Macquarie Capital Notes: No outright winner but a possible each-way bet

Key Points Macquarie Group Capital Notes are a replica of the Westpac Capital Notes High margin and less of the distribution made up of franking Investors need to keep a close eye on the Macquarie Group share price Macquarie might have been slow to the hybrid party, or simply biding their time till retail investors peaked in their generosity to issuers and disregard for risk. Either way, from Macquarie’s perspective, the timing of the issue of Maximum Conversion Number is calculated based on 50% of the Macquarie Group share price on the date of issue of the notes. However,...

Macquarie might have been slow to the hybrid party, or simply biding their time till retail investors peaked in their generosity to issuers and disregard for risk. Either way, from Macquarie’s perspective, the timing of the issue of Maximum Conversion Number is calculated based on 50% of the Macquarie Group share price on the date of issue of the notes. However, this falls to 20% on an early conversion caused by the Non-viability Trigger Event. As we explained in (grossed up) dividend yields than the hybrids – Macquarie’s hybrid is being issued at a distribution rate about the same (or even a touch higher) than the Macquarie Group ordinary shares (6.8% for the hybrid vs 6-7% for the ordinaries, grossed up).

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