybrids—historically offering 3–4% above the RBA cash rate—are now yielding just ~2% over benchmark, underscoring the market’s appetite for income despite diminished risk compensation.

The average trading margin across ASX-listed hybrids settled at 2.92%, with running yields clustering between 6–7%. Price volatility remained minimal, reinforcing the asset class’s defensive appeal. Notably, Westpac Capital Notes 5 (WBCPH) stood out with an unusually wide margin (~40%) due to its imminent call date, while other capital notes traded in tight ranges (<0.1% daily movement), reflecting balanced institutional demand.

This tightening of spreads mirrors trends in both local and global investment-grade credit markets, suggesting a broader recalibration of risk premiums. Investors should remain cognizant of the equity-like characteristics embedded in hybrids, particularly as compensation for structural risk continues to erode.

Figure 1: Hybrids: Median Sector Margin

• 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%	534.29%	345.00%	100.7	7.13%
  AMP Group	AMPPB	Capital Notes 2	16/12/2025	4.50%	18.27%	1.63%	100.8	8.35%
  Macquarie Bank	MBLPC	Capital Notes 2	22/12/2025	4.70%	15.80%	1.30%	100.88	8.52%
  Challenger	CGFPC	Capital Notes 3	25/05/2026	4.60%	9.06%	0.39%	102.23	8.41%
  Nat Aust Bank	NABPF	Capital Notes 3	17/06/2026	4.00%	7.65%	0.31%	101.61	7.77%
  Suncorp	SUNPH	Capital Notes 3	17/06/2026	3.00%	6.84%	0.29%	100.96	6.76%
  Macquarie Group	MQGPD	Capital Notes 4	10/09/2026	4.15%	5.51%	0.17%	102.58	7.82%
  CBA	CBAPJ	PERLS 13	20/10/2026	2.75%	5.18%	0.17%	101.11	6.48%
  Latitude	LFSPA	Capital Notes	27/10/2026	4.75%	12.53%	0.32%	98.5	8.98%
  Westpac	WBCPJ	Capital Notes 7	22/03/2027	3.40%	5.58%	0.14%	103.01	7.18%
  CBA	CBAPI	PERLS 12	20/04/2027	3.00%	3.93%	0.11%	102.4	6.66%
  Bank of Queensland	BOQPF	Capital Notes 2	14/05/2027	3.80%	4.98%	0.13%	103.51	7.50%
  Bendigo Bank	BENPH	Capital Notes	15/06/2027	3.80%	4.40%	0.11%	103.3	7.44%
  Macquarie Group	MQGPE	Capital Notes 5	20/09/2027	2.90%	3.32%	0.07%	102.5	6.52%
  Nat Aust Bank	NABPH	Capital Notes 5	17/12/2027	3.50%	3.69%	0.08%	103.7	7.09%
  ANZ Bank	AN3PI	Capital Notes 6	20/03/2028	3.00%	3.02%	0.05%	102.9	6.57%
  CBA	CBAPL	PERLS 15	15/06/2028	2.85%	3.17%	0.06%	103	6.47%
  Suncorp	SUNPI	Capital Notes 4	17/06/2028	2.90%	3.17%	0.06%	103.15	6.51%
  Westpac	WBCPL	Capital Notes 9	22/09/2028	3.40%	3.84%	0.06%	104.97	7.04%
  Macquarie Bank	MBLPD	Capital Notes 3	7/12/2028	2.90%	3.20%	0.04%	102.65	6.52%
  Bank of Queensland	BOQPG	Capital Notes 3	15/12/2028	3.40%	3.42%	0.06%	104.09	6.96%
  Judo Capital	JDOPA	Capital Notes	16/02/2029	6.50%	4.68%	0.07%	111.9	9.56%
  ANZ Bank	AN3PJ	Capital Notes 7	20/03/2029	2.70%	2.66%	0.03%	103	6.26%
  Challenger	CGFPD	Capital Notes 4	25/05/2029	3.60%	3.62%	0.05%	104.73	7.16%
  CBA	CBAPK	PERLS 14	15/06/2029	2.75%	2.90%	0.04%	103.31	6.34%
  Insurance Australia	IAGPE	Capital Notes 2	15/06/2029	3.50%	3.64%	0.04%	104.9	7.08%
  Macquarie Group	MQGPF	Capital Notes 6	12/09/2029	3.70%	2.81%	0.04%	106.7	7.06%
  Nat Aust Bank	NABPI	Capital Notes 6	17/09/2029	3.15%	2.95%	0.04%	104.65	6.67%
  Westpac	WBCPK	Capital Notes 8	21/09/2029	2.90%	3.52%	0.05%	103.85	6.59%
  ANZ Bank	AN3PK	Capital Notes 8	20/03/2030	2.75%	2.61%	0.03%	103.45	6.28%
  CBA	CBAPM	PERLS 16	17/06/2030	3.00%	2.58%	0.04%	105.5	6.46%
  Suncorp	SUNPJ	Capital Notes 5	17/06/2030	2.80%	2.75%	0.04%	104.01	6.35%
  Nat Aust Bank	NABPJ	Capital Notes 7	17/09/2030	2.80%	2.67%	0.03%	104.35	6.33%
  Bendigo Bank	BENPI	Capital Notes 2	13/12/2030	3.20%	2.97%	0.04%	105.1	6.69%
  Insurance Australia	IAGPF	Capital Notes 3	15/12/2030	3.20%	3.27%	0.03%	104.7	6.77%
  ANZ Bank	AN3PL	Capital Notes 9	20/03/2031	2.90%	2.50%	0.02%	104.75	6.35%
  Westpac	WBCPM	Capital Notes 10	22/09/2031	3.10%	3.15%	0.03%	105.8	6.67%
  Macquarie Group	MQGPG	Capital Notes 7	15/12/2031	2.65%	2.72%	0.03%	103.12	6.22%
  Nat Aust Bank	NABPK	Capital Notes 8	17/03/2032	2.60%	2.45%	0.03%	104.5	6.11%

• 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%	5.15%	90	8.78%
  Ramsay Health Care	RHCPA	Preference Share	Perpetual	4.85%	4.50%	4.50%	108.7	8.14%

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