I have some hybrids in my super portfolio (ANZPD, ANZPE and ORGHA).
Why is there suddenly a change in their perceived value?
Should I expect them to go lower, or come back – and should I sell, or buy more?
A: Thanks for the question.
I will cover this in Monday’s Switzer Super Report in more detail, however there are 3 main reasons:
- S&P announced in mid September a downgrade for a number of hybrid issues – one notch;
- With the fall in the market – yields on bank shares have increased – so as most hybrids are issued by banks, they are relatively less attractive to buy. They become more attractive if their price falls – spread or yield increases; and
- Indigestion – 3 new issues, spreads at record lows.
ANZPE and ANZPD have arguably been impacted more than some other hybrids – so I probably wouldn’t sell now. ORGHA hasn’t been impacted that much and is due to pay a coupon in December – again I would probably hold. There may be some interesting buying opportunities.
