Hybrids: Porsche takes unusual turn to Asian retail

Hybrid corporate market shows versatility as an alternative to European placement emerges.

The corporate hybrid sector shifted to retail markets with the Porsche 7.2% $1 billion perpetual non-call five (no coupon step-up), which was targeted at Asian investors. The transaction has several unusual aspects linked to structural features and marketing.

One of the key drivers of corporate hybrid trades has been the greater recognition that the rating agencies have given to issuers using deeply subordinated structures. Standard & Poor’s changed its methodology in late 2004 but it was Moody’s shift in February 2005 that opened the floodgates.