Handle with care

9 September 2010 By Neil Unmack Follow @unmack1

Investors’ search for yield has spawned a revival in hybridbond issuance by corporates. These quasidebt, quasiequity securities are meant to be winwin, giving companies cheap finance and investors good income. But buyers should remember they’ve been burned by hybrids before.

This content is for Subscribers only

Context News

Scottish and Southern Energy sold 750 million pounds and 500 million euros of hybrid debt on Sept 8, the first European deal this year by a private nonfinancial company. French utility Suez and Australian energy firm Santos are also planning hybrid deals.

Dutch stateowned utility TenneT raised hybrid debt in February, the first corporate hybrid bond since the failure of Lehman Brothers.

SSE doubled the size of its bond sale because of strong investor demand. The hybrids have an interest cost of 5.6 percent, the company said in a statement. Barclays Capital, BNP Paribas, Credit Suisse and RBS managed the SSE deal.

Email a friend

Please complete the form below.

Required fields *