Capital Notes

Capital notes are issued by companies to raise funds. By investing in capital notes, you are lending money to the company and in return you receive a fixed rate of interest. You can hold the notes until they mature, or sell them on the stock exchange.

Capital notes offer you:

• a moderate-risk investment for the fixed interest portion of your portfolio
• a steady income paid every 6 months
• generally a higher interest rate than corporate or government bonds
• a degree of capital protection with predictable returns
• added diversification if you have a portfolio of higher-risk investments.

Characteristics of capital notes

Capital notes are a moderate risk investment if you hold them until they mature.

Capital notes:

• are usually unsecured
• rank lower than other types of company debt (if the company was wound up, other types of debt would be paid back before capital notes)
• rank higher than equity.

The risk level of a capital note depends on:

• the credit rating of the company issuing the notes
• how each note is ranked - where it would stand compared with other securities if the company was wound up.

How to buy and sell

Capital notes are listed on the Australian Stock Exchange, so they settle in the same way as shares. You can buy and sell them in two ways:

1. Through a Macquarie adviser
2. Online using DirecTrade

This is General Advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should consider the appropriateness of the advice having regard to your situation.

For information relating to our financial services you should refer to the Macquarie Equities Ltd Financial Services Guide.