Until recently, the paramount concern for most issuers of hybrid securities had been not only to engineer a product that constituted Tier 1 capital – whether non-innovative Tier 1 or innovative Tier 1 – for regulatory purposes, but also to reconcile the seemingly conflicting imperatives of capital adequacy, corporate laws, tax laws, settlement systems, listing rules and investor perceptions into the perfect hybrid product. While there have been, and continue to be, real and significant cost savings to be achieved by getting this balance correct, it often results in complex products that can be difficult to understand. However, with risk management analysis and capital preservation again coming to the fore for many investors, the hybrid capital market is undergoing a subtle shift to less complicated subsidiary and direct issue instruments, a finding that is illustrated in the mapping of transactions completed throughout 2008 and to date in 2009.
While certain shifts in the hybrid capital markets space may be occurring, other trends, which began to emerge before the current economic maelstrom, continue to strengthen and evolve. As has been the case in past years, the Sidley team that works in this area has made a sincere effort to ensure this book will be a useful resource for our clients. Please feel free to contact any Sidley lawyer if we can be of further assistance. Please contact
if you would like to receive a copy.