Don't bank on hybrids

Don't bank on hybrids. Alongside the recent collapse in share prices has been a slump in the prices of hybrids, in many cases to below their issue price. I won't say 'I told you so', because I didn't, but my colleague Richard Livingston certainly has done on many occasions. The hybrid gives you the worst of both worlds by limiting your return when things are going well and lumping you in the same boat as equity investors if it all falls apart. Beneath it all, complexity is at the root of all the problems with hybrids. Even the smartest bond traders have trouble pricing these instruments because of the unknowns (for one thing, APRA hasn't clearly explained what might make a bank 'non-viable'), so what hope is there for the rest of us? (VIEW LINK)