One of the consequences from the RBA’s decision last week to reduce official rates by 25bps is the corresponding fall in the BBSW rates by a similar amount. 3 month BBSW was roughly 2.28% before the March CPI figures were released, 2.14% before the RBA cut the official cash rate to 1.75% and by the end of the week this benchmark rate had come down to 2.04%.
This of course has consequences for the interest/dividend payments on ASX listed hybrids and notes which use BBSW rates as part of their rate-setting formulae. Michael Saba from Evans and Partners suggests that investors look at securities which have already set payment terms in advance of the latest RBA decision and especially those which reset the rate every six months. These securities will have their interest accrual locked in until the next six monthly rate reset. These are highlighted in yellow in the table below.
