On Friday, Westpac announced that the offer size for its new hybrid security issue, Westpac Capital Notes 5, had been increased to $1.45 billion and the margin set at the bottom of the range. While this suggests that underlying demand is pretty strong, I think that this is an issue that it may pay to sit out on. It is no bargain.
And while I am a fan of hybrid securities for investors who understand the product and the risks, like all markets, there can be times when it pays to just sit out. With the recent move higher in bank ordinary share yields, I think the hybrid market is at this point at the moment.
I will come back to this a little later, but firstly, the details of the issue.