Rethinking hybrids

Standard & Poor''s reviews hybrid treatment giving Aussie issuers cause to reconsider these debt-cum-equity instruments.

Ratings agency Standard Poor's is said to be formalizing an international committee that will review its method of allocating equity credit to hybrid transactions, apparently making them look more like equity than debt. The move, which has yet to be formally announced, should make the instruments more palatable to corporate treasurers in Australia where hybrids were quickly gaining a reputation as expensive debt.

Rival Moody's Investors Service issued new hybrid guidelines last year and the result was an immediate up-tick in issuance in the US and Europe. Now Standard Poor's appears to be following suit, and with SP being the dominant ratings agency in Australia, dealmakers say the reclassification will...

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