Equity-linked faces competition from corporate hybrids

The new generation of corporate hybrids is becoming an increasingly popular acquisition finance tool in Europe, so could these products wipe out demand for other hybrid products such as traditional equity-linked bonds in M&A financings altogether, just as the latter are making a comeback?

“It would certainly be right to call it a competing product in certain cases,” says Claude Raiffel, head of equity-linked origination for HSBC. “But the big differences are that hybrid straight debt is relatively easily accessible to quality, highly rated issuers but not to those with a lower credit rating,” says Raiffel.