A: For investors: benefits include a gross distribution of  about 3.45%, about 3.0% higher than a 90 day term deposit; floating rate investment, so if interest rates go up, so will the distribution rate (no re-investment rate risk) and as an ASX listed security, easy to liquidate or exit. Downsides: higher risk, so if the Bank gets into trouble or there is a banking crisis in Australia, your investment will be worth less than $100 and you will suffer a capital loss; distributions are not guaranteed and in some circumstances won’t be paid; and as an ASX listed security, the market price will move around. It could be less than the $100 you pay.

 

For the issuer (banks), access to very cheap capital. No downsides

 

Attached is a copy of an article I have published. https://email.switzer.com.au/hubfs/Westpac%20and%20NAB%20Capital%20Notes.pdf