CommBank Perls 8 look fine priced at 2.75% over the 90 day bank bill relative to other listed issues, and we like them more than the recently launched Macquarie Offer priced at 2.90% over bank bills. While the margin is a lot tighter than we’ve seen in recent history, this speaks to the search for yield as investors roll out of term deposits but it’s also important to recognize the banks better capital positions i.e. the more capital banks hold, the safer hybrids are.
There’s no major change with our outlook for CSL and APX:
• CSL $248.46 – After being bearish for over 12-months MM likes CSL into new multi-months lows under $240, or another 4% lower.
• APX $16.34 – we have now evolved from bearish to neutral APX at current levels, a 15-20% bounce would not surprise, however it’s not one for us.