Bank shares versus hybrids

Key Points Bank share prices have surged since June, with yields much lower Margins on bank hybrids have improved As a result, a partial switch from ordinary shares to hybrids may be in order The background Initially at least, hybrid offers like grossed up). Critically, they’re now comparable with those offered on the convertible hybrids, each of which is currently trading (or is being offered) on a grossed up yield of 7-8%pa. The convertible hybrids still feature high yields, downside risk and no ordinary share upside (earlier articles contain the full analysis) but right now, bank ordinary shares offer...

Initially at least, hybrid offers like grossed up). Critically, they’re now comparable with those offered on the convertible hybrids, each of which is currently trading (or is being offered) on a grossed up yield of 7-8%pa.

The convertible hybrids still feature high yields, downside risk and no ordinary share upside (earlier articles contain the full analysis) but right now, bank ordinary shares offer lower yields and much less upside than they did a few months ago.

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