Avoid Macquarie Capital Notes 2

When your broker offers you quick profits with Macquarie's latest hybrid securities, respond with a quick 'NO!'. When a banker offers you a hybrid security and a 156-page prospectus, hold on to your wallet. We’ve long preached a ‘no hybrid’ philosophy (see here, here, here, here, here or here). Macquarie Group’s (ASX: MQG) Capital Notes 2 aren’t about to change that. The 5.14% margin the Notes offer above the bank bill rate (currently 2.36%) looks appealing relative to term deposits and is better than the 4.2% margin offered by Westpac’s (ASX: WBC) recent hybrid issue (see Avoid Westpac Capital Notes 3). Nonetheless, it’s still inadequate compensation for the risk, which is nicely summarised in the fine print on Page 4: The Notes are 'subject to payment conditions including MGL’s absolute discretion to determine whether or not to pay distributions'. Make no mistake, Macquarie is trying to reduce its own financing cost and risk, not doing its best to make you rich. Read full article here: (VIEW LINK)