Own issues of hybrid bonds
Own issues of hybrid bonds
Hybrid bonds are equity-like, subordinated corporate bonds.
Hybrid bonds are equity-like, subordinated corporate bonds. One of the special features of hybrid bonds is that these securities can have equity-like characteristics with coupon payments, resulting in a hybrid between shares and bonds. Hybrid bonds can have very long or even unlimited maturities.
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Advantages for companies
The hybrid bond is a model for an open-ended amount of capital, as several tranches are always possible according to the same pattern. Hybrid bonds are therefore particularly suitable for innovative models that currently require capital and can bear the interest relatively easily and repay it at the end of the term.
At the end of the term, these may be convertible into an equity participation (share participation).
As the valuation of the company at the later date is often significantly higher than when the loan was taken out, the dilution of the shareholder structure can be reduced.
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Participation certificates
The company can use non-voting pre-IPO shares to implement capital increases without compromising its ability to act.
Investment financing
With clearly defined loan terms and conditions on an objective or project-specific, medium to long-term basis.
Mezzanine loan
In the case of mezzanine loans, neither voting rights nor company shares are transferred.
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