AGL Energy will pay 380 basis points over the 90-day bank bill swap rate on the A$650 million of subordinated notes it is issuing. AGL completed its bookbuild yesterday, after entering the market last week with indicative pricing of 340 to 360 basis points.Some market participants see the AGL re-pricing as a sign the market is having difficulty absorbing the volume of hybrids that have been issued in recent weeks, many of them from banks. Others see it as a sign of a push-back from investors, who are starting to demand higher rewards for the risks they are taking on these subordinated securities.ANZ launched an issue of subordinated notes on February 14. A week later it had increased the offer from $500 million to $1.5 billion and set pricing at a margin of 275 basis points.The ANZ's subordinated notes have a relatively simple structure with interest payments being non-deferrable, subject to a solvency test. The notes have a 10.25-year term and ANZ has the option of redeeming them in June 2015. Since ANZ's launch, Westpac has launched a $750 million issue of convertible preference shares; the Commonwealth Bank's subsidiary, Colonial Holding Co, has launched a $500 million issue of subordinated notes; and AGL Energy has now launched its issue.Westpac's preference share bookbuild closed on February 23 with a margin of 325 basis points. The Westpac issue is a true hybrid: the term is perpetual and the preference shares can convert into ordinary equity.Earlier this week, Bank of Queensland tapped an existing subordinated note issue to raise additional funds at a 425-basis point margin.One market participant said: "There has been a lot of issuance and it is inevitable that it will take some time to work through."However, the market is robust. If you think about all the money that is sitting in cash-deposit balances the recent hybrid issuance is a blip."Investors don't want equity downside, but they are looking for a better yield. The risk-reward trade-off being offered with these hybrids is reasonable."Not everyone agrees. Tyndall Asset Management's head of credit, John Sorrell, said: "With these things it is always hard to see if they are priced for risk. But, given how subordinated they are, we would think they are not cheap."There has been some criticism of issuers targeting the retail investor market with hybrids. The argument is that retail investors will invest in a security if they recognise the issuer name, and if the yield is higher than that of term deposit rates, while ignoring the risk factors.Sorrell said: "[The] risks have been understated. In some cases, the securities are very long dated, [while] in others the coupons are non-cumulative."The AGL Energy re-pricing may be an indication that there is over-supply, or it may be that investors are asking more questions about risk."Fixed-income broker FIIG Securities wrote in the February 22 issue of its newsletter, The Wire: "We would generally expect hybrids issued by corporations to pay a higher spread than bank hybrids because they are higher risk."Generally, banks have higher