Suncorp Subordinated Notes (ASX code: SUNPD) were issued in May 2013. They pay a floating rate of interest equivalent to 3 month BBSW + 285bps, have a first call date of 22 November 2018 and their final maturity date is on 22 November 2023.
Suncorp has recently announced it will redeem all of these notes on the first (call) optional redemption date of 22 November 2018. Holders will receive the final interest payment of $1.2111 in addition to the $100.00 face value.
One common feature of notes, bonds and hybrid securities listed on the ASX is the increased volatility of their trading margins as the time to maturity approaches. Typically, trading margins decrease once a security passes a certain minimum time to maturity. Then, as its sensitivity to price changes increases in its final year, it moves to the point where a small price change will lead to a large change in yield, thus potentially producing wild swings.
