Criteria | Corporates | General: Update: Intermediate Equity Content For Certain Mandatory Convertible Preferred Stock Hybrids Nov 08
Standard & Poors, November 2008
Abstract
This article announces a change in our equity content categorization of some mandatory convertible preferred stock issued by regulated financial institution and insurance entities. The update follows our review of the performance of mandatory convertible preferred stock issued by rated Australian banks, which are among the most prolific rated issuers of such instruments. Mandatory convertible preferred stock, a form of hybrid capital, is comprised of two elements: (i) An initial security in the form of preferred stock; and (ii) The mandatory conversion (or synthetic equivalent) of the preferred stock into common stock at a specified future date. To facilitate our analysis, we classify qualifying hybrid capital issues into three categories, based on our assessment of their equity content: "high," "intermediate,"...
Companies mentioned in this report are: Australia (Commonwealth of) (Unsolicited Ratings)
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
Australia (Commonwealth of) (Unsolicited Ratings)
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