In November toolmaker Stanley sold a $450 million 40-year non-call five-year issue via Citigroup, Goldman and UBS called enhanced trust preferred securities (E-Trups) to finance its planned acquisitions of Facom Tools and National Manufacturing. This is just the start in the US of a theme that had already developed in Europe.
Hybrid debt in Europe is a story of constant innovation; first by banks, then insurers and finally corporates. CFOs and treasurers like hybrids because, although they are similar to equity, they are a much cheaper form of capital and offer tax deductibility.
The trigger for the takeoff of European corporate hybrid issuance during 2005 was a change of stance from the rating agencies.
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