Challenger Ltd (ASX: CGFPD) and Non-bank Hybrids

Hi Craig,

CGFPD is an ASX-listed hybrid issued by Challenger Limited, rather than an APRA-regulated bank – so it doesn’t fall into APRA’s planned phase-out of Additional Tier 1 (AT1). Challenger’s capital framework sits under APRA’s life insurance standards, including LPS 112, which continues to recognise AT1 capital.

• As a result, CGFPD is not captured by the bank AT1 phase-out and should not be viewed as subject to the same regulatory wind-down as major-bank hybrids.

Non-bank AT1 issuance remains active, reinforcing the distinction between bank and insurance hybrids. Suncorp issued new wholesale AT1 Capital Notes in April 2026 at BBSW +235bps, with the transaction more than four times oversubscribed, while QBE followed with A$500m of AT1 Capital Notes in May – though both of these notes are not listed on the ASX.

The key takeaway is that APRA is phasing out AT1 within the Australian banking framework, not eliminating the broader hybrid asset class, leaving insurance and other non-bank hybrid securities, including Challenger’s CGFPD, outside the scope of the change. Macquarie Group issued notes also fall outside this framework.

That said, Hybrid margins are relatively tight at the moment, although some of the bank notes have fallen/spreads increased in the last couple of weeks based on a report that banks could redeem early – though we think that is a very low probability.

• While MM was not fans of APRAs decision toward bank hybrids we do like some of the non-bank hybrids, it’s just spreads are quite tight at the moment.

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Challenger Ltd (CGFPD)

LAST UPDATED 20/08/2026 13:10

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Challenger Ltd (CGFPD)

LAST UPDATED 20/08/2026 13:10