The Commonwealth Bank must believe that conditions in the listed hybrid note market are about to rapidly improve, or that it has got a lot of very loyal hybrid investors despite the PERLS VII debacle.After flagging its intention to launch a new hybrid note with the release of its interim results last Wednesday, CBA did not keep the market waiting long. Yesterday, it announced the launch of the PERLS VIII notes, which will be used to replace the A$1.16 billion of PERLS III notes due to be called in April.When flagging the PERLS VIII issue, the bank said that the issue would be made subject to market conditions. Market conditions have significantly deteriorated since the bank sold A$3.0 billion of PERLS VII notes in October 2014.The notes were sold with a credit spread of 280 basis points, the lowest seen for a Basel III compliant Additional Tier 1 capital instrument. The size of the issue overwhelmed the market and the notes have failed to trade at their issue price of A$100 since then.In fact, the PERLS VII notes closed at $85.29 on Tuesday, the lowest level yet. At this price, the notes have a trading margin (the market's required credit spread for the perceived risk involved) of 598 bps, more than double the credit margin at issue.It seems that CBA must be anticipating a sudden improvement in market conditions because the indicative credit margin on the PERLS VIII notes is 520 bps to 535 bps, while the call date is just 14 months earlier. Yes, this is now the largest credit margin seen on a primary issue, but there is no new issue premium being offered here.In fact, CBA is not even meeting the market and any investor prepared to look at returns available in the secondary market will be seriously underwhelmed.CBA has set a call date of October 2021 for the PERLS VIII notes. Westpac's WBCPF notes will be called seven months earlier and can be picked-up with a trading margin of 554 bps. ANZ's ANZPD notes have a September 2021 call date, and a trading margin of 587 bps.And, with a call date ten months earlier in December 2020, NAB's NABPC notes are offering a trading margin of 622 bps.Is the market over sold? Are hybrid investors becoming increasingly aware of institutional pricing of Additional Tier 1 notes (CoCos) in international markets? Has the limit of the capacity of (primarily) retail investors in Australia to absorb hybrid notes issues been reached?The answer to each of these questions is … possibly. The proposed pricing of the PERLS VIII notes, at 520 bps (5.20 per cent) to 535 bps (5.35 per cent) over the 90 day bank bill rate of 2.75 per cent, gives a gross yield of 7.95 per cent to 8.10 per cent per annum. At the close of business on Tuesday, CBA's shares were trading on a dividend yield of 8.07 per cent. At first glance, hybrid investors are now demanding the same return for risk as