Hi @afrowest -- thanks for pointing these out, I haven't looked at these instruments for a long time!

I would encourage you to have a skim of the prospectus (here), but the key things on my quick look are:

• Distributions are NOT guaranteed. Macquarie can, at its discretion, choose to not pay (although that is probably unlikely)
• The note can be redeemed at MQG's discretion on 16 December 2024, 16 June 2025 or 15 December 2025; or  if a Tax Event or Regulatory Event occurs. In this case you will get $100 per note, or if MQG choose, $101 worth of ordinary shares for each note
• Otherwise, they will be converted on 15 December 2027, again at $101 worth of MQG shares for each note.

All told, it seems like a relatively low risk proposition if you trust MQG (and i'm not suggesting you shouldn't, only that there are no guarantees). While you get 5% or so, it's worth considering that we are all wearing a 5% inflation charge at the same time. So it's probably just a store of value asset, in real terms. And nothing wrong with that -- certainly has some advantages over cash. Plus you don't have to risk the chance of loss in this volatile market. And the market for these notes appears to be quite liquid too, so you can always convert back to cash pretty easily (under normal market conditions).

For me, a lot would depend on when I need the cash. If i needed it within the next year or so, these seem like a good option. If i didn't, I'd personally cop the volatility and hope to achieve superior long term gains. (not advice!! just saying how i'd look at it).

Hi @afrowest i am not particularly familiar with this Macbank hybrid but would make the following generalised comments re hybrids which i have held in the past.

my view on hybrids is that as a stand alone risk vehicle they are reasonable as long as you assess the risk of default, which is usually low but can happen and be priced in by the market in varying degrees.

the problem, imo, with hybrids is when they are used as an asset allocation tool. so a place to hide from equities with the intent to go back into equities. the scenario can arise at times of high stress in the equity markets when these vehicles start to take on the characteristics of equity investments, ie become correlated with equities. like in the GFC etc and other instances they can trade well below fv as the market prices in the higher risk of default. when this occurs they are not an effective hedge. the risk is whetehr we enter one of these rare but possible scenarios (esp now). i think i bought macnotes at 70c in the $ in the GFC or just post it 2012?. liquidity can be an issue as well, i found it difficult to get $1000k in and out, certainly moved the market. so just be aware of these risks.

Thanks @Strawman

Appreciate your comments. As mentioned I needed a place to park cash, until I see signs of this markets normalising. I do work on the premise that I buy businesses however we also need to factor in that the market determines their price at any given time thus happy to wait for the volatility to wane and hopefully pick up some quality business at a reasonable price, can’t pick the bottom but happy to miss the first 10-15% once I can see the market is starting to value the business correct. So these instruments provide a decent return, any movement in rates will be reflected, being floating, risk associated with MQG is limited and market is liquid, so thanks for confirming my thoughts

Held these previously, among other bank capital notes. One difference between bank capital notes and Australian government bonds is that, bank capital notes usually comes with franking credits. Risk and distribution stability-wise, nothing is 'safer' than government bonds though.