A: Thanks for your email.

Firstly, I don’t think of hybrids as a “share” – I think of them as a floating rate “corporate bond” or an “interest rate security”. As the interest rate is re-set every 3 months, it is a bit like investing in a “corporate” term deposit that is rolled over every 3 months.

So, the question of whether they are a “good investment” means (for me) are they good compared to a term deposit, or a corporate bond?

How good are they? Well, they were a lot better some 9 to 12 months back when they were priced at more attractive margins. In the search for yield, the spreads have been compressed and they are now less attractive. That said, they are still somewhat attractive compared to a government guaranteed term deposit.

Safety? I think that with the Bank issued hybrids, you can be reasonably comfortable. They are not riskless – so diversify and spread your risk – take exposure across a number of issues.