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Hybrids
With nabtrade get access to both equity and debt characteristics through hybrids.

Reasons to invest in hybrids with nabtrade

Enjoy great brokerage and a competitive high interest rate for your cash.

Stream live ASX data so you can make real time investment decisions.

Stay up to date with the latest news and insights from industry experts.

About hybrids

Hybrid securities are a class of securities that have both debt and equity characteristics. These securities usually pay fixed or floating interest payments (or ‘dividend payments’) over a defined period. After this period they may be either redeemed, the interest margin is reset for a further set time period, or converted into equity (shares).

These securities often contain provisions that allow for the issuer (of the hybrid) the right to buy the security within a defined period, as well as other features that may impact the payment of interest (or dividends).

The most important aspect of hybrid securities for investors to understand is the credit/financial strength of the underlying issuer, and the ability of the issuer to meet its ongoing interest payments and capital repayments.

Learn more about hybrids with NAB's expert Mark Todd, Director Sub-Institutional Fixed Income Distribution.

Benefits

Regular income

Hybrids tend to pay regular income, and their coupon rate can be fixed or floating.

Franking credits

Some hybrid securities offer franking credits. The availability and level of franking credits may vary depending on the security and the ability of the issuer to pay franked distributions.

Dividend income

You may be able to generate a regular dividend income stream as cash or opt to reinvest distributions in more shares via a company Dividend Reinvestment Plan (DRP).

 

 

 

Risks

Volatility

In some cases you are taking on equity-like risks but only receiving bond-like returns.

Coupons not guaranteed

The coupon (interest payment) is generally at the discretion of the issuer, so the issuer can make a decision not to pay coupons.

Delayed redemption

The issuer may have the option to delay redemption for a longer period than initially defined or indefinitely.

Low ranking

Hybrids lie at the riskier end of a company’s capital structure – normally ranking just above equity, but below secured debt, senior debt and subordinated debt.

Pricing

  • Brokerage
  • Trade size
  • $5,000
  • $10,000
  • $20,000
  • $50,000

Funding options for hybrids

There are two ways to fund your investment:

Add cash to your account

Every nabtrade account comes with a linked cash account.

Cash management

Borrow to invest

With a NAB Margin Loan you can borrow to invest.

Margin lending

Next steps Get started with nabtrade

Every new nabtrade customer receives:

  • A domestic trading account
  • An international trading account
  • An integrated cash account

Additional service options include:

  • nabtrade High Interest Account
  • nabtrade IRESS Trader/ViewPoint
  • NAB investment lending solutions
  • Self Managed Super Fund setup and management services

Get started today

1. Apply online - Complete our online application form - you can select from an Individual, Joint, Company or SMSF/Trust account.

2. Add cash to your account - watch the tutorial.

3. Start trading