Investors who switched from bank term deposits to listed hybrids in an effort to protect their income have seen most of the margin pick up eroded by fallng rates
The 90 day bill rate is now only 2.7%, and 3 year bonds 2.5%. The chart below shows how the 90 day bank bill futures market has moved in the last year, with the yield being 100 minus the price (96.00 represents 4.00%).
So, dor example, the recent Suncorp Hybrid issue paying BBR plus 2.85% (after franking adjustment) will be around 5.5% in yield. Not a great compensation for the added risk of a hybrid compared with a senior term deposit.
90 day BBR