What happened
Major bank hybrids totaling $32 billion are being phased out following APRA regulations removing Additional Tier 1 capital eligibility by 2032. Retail investors hold an estimated 25% of these securities. Approximately $2 billion in hybrid capital is scheduled to be called across September and October alone.
Why it matters here
Australian retail and SMSF investors relying on hybrids face a diminishing pool of franked, floating-rate income. Replacement Tier 2 subordinated debt will be issued mainly in wholesale denominations, forcing income-seeking portfolios into alternative credit or fixed-income assets to prevent cash drag.
What to watch
Individual bank redemption notices and call dates throughout September and October to avoid uninvested cash allocations.
Source
latrobefinancial.com.au