Category Archives: HYBRID FINANCING INSTRUMENTS

Redeem ability

Redeem ability Preference capital has a limited life specified fixed maturity after which it must be retired. However, there are no serious penalties for breach of redemption stipulation. The preference shares have a stated call price which is above the original issue price and over time like the call feature on bonds, the call feature on preference shares provides to the issuer company. Since the market pric

Prior Claim on Income Assets

Prior Claim on Income Assets Preference capital has a prior claim preference over equity capital the income and assets of the company. In other words, preference dividend must be paid before payment of any dividend on the equity capital and in the event of liquidation, the of preference capital must he paid before anything is paid to the equity capital. Thus, the capital stands midway between debentures and equ

PREFERENCE SHARE CAPITAL

PREFERENCE SHARE CAPITAL Preference capital is a unique type of long-term financing in that it combines some of the features as well as debentures. As a hybrid security form of financing, it is similar to debenture as: (i) it carries a fixed stated rate of dividend, (ii) it ranks higher than equity as a claimant income assets, (iii) it normally does not have voting rights and (iv) it does not have a share ual ea

HYBRID FINANCING INSTRUMENTS

HYBRID FINANCING INSTRUMENTS INTRODUCTION As hybrid source of financing has characteristics of both straight delta and straight equity falling ‘here in between. The important hybrid instruments sources of financing arc: (i) preference capital. (ii) convertible exchangeable debentures bonds, (iii) warrants and (iv) options are covered in Sections. The focus is on their features and valuation, The procedur