FIIG - The Fixed Income Experts

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Which NAB security offers the best relative value?

by William Arnold | Nov 28, 2012

The NAB Group offers a variety of securities across the capital structure and in various currencies.    Figure 1 details the AUD equivalent credit margin of various NAB Group issues.

Figure 1

Looking at the chart, it is easy to see that the NABCap hybrid Tier 1s in AUD and especially non-AUD offer strong yields.  The EUR issue specifically offers a high margin and a capital price of only around €85. The difference between the EUR and the AUD hybrid Tier 1s, which both have a call date of September 2016, is 256bps suggesting the EUR is excellent value.  The GBP and USD hybrid T1s however also offer an attractive pick up over the AUD.

The newly issued NAB AUD LT2 deal also may be attractive to investors offering a pick up of around 125bps over similarly dated senior NAB paper. 

Prices and yields are accurate as at 27 November 2012, are a guide only and subject to market availability.  FIIG does not make a market in these securities.

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