Macquarie Group Limited Stapled Floating Rate Perpetual Securities (ASX: MBLHB)

 By Jason Fittler,

MBLHB is a stapled security.

The issuer is Macquarie Group Limited (ASX: MQG), a leading investment bank, providing banking, financial, advisory, investment and funds management services.

This security offers holders an interest rate at a margin of 1.7% over the 90-day bank bill rate, paid quarterly. It has no maturity date and can therefore be only be repaid with cash for its face value.

We like this security for a number of reasons.

First, the current yield of approximately 5.7% is attractive in the current market climate.

Second, it is a floating rate security, so that if interest rates in general move higher going forward, so too will the interest payments associated with this security (conversely if interest rates in general move lower, so too will the interest payments associated with this security).

Third, with these securities trading at approximately $75.00, there is the possibility of a capital gain in the long-term, if they are redeemed for their face value of $100.00.

Under APRA’s Basel III regulatory framework, this security will progressively lose its eligibility as tier-one capital going forward, increasing the possibility of redemption over the next five to ten years.

We believe the current share price represents an excellent entry point into this security, which we are happy to hold purely for the yield, with the possibility of capital gain a bonus.

For more information on MBLHB please contact us on 07 4771 4577.