The dividend yield at the present price of $76 is 4% (bank bill...

The dividend yield at the present price of $76 is 4% (bank bill swap is 1.8%).

There are significant advantages of this hybrid over other bank hybrids which is attracting a price premium. The same applies for the old Macquarie Bank hybid MBLHB, although NABHA is seen as marginally better value/risk.

Firstly, these older hybrids pay unfranked dividends - fully in cash and you don't have to wait for tax return to get the benefits of any credits.

Secondly they do not have any of the mandatory conversion clauses of the modern bank hybrids released in the past five years. Although it seems remote, if there is a global banking crisis, the newer hybrids have a risk of being converted to equity at a significantly depressed share price or even being expunged completely. The older hybrids can't, they will survive. Dividends can be stopped but then all other dividends stop until the hybrids have restarted. This means that these older hybrids have a much lower risk profile.

Thirdly, many analysts consider these hybrids will be redeeemed at face value within the next five years. Under Basil 3 banking rules, these older hybrids progressively count less towards the important bank capital adequacy ratios and will be deemed to be fully debt in 2023. The banks can attract wholesale debt at a better rate than these hybrids so it is likely they will issue a new style hybrid to pay out these old hybrids. That's a likely capital gain of 32%. Although this may not seem a lot over five years, when you add it to the dividend, it gives a simple yield to maturity of over 10% pa.

Not bad for the least risky bank hybrid on the market. Always do your own research to verify.