Macquarie to test $500m hybrid

Macquarie was testing support through its London branch to offer a US-dollar tier 1 hybrid security to institutional investors. The bank said the intended size of the offer is up to $US500 million.

The move adds to the $4.4 billion worth of hybrid security issues launched by local companies within the space of just three weeks. The issues are aimed at tapping the strong demand for fixed income-type investments among retail investors, especially those with self-managed superannuation funds.

Last week, AGL Energy launched a $A650 million subordinated note issue.

The Macquarie hybrid, if issued, will be unsecured, subordinated notes of Macquarie's banking unit and exchangeable for Macquarie Group shares in certain circumstances. Unlike other recent issues, they will only be sold to institutional investors. The offer is subject to market conditions, Macquarie said.

The focus on hybrids comes as the Australian Securities and Investments Commission plans to meet finance representatives to remind them they need to highlight the investment risks. The regulator has raised concerns over the aggressive retail marketing of the instruments.