What do we think of Hybrid Securities?

Nicholas Forsyth

On the last day of May we saw NAB announce a new Hybrid Security in an effort to raise around $750m of tier 1 capital. This comes on the back of two successful deals from Westpac about a week ago, and Commonwealth Bank in early April. However, not all Hybrids have been successful as those holding the CBAPD, which was issued back in 2014, can attest. With over $900bn sitting on term deposit in Australia earning peanuts, and an aging population that requires income to sustain lifestyle, these securities can offer an attractive alternative, however they are not without risk. In today’s note we’ll give an overview of these securities in general terms, what we need to be conscious of, compare a few different issues and whether or not they’re worthwhile considering in a portfolio. See link here: (VIEW LINK)


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