Things To Know About Maturity Dates For Hybrid Securities

  • Jan 20, 2019 AEDT
  • Team Kalkine
Things To Know About Maturity Dates For Hybrid Securities

Hybrid securities are those securities which contain the features of both equity and debt. Like any other debt security, many hybrid securities also get matured on a specified date called Maturity Date. It is very important for investors to know what will happen to the security on the maturity date.

Usually, on the maturity date of a security, the principal amount which is invested by the investor is paid back to him, and with maturity date onwards investors stop receiving any interest if they were receiving any. However in the case of Hybrid securities, what happens at the maturity date depends on the particular terms and conditions that are associated with the type of the Hybrid Security.

Let us take a quick look at the different types of Hybrid securities and their maturity dates.

Convertible/converting debt securities – Convertible or converting debt securities are those securities in which the investors are having an option to convert the securities into another type of security at a pre-determined date. These securities usually have a fixed maturity date.

Preference shares- Preference shares are those shares which pay specified dividend rate, and they contain a right to be redeemed for cash at maturity. Usually, Preference shares have maturity dates but there may be cases where they are issued without a maturity date, those without maturity dates are known as a non-redeemable or perpetual preference share. Like Convertible debt securities, there are also convertible preference shares which may be converted into ordinary shares at the will of the holder of those shares at a specified date.

Capital notes- Capital notes are those debt securities which possess characteristics like equity. Hybrid securities like perpetual debt securities have no fixed Maturity date whereas other securities like subordinated debt securities and knock-out debt securities have fixed maturity date.

In Australia, hybrid securities are issued by either corporates or banks and insurance companies, aimed to borrow money from other investors. Bank hybrids that meet Australian Prudential Regulation Authority’s prudential standards are divided into two types- Tier 1 bank hybrids and Tier 2 bank hybrids.

Tier 1 bank hybrids are those securities which have a fixed maturity date, and they are generally converted into ordinary shares on a fixed date. On the other hand, Tier 2 bank hybrids do not have a fixed maturity date, but they can be converted into ordinary shares if the bank becomes non-viable. Further, they can only be converted once the Tier 1 bank hybrids have been converted.

Investors can enjoy the benefits of a diversified portfolio by holding hybrid securities of different types with different maturity dates. Understanding how the securities are going to mature, helps investors to take better-investing decisions aimed at securing financial gains. Market participants can enjoy capital growth as well as regular income depending on their exposure to different kinds of hybrids.


This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.


All pictures are copyright to their respective owner(s) does not claim ownership of any of the pictures displayed on this website unless stated otherwise. Some of the images used on this website are taken from the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image.


There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.

Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.

As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK