pxupa very attractive, page-13

Firstly I'm not sure what BBSW rate you are using but the market is forward looking and seeing BBSW around 3.5-4% in 6 months time. They will both re-set at new BBSW in Jan 09 reflecting this reality not historical rates.

I think also you need to account for the 4 years until PXUPA steps up. That is, four years where AAZPB gets the extra 2.4% above BBSW before PXUPA steps up. This means that PXUPA are behind 4 x $2.40 interest payments before step up or about $10 and thus should be $10 cheaper than AAZPB if they are both to be held for perpetuity. I see they are trading about $10 cheaper than AAZPB. Then again step-up margin is 0.25% less than AAZPB and being already stepped-up AAZPB have a higher possibility of beiung redeemed than PXUPA so maybe AAZPB should be trading at a further premium than $10?

cheers