Maximising cash income with Macquarie Capital Notes 2

Read our Fixed Interest Weekly - attached. The new Macquarie Group Capital Notes 2 (MQGPB) offer sets a new benchmark for income levels provided by a top 10 ASX listed company. At bookbuild completion, the issue was upscaled from $400m to $500m. The record high 5.15% issue margin above current 6 month bank bill of 2.37% equates to a 7.52% initial grossed up running yield. MQGPB currently provides the highest cash and grossed up income of all ASX listed hybrids, where partial franking provides a boost to cash income. Reducing franking from 100% to 40% boosts cash income per security from $5.26 to $6.42. As international income represented 71% of 1H16 total income for Macquarie Group, ongoing distributions should remain partially franked.