The share market is still fraught with uncertainty as Europe battles to keep a lid on spiralling debt, China winds back its horse-powered growth and the US staves off creeping recession. Because of this investors have shied away from investing their hard earned in financial markets.

The fact Australia’s biggest online stockbroker, Commsec, is sitting on more than $5 billion of client cash illustrates current mum and dad investor sentiment. This figure has swelled over 20 per cent in the past year as investors have fled shares for the safety of deposit accounts.

Conversely, Australian Self Managed Super Funds (SMSF’s) are arguably over exposed to equities and perceived as taking on too much risk. According to the Organisation for Economic Co-operation and Development, Australia’s super funds have the highest allocation to equities in the world, about 60 per cent. These same super funds also have the lowest allocation to bonds.

An alternative for both these groups, investors sitting on low yielding cash deposits and SMSF’s carrying too much equity exposure, is investing in corporate debt.

Over the past month an influx of $5 billion of corporate debt issues to the market has seen some existing bonds and hybrid issues (securities that combine elements of debt and equity) become pretty attractive propositions.

Just so we’re clear, the most common hybrids in Australia are convertible bonds and preference shares. Both generally pay a regular coupon (like a dividend) that is set at the start of their life and have a redemption or ‘step up’ date. At the redemption date the issuer pays holders back the face value of the security, usually $100, or converts the face value to the equivalent value of company shares.

If the issuer thinks it might delay paying investors back, then the hybrid will include a step up date. At the step up date the holder can choose to redeem the security for face value, convert it to shares or continue to hold and receive an increased coupon rate going forward.

Coupon rates are usually quoted as a margin over the Bank Bill Swap rate (BBSW), the interest rate banks charge each other for short term loans. For reference, today’s 90 day BBSW is around 4.26 per cent.

Whatever the redemption terms of the investment, they are all traded on the ASX so can be sold at any time and providing good liquidity.

Bonds are also exchange traded but have much more straight forward terms. Bondholders receive regular, pre-determined coupon payments for the life of the security and at redemption date the issuer pays holders back the face value of the bond.

So now that we’re broadly across the types of debt issues and who might be suited to them, let’s take a look at some of the more attractive offerings out there.

CommBank Retail Bonds

Ticker: CBAHA

Price: $98

Face Value: $100

Issue Terms: 90 day BBSW + 1.05%

Redemption: December 24, 2015

Gross Yield to Maturity: 5.9%

These are straightforward retail bonds with just over three and a half years to run. The modest margin of 1.05% above the swap rate is a trade off for regular cash coupons paid by a very secure institution. Still, the current yield exceeds almost any cash deposit rate on offer today.

ANZ Convertible Preference Shares 2

Ticker: ANZPA

Price: $98

Face Value: $100

Issue Terms: 90 day BBSW + 3.1%

Mandatory Conversion: December 15, 2016

Gross Yield to Maturity: 7.8%

Recommended by research house Morningstar. They are convertible to ordinary shares at maturity however ANZ may elect for a third party to purchase the ANZPA’s rather than deliver ordinary shares.

Commonwealth Bank Perls III

Ticker: PCAPA

Price: $180

Face Value: $200

Issue Terms: 90 day BBSW + 1.05%

Step Up Date: April 6, 2016

Gross Yield to Maturity: 8.0%

The trade off here is lower income for greater capital growth. Like the CBAHA’s, the margin over the swap rate is just 1.05%, however the capital gains at the current $180 price tag boost the gross yield of this issue.

Westpac Trust Preferred Securities

Ticker: WCTPA

Price: $90.7

Face Value: $100

Issue Terms: 90 day BBSW + 1%

Step Up Date: June 30, 2016

Gross Yield to Maturity: 7.7%

Similar to the PCAPA’s, the value of these securities lies in the capital gains on offer. Trading at an almost 10% discount to face value, the yield to maturity is significantly boosted from a coupon of just 1% over the swap rate.