Hitting the radar (TT JulAug05 p22-23)

Developments in the capital markets have made hybrid securities more attractive than previously. Factors contributing to the rise of hybrid capital are the introduction of International Financial Reporting Standards (IFRS) and changes in the way equity credit is rated. An increasing number of companies have a rating and hybrid capital can contribute to maintaining the rating. Hybrid capital appears on the balance sheet as equity not debt and could be useful in merger and acquisition or in a share buyback. The use of hybrid capital will be event driven and careful communication would be necessary with the market.