The write-off of Credit Suisse’s hybrid securities last month drove a sell-off in the Australian hybrid market in March. BondAdviser reported that its BA AUD AT1 Index, which tracks locally issued hybrids, fell 78 basis points in March. Spreads across big bank hybrids widened by as much as 73 basis points, compared with the February close, before ending the month at an average of 38 bps wider. Spreads on non-major hybrids widened by as much as 83 bps before ending the month 51 bps wider. “While we believe Credit Suisse’s AT1s are inherently riskier than the domestic hybrids space, selling pressure across the domestic AT1 space was to a degree rational, given the level of uncertainty across the banking sector globally,” BondAdviser said in its latest Monthly Review. The higher risk, compared with locally issued hybrids, came from the fact that Credit Suisse’s hybrid documentation stated that conversion to equity was not an option. The performance of the hybrid market was at odds with the rest of the fixed income market. Bloomberg’s AusBond Composite Index rose 316 bps in March, as investors started pricing in lower interest rates. It was one of the best monthly performances for the index in 30 years.