Updated · The Australian Financial Review · Aug 12
Brokers Pitch $30 Billion Bank Hybrid Exit Trade as Early Buyback Risk Stirs Angst
Updated
Updated · The Australian Financial Review · Aug 12
Brokers Pitch $30 Billion Bank Hybrid Exit Trade as Early Buyback Risk Stirs Angst
1 articles · Updated · The Australian Financial Review · Aug 12
Summary
$30 billion of retail and high-net-worth money tied up in major bank hybrids is being targeted by brokers and fixed-income managers pitching investors to sell now and lock in profits.
That trade is gaining traction because regulators have ordered the securities retired, while investors also risk being caught by an earlier-than-expected bank buyback that could cap upside.
The pitch has become controversial in the listed fixed-income market, where the prospect of investors rushing for the exit is adding to anxiety around how the hybrid phaseout will unfold.
Fund managers are already marketing aggressively for the cash that will need a new home once the major banks' hybrids disappear, setting up a scramble for replacement income products.