Why I like NAB’s new hybrid issue

Co-founder of the Switzer Report
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News that one of Australia’s largest super funds, Q Super, was going to bid for $200m of NAB’s new ASX-listed hybrid security has fueled demand for the issue. On Friday, NAB announced that it would issue at least $1.65bn of NAB Capital Notes 3, up from an original $750m.

Typically, the domain of retail investors, the strong support for this hybrid by institutional investors means that the fixed margin of 4% is seen as attractive and that the issue will be keenly supported. By historic standards, this is about  “middle of the range” for ASX retail hybrid issues. CBA, which has been the most prolific issuer, has launched its capital notes issues (PERLS) in recent years from a high margin of 5.2% to a low margin of 2.8% (see table below).

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