The Next Big Thing In Hybrid Capital

French, Jeffrey
August 2005
Investment Dealers' Digest;8/22/2005, Vol. 71 Issue 33, p7
Trade Publication
This article reports that the seemingly endless search for a security that affords issuers the maximum amount of equity credit for the cheapest price took a turn on August 12, 2005 with the debut of a new hybrid instrument, dubbed enhanced capital advantaged preferred securities, or Ecaps. The new instrument is already being hyped as the replacement for trust preferred securities and mandatory convertible preferreds, both massive markets in the U.S. Ecaps allow issuers to receive considerably more equity credit than trust preferreds while maintaining the favorable tax treatment that has made them so wildly popular.


Related Articles

  • More Leeway on Reg NMS. Chapman, Peter // Traders Magazine;Mar2008, Vol. 21 Issue 278, p26 

    The article reports on the exemption of nonconvertible preferred stock from the order-protection rule of the Regulation National Market System (NMS) by Securities and Exchange Commission (SEC). It discusses that the SEC has made an exemption grant for the lightly traded securities and cites that...

  • Tax Options, Clienteles, and Adverse Selection: The Case of Convertible Exchangeable Preferred Stock. Cowan, Arnold R. // FM: The Journal of the Financial Management Association;Summer99, Vol. 28 Issue 2, p15 

    Firms that issue convertible exchangeable preferred stock can later exchange it for debt with identical conversion and cash flow rights, thus capturing interest tax deductions when they can benefit from them. Despite tax and transaction-cost advantages, many issuers forego this innovative...

  • Monthly income preferred securities: A new hybrid that combines the best of equity and debt. Crain, John L.; Jackson, Gisele // CPA Journal;May96, Vol. 66 Issue 5, p68 

    Discusses the tax advantages of monthly income preferred securities (MIPS). Deduction of dividend payments; Classification of the security as equity for financial reporting purposes; Basic structure of MIPS; Disadvantages of MIPS.

  • Liability or equity? Martin, Peter; Rutherford, Robert T. // CA Magazine;Nov96, Vol. 129 Issue 9, p30 

    Discusses how the new Canadian standards on financial instruments apply to high/low redeemable preferred shares. Applicable requirements for determining the issuer's presentation of any financial instruments as a liability or equity; Development of standards; Accounting for the substance of...

  • First BanCorp in Puerto Rico Sweetens Exchange Offer. Browdie, Brian // American Banker;3/28/2013, Vol. 178 Issue 48, p6 

    The article reports First BanCorp in Puerto Rico increased the value of its exchange offer and extended the offer to convert preferred shares into common stock to April 9, 2013. The article notes the offer is expected to strengthen the company's capital structure. It also notes First BanCorp has...

  • Preference share.  // Essential Finance;2003, p237 

    A definition of the term "preference share" is presented. It refers to a share carrying a fixed rate of dividend which has to be paid in full before ordinary shareholders can receive a cent; called a preferred stock in the United States. It is regarded as an unexciting but relatively risk-free...

  • Odyssey raises cash to grow.  // European Chemical News;9/15/2003, Vol. 79 Issue 2068, p16 

    Deals with the preferred stock offering raised by U.S.-based chemical logistics firm Odyssey Logistics & Technology in September 2003. Acquisition of Nordstrom Freighting, a freight forwarding company in Connecticut; Proceed of the stock offering.

  • The Role of Debt and Preferred Stock as a Solution to Adverse Investment Incentives. Heinkel, Robert; Zechner, Josef // Journal of Financial & Quantitative Analysis;Mar1990, Vol. 25 Issue 1, p1 

    We analyze the optimal mix of debt, common equity, and preferred equity in a model with an investment opportunity and asymmetric information about its quality, and show that an all-equity financed firm will overinvest. Issuing the appropriate amount of debt before the project becomes available...

  • Puerto Rico banks lost $2.2 billion in market value in 2008. Márquez, Carlos; Carmona, José L. // Caribbean Business;1/8/2009, Vol. 37 Issue 1, p4 

    The article reports on the loss of Puerto Rico's public traded bank stocks. The total loss of the fund is approximately $17.9 billion in four years and an annual common and preferred stock dividend payments have decreased to $160 million. A local industry suggests that the last thing to do with...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics