FOLITIC / HYBRID SECURITIES

Hybrid Securities Trading Guide

Understand securities that combine features of debt, equity and derivatives. Follow eight stages covering preferred shares, convertibles, corporate hybrids, bank capital and structured notes.

Start with What makes a security a hybrid, then follow the next lesson links. Explore 32 lessons with worked examples, exercises and further reading.

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Bank Capital and Contingent Conversion · All lessons

Bank Capital and Contingent Conversion

Examine capital triggers, coupon cancellation, conversion and potential principal losses.

Intermediate

Additional Tier 1 capital and what loss absorption means

Additional Tier 1 instruments are designed to absorb losses under their terms and the applicable banking framework. Their income features should never be confused with deposit...

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Intermediate

Capital ratio triggers and discretionary intervention

A numerical capital trigger and a supervisory intervention are different mechanisms. Both require careful reading because reported ratios do not capture every possible trigger event.

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Intermediate

Conversion write downs and coupon cancellation

Conversion, principal write down and coupon cancellation affect different parts of an investment. Map each mechanism separately before estimating a stress recovery.

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Intermediate

Comparing bank capital across jurisdictions

Similar labels can conceal different rules across countries. Compare legal terms, regulatory treatment and market access before treating bank capital securities as substitutes.

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