Hybrids: European supply outlook hinges on M&A

It seems that strong M&A-related financing is needed if hybrid volumes are to breach the €74 billion sold during 2006. A key reason is that bank capital issuance from Europe, the mainstay of the international hybrid market, is unlikely to grow substantially this year. There are a number of reasons why hybrid bank capital supply could dip this year. One is that, in the absence of M&A, banks are under less impetus to raise external capital because their internal generation of capital is supporting asset growth.