Seduced by yield: are hybrid bonds worth it?

In response to strong investor demand, businesses across a range of sectors are increasingly turning to so-called ‘hybrid’ bonds as a way of raising capital. But are the potential attractions as clear-cut for investors as they are for the companies issuing them? While there would, at first glance, certainly appear to be some enticing headline yields on offer from these financial instruments, investors do need to be aware of the added risks that can accompany them. As the name would suggest, hybrid bonds sit, like preference shares, somewhere on the spectrum between ‘proper’ equity and...