bank hybrids

Bank Hybrids: The devil is in the detail.

Lachlan Hughes
Lachlan Hughes Swell Asset Management

We are often surprised that retail investors with whom we speak, are blissfully unaware of the risks involved in owning hybrids. ASIC and the banks have done a great job disclosing the risks, however, the message does not seem to be relayed effectively by financial intermediaries. We hope this note... Show More

Bank Hybrids – Still as safe as houses?

Clive Smith
Clive Smith Russell Investments

The Global Financial Crisis of 2008 (GFC) was a turning point for bank hybrid investors. Though most investors still focus on the traditional risks associated with bank hybrids, regulatory changes have not only altered the risks investors in hybrids are exposed to but also increased the total level of risk.... Show More

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Westpac's Landmark Hybrid Impresses

Christopher Joye
Christopher Joye Smarter Money Investments/Coolabah Capital Investments

In the AFR I argue that Westpac's landmark US$1.25 billion hybrid issued into the US market this week, which was initially 11x oversubscribed, will reduce the bank's need to issue future hybrids on the ASX and thereby choke domestic supply. This 10 year hybrid was also priced at a credit... Show More

Smallest Budget Deficit Since 2013 + Why Hybrids Are Cheap

Christopher Joye
Christopher Joye Smarter Money Investments/Coolabah Capital Investments

In the AFR I review the government's latest monthly financial data, which shows that Australia's budget deficit is the smallest since 2013 and currently running much better than expected care of strong commodity prices, corporate profits, and asset price appreciation. I also present new research that prices the downside risk... Show More

What the collapse of Spain’s sixth largest bank means for the sector and why we should all be watching

Jeff Thomson
Jeff Thomson Alphinity Investment Management

Spanish banks have until recently been an attractive way for investors to play regional economic recovery and rate normalisation. The real estate market in Spain is in recovery mode and prices remain significantly below pre-crisis peak levels (unlike many other countries, including Australia). Domestic Spanish banks generally remain highly leveraged... Show More

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No more hybrid duds, please

Christopher Joye
Christopher Joye Smarter Money Investments/Coolabah Capital Investments

In The AFR I argue that it's time for the major banks to get "long-term greedy"---as my former Goldman Sachs bosses would implore---when it comes to pricing new deals in the fickle ASX hybrids market. Current market pricing implies hybrids are trading around fair value and smart hybrid issuers will... Show More

Top trade of 21st century...

Christopher Joye
Christopher Joye Smarter Money Investments/Coolabah Capital Investments

In The Australian Financial Review I reveal what is likely one of the best non-tech trades of the 21st century (with a 2,000% gross return) that I had to fly to Las Vegas to learn about; discuss the top trades in my own portfolios in 2016, which focussed on the... Show More

Hybrids are still cheap

Christopher Joye
Christopher Joye Smarter Money Investments/Coolabah Capital Investments

In The AFR I publish new research on the bottom-up valuation models we use to price ASX hybrid securities to determine whether they are cheap or expensive given high-profile hedge fund manager Michael Hintze's claim this week that the sector is attractive. While we employ a range of top-down regression-based... Show More

Banks to go global with hybrids after tax ruling

Christopher Joye
Christopher Joye Smarter Money Investments/Coolabah Capital Investments

In The AFR today I report a game-changing development for the major banks' ASX listed hybrid capital market: the ATO has delivered ANZ a private binding ruling (PBR) that allows them to stream (or not use) franking credits when issuing hybrid capital securities overseas that reduces the interest costs of... Show More

Westpac's hybrid looks like dud equities for dummies

Christopher Joye
Christopher Joye Smarter Money Investments/Coolabah Capital Investments

In The AFR today I argue that Westpac's mooted $750m plus hybrid offer looks like a real dud that will be yet another "equity for dummies" deal. Why buy perpetual, non-voting equity in Westpac on what appears to be a current maximum 6.15% return when you can get Westpac's ordinary... Show More